Exam 3 Cards | FIN 304 - RISK & INSURANCE, Quizzes of Credit and Risk Management

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TERM 1 Policy Holder Surplus DEFINITION 1 = Assets - Liabilities TERM 2 Loss Ratio DEFINITION 2 = (Incurred Losses + Loss Adjustment Expense) / Premium Earned TERM 3 Pure Premium DEFINITION 3 = Losses / Number of Exposure Units TERM 4 Expense Ratio DEFINITION 4 = Underwriting Expenses / Premiums Written TERM 5 Combined Ratio DEFINITION 5 = Expense Ratio + Loss Ratio TERM 6 Investment Income Ratio DEFINITION 6 = Total Investment Income / Earned Premiums TERM 7 Overall Operating Ratio DEFINITION 7 = Combined Ratio - Investment Income Ratio TERM 8 Accumulated Dividends DEFINITION 8 are added to policy face amount and paid to beneficiary as part of the death benefit TERM 9 Paid-up Additions Option DEFINITION 9 each dividend is used to purchase as much single-premium whole life insurance as possible; economical way to buy additional life insurance; no commission or other expenses must be paid; no medical exam is required TERM 10 One-year Term Option DEFINITION 10 use each year's dividend to purchase as much one-year term insurance as possible TERM 21 Split Limits DEFINITION 21 the amounts of insurance for bodily injury liability and property damage are stated separately TERM 22 Single Limit DEFINITION 22 applies to both bodily injury and property damage liability; the total amount of insurance applies to the entire accident without a separate limit for each person TERM 23 Liability DEFINITION 23 PAP Coverage A TERM 24 Medical Payments DEFINITION 24 PAP Coverage B TERM 25 Uninsured Motorists DEFINITION 25 PAP Coverage C TERM 26 Automobile Damage DEFINITION 26 PAP Coverage D TERM 27 Duties After Accident or Loss DEFINITION 27 PAP Coverage E TERM 28 General Provisions DEFINITION 28 PAP Coverage F TERM 29 HO-3 DEFINITION 29 (Special Form)Insures the dwelling and other structures against risk of direct physical loss to property TERM 30 HO-4 DEFINITION 30 (Contents Broad Form)Designed for tenants who rent apartments, houses, or rooms;Covers the tenant's personal property against loss or damage and also provides personal liability insurance TERM 31 HO-5 DEFINITION 31 (Comprehensive Form)Insures the dwelling, other structures, and personal property against the risk of direct physical loss to property TERM 32 HO-6 DEFINITION 32 (Unit-Owners Form)Designed for owners of condominium units and cooperative apartments;Covers the unit owner for perils such as fire, lightning, windstorm, hail, and explosion TERM 33 HO-8 DEFINITION 33 (Modified Coverage Form)Covers loss to the dwelling and other structures on the basis of repair cost, which is the amount required to repair or replace damaged property using common construction;Designed for an older home whose replacement cost substantially exceeds its market value TERM 34 Dwelling DEFINITION 34 Homeowners Coverage A TERM 35 Other Structures DEFINITION 35 Homeowners Coverage B TERM 46 Increasing Term DEFINITION 46 Form of term life insuranceThe face amount goes up periodically on a predetermined basis TERM 47 Cost-of-Living DEFINITION 47 Form of term life insuranceIncreases the amount of protection by the same amount that CPI increasesNo evidence of insurability is required if insured accepts and pays for additional amounts when it is offered TERM 48 Straight Life DEFINITION 48 Form of whole life insurancePremiums are payable as long as the insured lives TERM 49 Limited-Pay Life DEFINITION 49 Form of whole life insurancePremiums are paid only for a specified period of time; no further premiums are necessary, but coverage remains in effect until the insured's death TERM 50 Type A Universal Life DEFINITION 50 Type of universal life insuranceDeath benefit is an amount that remains the same while the policy is in forceAs cash value grows over time, the additional death protection that must be purchased decreases TERM 51 Type B Universal Life DEFINITION 51 Type of universal life insuranceDeath benefit fluctuatesAs cash value grows over time, so does the death benefit TERM 52 Variable Life DEFINITION 52 Type of life insuranceDeath benefit and cash value fluctuate with investment performancePolicyholders can designate the types of investments TERM 53 Variable Universal Life DEFINITION 53 Type of life insuranceOnly the cash value varies with the performance of the underlying securitiesPolicy owners are given a choice of investment to support the contract TERM 54 Modified Life DEFINITION 54 Type of life insuranceA form of whole life with premiums lower for an initial period of time, after that premiums higher than they would otherwise be(Meets the same need as convertible term) TERM 55 Debit Insurance DEFINITION 55 Type of life insurancePremiums are only a few dollars a weekCollect premiums at insureds' homesMeet burial needs of low income insuredSmall face amountsMore expenses because of the high cost of its premium collection method; needs are better served by term or whole life TERM 56 Credit Life DEFINITION 56 Type of life insuranceOffered in connection with installment loan such as car loans (decreasing term insurance) TERM 57 Endowment Policy DEFINITION 57 Pays the face amount of policy if insured dies and also pays face if insured survives