PCEIA flashcards
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32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Insurable interest
- A financial relationship whereby the insured benefits from the continued existence of the subject matter or suffers loss from its destruction; required at inception for life cover.
- Utmost good faith
- The mutual duty of insured and insurer to disclose all material facts relevant to the risk, so that the contract is not induced by concealment or misrepresentation.
- Proximate cause
- The dominant and effective cause of a loss, without which the loss would not have occurred; remote causes are disregarded when testing whether a peril is insured.
- Subrogation
- The insurer's right, after indemnifying the insured, to pursue third parties who caused the loss and to recover the amount paid, preventing double recovery by the insured.
- Moral hazard
- A condition arising from the character or conduct of the insured, such as dishonesty or carelessness, that increases the likelihood or severity of loss.
- Term assurance
- Pure protection cover paying the sum assured only if death occurs during the stated term; no cash value accrues and premiums are typically the lowest available.
- Whole life insurance
- Permanent cover paying a death benefit whenever death occurs, with accumulating cash value, surrender value, and policy loan privileges after qualifying periods.
- Endowment assurance
- A policy paying the sum assured on death within the term or on survival to maturity, combining death protection with a guaranteed savings element.
- Investment-linked policy
- A policy in which premiums purchase units in underlying investment funds; benefits fluctuate with unit value and the policyholder bears the investment risk.
- Grace period
- A stated period, commonly 30 to 31 days after a premium due date, during which the policy remains in force and the overdue premium may be paid.
- Non-forfeiture options
- Provisions protecting accumulated value when premiums stop, including cash surrender value, reduced paid-up cover, and extended term assurance.
- Average clause
- A condition reducing claim payment in proportion to underinsurance, calculated as loss multiplied by the sum insured divided by the value at risk.
- Public liability insurance
- Cover for legal liability to pay damages for bodily injury or property damage caused to third parties in connection with the insured's business premises or activities.
- Professional indemnity insurance
- Claims-made cover for legal liability arising from negligent acts, errors, or omissions in professional services, including defence costs and breach of professional duty.
- Business interruption cover
- Cover for loss of gross profit and increased cost of working following insured material damage at the premises, usually subject to an indemnity period.
- Personal accident policy
- A benefit policy paying fixed sums for accidental death, permanent disablement, and temporary disablement, expressed as percentages of a stated capital sum.
- Warranty in insurance
- A strict policy term that must be complied with exactly; breach entitles the insurer to discharge liability for the risk to which it relates.
- Policy schedule
- The document identifying the parties, insured subject matter, sum insured, policy period, premium, excess, and endorsements that particularise the standard policy wording.
- Condition precedent
- A policy condition that must be satisfied before the insurer's liability arises, such as payment of the premium or notification within a stated period.
- Material fact
- Information that would influence a prudent insurer's decision to accept the risk or fix the premium, and which must therefore be disclosed before cover begins.
- Underwriting decision
- The insurer's determination after assessing a proposal: accept at standard rates, accept with extra premium or exclusion, postpone, or decline the risk.
- Claims-made basis
- Cover responding to claims first made and notified during the policy period, regardless of when the negligent act occurred, subject to any retroactive date.
- Policy reinstatement
- Restoration of lapsed cover, usually requiring payment of overdue premiums plus interest and, for life policies, satisfactory evidence of continued insurability.
- Endorsement
- A written amendment attached to a policy that alters its terms, such as changing the sum insured, adding a peril, or naming an additional insured.
- Solvency margin
- The excess of an insurer's admissible assets over its liabilities, measured against a regulatory minimum to demonstrate ability to meet obligations as they fall due.
- Anti-money laundering
- Regulatory duties requiring customer due diligence, beneficial ownership identification, ongoing transaction monitoring, and reporting of suspicious activity to the authorities.
- Product disclosure
- The requirement to give clients clear and accurate pre-contract information about cover, exclusions, premium, and significant risks in a form that is not misleading.
- Conflict of interest
- A situation where an adviser's personal or financial interest could improperly influence advice; it must be disclosed and managed in the client's favour.
- Needs approach
- A method of calculating life cover by adding income replacement, debts, education, and final expenses, then deducting existing assets and available benefits.
- Human life value
- A method estimating life cover as the present value of the insured's expected future earnings, after deducting personal consumption and applying a discount rate.
- Systematic risk
- Market-wide risk affecting all assets, such as interest rate or economic changes, which cannot be removed by diversification within a portfolio.
- Suitability assessment
- Review of a client's age, income, dependants, existing cover, risk tolerance, time horizon, and liquidity needs before recommending an insurance or investment product.