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Health and Life Insurance Exam- Practice Questions

Terms in this set (37)

Which of the following requires insurers to disclose when an applicants consumer or credit history is being investigated:
1970- Fair Credit Reporting Act
1959- Intervention by SEC
1999- Financial Services Modernization Act
1945- The McCarran-Ferguson Act
1970- Fair Credit Reporting Act
When a policy pays dividends to its policyholders, it is said to be:
profitable
mutual
nonparticipating
participating
Participating
What is the name of the law that requires insurers to disclose information gathering practices nd where the information was obtained?
State Guaranty Association
Fair Labor Standards Board
Fair Credit Reporting Act
National Association of Insurance Commissioners
Fair Credit Reporting Act
The stated amount or percent of liquid assets that an insurer must have on hand that will satisfy future obligations to its policyholders is called
credits
reserves
surplus
retention
Reserves
What type of reinsurance contract involves two companies automatically sharing their risk exposure?
Arbitrage
Facultative
Excess
Treaty
Treaty
4 essential elements of a contract
1. Agreement - offer and acceptance
2. Consideration
3. Competent parties
4. Legal purpose
The two parties in an insurance contract
The insured and the insurer
Offer and Acceptance is sometimes referred to as:
The agreement
If an applicant applies without an initial premium he or she is making:
An invitation
For a contract to be enforceable, the contract must have:
Legal Purpose
Both insurance and gambling contracts are typically considered:
Aleatory contracts
Most insurance (except life insurance) is considered to be a:
Personal contract
For a life or health insurance contract, insurable interest is only required:
At the time of the application.
Stranger-Originated Life Insurance (STOLI)
Life insurance arrangements where investors persuade individuals (typically seniors) to take out new life insurance, naming the investors as beneficiaries.
Concepts related to good faith:
Warranties, representations, and concealment
The legal principal of estoppel involves:
A broken promise.
An agent has the __________ authority to solicit applications for insurance on behalf of the company
Expressed
The significance of authority:
Ties the company to the acts and deeds of its agents
Which of the following consists of an offer, acceptance, and consideration?
warranty
estoppel
contract
representation
Contract
A life insurance arrangement which circumvents insurable interest statues is called:
a contract of adhesion
an indemnity contract
key person insurance
investor-originated life insurance
Investor-originated life insurance
In regards to representations or warranties, which of these statements is TRUE?
-warranties are statements considered to be true to the best of the applicants belief
-if material to the risk, false representations will void a policy
-representations are statements guaranteed to be true in every respect
-if material to the risk, false representations will NOT void a policy
If material to the risk, false representations will void a policy
At what point does an informal agreement become a binding contract?
When consideration is provided by one of the parties to the contract
What is the consideration given by an insurer in the consideration clause of a life policy?
Promise to pay a death benefit to a named beneficiary
If a contract of adhesion contains complicated language, to whom would the interpretation be in favor of?
Insured.
Who makes the legally enforceable promises in a unilateral contract?
Insurance company
When third-party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have
Insurable interest in the proposed insured
The part of a life insurance policy guaranteed to be true is called a(n):
Warranty
What is not considered to be an elements of an insurance contract?
Negotiating
What arrangement allows one to bypass insurable interest laws?
Investor-Originated Life Insurance
Insurance policies are considered aleatory contracts because
Performance is conditioned upon a future occurrence
A policy or adhesion can only be modified by whole?
The insurance company.
A life insurance policy would be considered a wagering contract WITHOUT:
Insurable interest
What is statement that is assured to be true in every respect?
Warranty
A nonprofit incorporated society that does not have capital stock and operates for the sole benefit of its members is known as:
A fraternal benefit society
Who elects the governing body of a mutual insurance company?
Policyholders
Insurance contracts are known as ____ because certain future conditions or acts must occur before any claims can be paid.
Conditional
Stranger Originated Life Insurance (STOLI) has been found to be in violation of which of the following contractual elements?
Legal purpose (insurable interest)
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