NC LIFE Insurance State Exam Study Guide with Complete Solutions

NC LIFE Insurance State Exam Study Guide with Complete Solutions CREDIT LIFE - Correct Answer a special type of coverage written to the life of the debtor and pay off the balance of a loan in the event of the death of the debtor. BUY-SELL AGREEMENTS - Correct Answer a legal contract that determines what will be done with a business in the event that an owner dies or becomes disabled. Otherwise known as a business continuation agreement INSURABLE INTEREST - Correct Answer to purchase insurance the policy owner must face the possibility of losing money or something of value in the event of loss, insurable interest must exist between the policy owner and the insured at the time of application CONCEALMENT - Correct Answer the legal term for the intentional withholding of information of a material fact that is crucial in making a decision MISREPRESENTATION - Correct Answer statement that if discovered would alter the underwriting decision of the insurance company IMPERSONATION - Correct Answer Otherwise known as false pretense, refers to the act of assuming the name and/or identity of another person for the purpose of committing a fraud UNILATERAL - Correct Answer only one of the parties to the contract is legally bound to do anything. The insured makes no legally binding promises however an insurer is legally bound to pay losses covered by a policy in force ADHESION - Correct Answer a contract of adhesion is prepared by one of the parties (insurer) and accepted or rejected by the other party (insured). Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. Insurance contract are offered on a take it or leave it basis by an insurer INDEMNITY - Correct Answer sometimes known as reimbursement, a provision in an insurance policy that states that in the event of loss, an insured or beneficiary is permitted to collect only to the extent of the financial loss, and is not allowed to gain financially because of the existence of an insurance contract. The purpose of an insurance contract is to restore, but not let an insured or a beneficiary profit from the loss