Texas General Lines — Life, Accident, Health and HMOGeneral InsuranceMedium
A producer is explaining the various parties involved in an insurance contract to a new client. Which of the following best describes the role of the Insurer?
- AThe individual or entity that receives the policy benefits upon a covered loss.
- BThe person authorized to sell, solicit, and negotiate insurance contracts.
- CThe individual or entity that pays the premiums and owns the policy.
- DThe company that agrees to compensate for losses covered by the policy.
Show answer & explanationAnswer & explanation
Correct answer: D. The company that agrees to compensate for losses covered by the policy.
The insurer is the insurance company that provides coverage and agrees to pay claims according to the policy terms. The other options describe the beneficiary, policyowner, and producer respectively.
Why the other options are wrong
- A. This describes the beneficiary.
- B. This describes the producer (agent).
- C. This describes the policyowner.
Insurer
The insurance company that provides coverage and agrees to pay claims as specified in the policy.
- Assumes the financial risk.
- Issues the insurance policy.
- Promises to pay benefits for covered losses.
Memory trick: The 'InsurER' is the 'givER' of protection and promises.