LOMA 281 Exam Questions with Correct Answers

LOMA 281 Exam Questions with Correct Answers waiver of premium for payor benefit - Answer-insurer waives renewal premiums if the policy owner, rather than the insured, dies or becomes totally disabled (must provide evidence of insurability) Contracts of Indemnity - Answer-base benefits on the actual amount of the financial loss that results from a covered event when it occurs, subject to maximum limits (other than life insurance) Valued Contract - Answer-life insurance policies which state the benefit payable at the time of the policy issue Retrocessionaire - Answer-The reinsurer that assumes all or part of the reinsurance risk accepted by another reinsurer Stock Insurer - Answer-- can issue shares of stock - owned by stockholders, who have voting rights in the company - stockholders may receive shares of operating profits known as stock dividends Mutual Insurer - Answer-- owned by policyowners - policyowners have membership rights (voting rights) - policyowners may periodically receive an amount of money known as a policy dividend Fraternal Benefit Society - Answer-- owned by members of fraternal lodge system - provides social and insurance benefits only to fraternal members of their families - legally required to have a representative form of government Solvency Regulation - Answer--assets must be sufficient to offset liabilities -calculation of reserves -premium to surplus ratio -investment types and quality -annual statement must be filed -guaranty funds Market Conduct Regulation - Answer-Regulation of the practices of insurers in regard to four areas of operation: sales practices, underwriting practices, claims practices, and bad-faith actions. McCarran-Ferguson Act - Answer-states that while the federal government has authority to regulate the insurance industry, it would not exercise its right if the insurance industry was regulated effectively and adequately on the state level. Dodd-Frank Act - Answer-Created the Federal Insurance Office (FIO) with authority to monitor the insurance industry The Life and Health Insurance Guaranty Association - Answer-State's association covers the company's benefits up to state-mandated maximums (usually up to $300k) should the insurance company go insolvent