USAA LICENSING EXAMS EXAM PREP 2026
PRACTICE SOLUTION STUDY GUIDE
◉ Impersonation. Answer: Wrong person takes medical
examination/test in connection with application for insurance.
**Can be contested beyond 2 year incontestable clause**
◉ Adhesion. Answer: Ins. Co. designs original contract. Insured has
little or no control of content, no room for bargaining, no
negotiations. Insured must take it or leave it.
◉ Indemnity. Answer: Person restored to original condition he/she
enjoyed prior to loss. Does not profit a gain from the insurance.
◉ Aleatory. Answer: Ins. contract is "out of balance". Insured or bene
might receive much more than he she pays into the policy or may
pay premiums for a long time and yet have no loss.
◉ Conditional. Answer: Ins. contract is conditional. Both parties
must meet conditions. Even when a loss occurs. Ex) Life Ins. policy
only pays on condition that proof of death is provided.
◉ Reinsurance. Answer: Ins. between ins. co's. Ins. co's go to each
other for help. Ex) A given risk is not acceptable to an ins. co. due to
,adverse medical/underwriting considerations or large amt of ins.
involved is over co's retention limit
◉ Misrepresentation/Concealment. Answer: Making misleading
statements. Intentionally misrepresenting benefits, terms of policy.
Concealing known material facts. Ex) Implying ins. policy equates
shares of stock, implying dividends are guaranteed, overstating
future values
◉ Interested Adjusted Cost Comparisons. Answer: Similar policies
are compared & int. is taken into account. Cost determined by
considering int. that might have been earned on premiums had they
been invested. (Surrender Cost Index measured at 10 & 20 years)
◉ Traditional Net Cost Comparisons. Answer: Similar policies
compared without taking the effect of int. into account. (Net
Payment Cost Index measured at 10 & 20 yrs)
◉ Capital Stock ("Stock"). Answer: Ins. Co. owned by stockholders.
Ex) Lincoln Financial
◉ Mutual Insurance Company. Answer: Ins. Co. owned by the
policyholders. Ex) State Farm, NW Mutual
, ◉ Fraternal Benefit Societies. Answer: Under jurisdiction of Dept. of
Ins.
-nonprofit org.
-a society, voluntary assoc. or corp.
-cannot issue capital stock
-org. solely for mutual benefit of members & their families
-must have lodge system w/ ritualistic form of work
-do not issue any prop/liability pol. (No homeowners/auto ins)
-agents who sell to captive audience must be licensed by NCDOI
Ex) International Order if the Forester, Woodland of the World
◉ Health Maintenance Organization (HMO). Answer: Form of Ins. Co.
Ownership
◉ Commissioner of Insurance. Answer: Elected by the ppl for period
of 4 yrs. Oversees state's dept. of ins. Approves rates, but does not
set them. Authority to give notice of hearing regarding violation,
notice must specify time & place of hearing & take place no less than
10 days after notice served.
Keep on file list of rates & explanations of coverages. Examine each
annual statement, reports all violations to attorney general. May
petition court for restraining order if public is in danger. If unable to
fulfill term = governor appoints someone else.
PRACTICE SOLUTION STUDY GUIDE
◉ Impersonation. Answer: Wrong person takes medical
examination/test in connection with application for insurance.
**Can be contested beyond 2 year incontestable clause**
◉ Adhesion. Answer: Ins. Co. designs original contract. Insured has
little or no control of content, no room for bargaining, no
negotiations. Insured must take it or leave it.
◉ Indemnity. Answer: Person restored to original condition he/she
enjoyed prior to loss. Does not profit a gain from the insurance.
◉ Aleatory. Answer: Ins. contract is "out of balance". Insured or bene
might receive much more than he she pays into the policy or may
pay premiums for a long time and yet have no loss.
◉ Conditional. Answer: Ins. contract is conditional. Both parties
must meet conditions. Even when a loss occurs. Ex) Life Ins. policy
only pays on condition that proof of death is provided.
◉ Reinsurance. Answer: Ins. between ins. co's. Ins. co's go to each
other for help. Ex) A given risk is not acceptable to an ins. co. due to
,adverse medical/underwriting considerations or large amt of ins.
involved is over co's retention limit
◉ Misrepresentation/Concealment. Answer: Making misleading
statements. Intentionally misrepresenting benefits, terms of policy.
Concealing known material facts. Ex) Implying ins. policy equates
shares of stock, implying dividends are guaranteed, overstating
future values
◉ Interested Adjusted Cost Comparisons. Answer: Similar policies
are compared & int. is taken into account. Cost determined by
considering int. that might have been earned on premiums had they
been invested. (Surrender Cost Index measured at 10 & 20 years)
◉ Traditional Net Cost Comparisons. Answer: Similar policies
compared without taking the effect of int. into account. (Net
Payment Cost Index measured at 10 & 20 yrs)
◉ Capital Stock ("Stock"). Answer: Ins. Co. owned by stockholders.
Ex) Lincoln Financial
◉ Mutual Insurance Company. Answer: Ins. Co. owned by the
policyholders. Ex) State Farm, NW Mutual
, ◉ Fraternal Benefit Societies. Answer: Under jurisdiction of Dept. of
Ins.
-nonprofit org.
-a society, voluntary assoc. or corp.
-cannot issue capital stock
-org. solely for mutual benefit of members & their families
-must have lodge system w/ ritualistic form of work
-do not issue any prop/liability pol. (No homeowners/auto ins)
-agents who sell to captive audience must be licensed by NCDOI
Ex) International Order if the Forester, Woodland of the World
◉ Health Maintenance Organization (HMO). Answer: Form of Ins. Co.
Ownership
◉ Commissioner of Insurance. Answer: Elected by the ppl for period
of 4 yrs. Oversees state's dept. of ins. Approves rates, but does not
set them. Authority to give notice of hearing regarding violation,
notice must specify time & place of hearing & take place no less than
10 days after notice served.
Keep on file list of rates & explanations of coverages. Examine each
annual statement, reports all violations to attorney general. May
petition court for restraining order if public is in danger. If unable to
fulfill term = governor appoints someone else.
