Adverse selection
The tendency of risks with higher probability of loss to purchase and maintain insurance more often that the risks who present lower probability.
Agent
An individual who is licensed to sell, negotiate, or effect insurance contracts on behalf of an insurer
Alien insurer
An insurance company that is incorporated outside the united states.
Domestic insurer
Insurer's location of incorporation and the legal ability to write business in a state.
Foreign Insurer
An insurance company that is incorporated in another state
Human Life Value
Approach that is a capitalized value of an individual's net future earnings. It looks at potential lost earnings of a person as a measure of how much insurance to purchase
Insurable interest
An individual may not purchase life insurance covering the life of another person unless he or she possesses an insurable interest in that person. This involves a financial or economic interest in that person.
Insurance
A contract whereby one party (insurer) agrees to indemnify or guarantee another party (insured) against a loss by a specified future contingency or peril I return for payment of a premium
Law of large numbers
A principal sating that the larger the number of similar exposure units considered, the more closely the losses reported will equal the underlying probability of loss
Life insurance
Transfer of risk of premature death from 1 party (policy owner) to another part (insurer).
Mutual insurers
Insurance organizations that have no capital stock, but are owned by the policy holders.
Premium
A periodic payment to the insurance company to keep the policy in force.
Producer
Insurance agent or broker
Risk
The uncertainty or chance of financial loss
Risk management
Avoidance, retention, partnership, transfer of risk, reduction, prevention
Stock insurer
a publicly-traded insurance company that is owned and controlled by a group of stockholders whose investment in the company provides the safety margin necessary for the issuance of guaranteed, fixed premium, nonparticipating policies.