NC State LIFE Insurance Exam With Complete Solutions

NC State LIFE Insurance Exam With Complete Solutions Insurable Interest - answerSomething of value that, if lost, would cause you financial harm. Must exist upfront at time of application. Legitimate financial reason for buying insurance. Impersonation - answerWrong person takes medical examination/test in connection with application for insurance. **Can be contested beyond 2 year incontestable clause** Adhesion - answerIns. 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 - answerPerson restored to original condition he/she enjoyed prior to loss. Does not profit a gain from the insurance. Aleatory - answerIns. 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 - answerIns. 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 - answerIns. 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 - answerMaking 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 - answerSimilar 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 - answerSimilar policies compared without taking the effect of int. into account. (Net Payment Cost Index measured at 10 & 20 yrs) Capital Stock ("Stock") - answerIns. Co. owned by stockholders. Ex) Lincoln Financial Mutual Insurance Company - answerIns. Co. owned by the policyholders. Ex) State Farm, NW Mutual Fraternal Benefit Societies - answerUnder 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) - answerForm of Ins. Co. Ownership Commissioner of Insurance - answerElected 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. Dept of Insurance - answerAgent qualification & licensing & ensuring all laws directly relating to matters of ins. are executed and enforced. Main purpose of ins. reg. = promote public welfare. Domestic Insurance Company - answerIncorporated or organized in NC. Ex) Durham Life Foreign Insurance Co - answerIncorporated or organized under laws of a state other than NC. Ex) MetLife Alien Insurance Company - answerIncorporated or organized under laws of any jurisdiction outside the U.S. Ex) Canada