Texas Life and Health Insurance Exam (Answered) Verified Solution

Texas Life and Health Insurance Exam (Answered) Verified Solution At what point must a life insurance applicant be informed of their rights that fall under the Fair Credit Reporting Act? Upon completion of the application Who elects the governing body of a mutual insurance company? policyholders An insurance applicant MUST be informed of an investigation regarding his/her reputation and character according to the Fair Credit Reporting Act What type of reinsurance contract involves two companies automatically sharing their risk exposure? Treaty 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 reserves Which of the following requires insurers to disclose when an applicant's consumer or credit history is being investigated 1970 - Fair Credit Reporting Act What is the consideration given by an insurer in the Consideration clause of a life policy? Promise to pay a death benefit 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 Statements made on an insurance application that are believed to be true to the best of the applicant's knowledge are called representations The part of a life insurance policy guaranteed to be true is called a(n) warranty Which of these is NOT a type of agent authority? Express Implied Principal Apparent Principal The Consideration clause of an insurance contract includes the schedule and amount of premium payments E and F are business partners. Each takes out a $500,000 life insurance policy on the other, naming himself as primary beneficiary. E and F eventually terminate their business, and four months later E dies. Although E was married with three children at the time of death, the primary beneficiary is still F. However, an insurable interest no longer exists. Where will the proceeds from E's life insurance policy be directed to? In this situation, the proceeds from E's life insurance policy will go to F. Which of the following terms defines the legally enforceable promise in an insurance contract by the insurer? Unilateral When must insurable interest exist for a life insurance contract to be valid? Inception of the contract Insurance contracts are known as ____ because certain future conditions or acts must occur before any claims can be paid. conditional Which of these require an offer, acceptance, and consideration? Contract Which of these arrangements allows one to bypass insurable interest laws? Investor-Originated Life Insurance Investor-originated life insurance (or IOLI), sometimes called stranger-originated life insurance (or STOLI) is used to circumvent state insurable interest statutes. This is done when an investor (or stranger) persuades an individual to take out life insurance specifically for the purpose of selling the policy to the investor. The investor compensates the insured and makes the premiums, then collects the death benefit when the insured dies. Which of these is NOT considered to be an element of an insurance contract? the offer acceptance negotiating consideration negotiating An agent is an individual that represents whom? Insurer Insurable interest must exist at what time? at the time of application Which policy requires an agent to register with the National Association of Securities Dealers (NASD) before selling? Variable Life Which of the following actions require a policy owner to provide proof of insurability in an Adjustable Life policy? increase face amount When a policy owner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply? Conversion provision What type of life insurance are credit policies issued as? Term How long does the coverage normally remain on a limited-pay life policy? age 100