LOMA 281 FINAL STUDY GUIDE QUESTIONS
AND CORRECT ANSWERS COMPLETE
PREPARATION PACK
●● 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
●● Unilateral Contract
Answer: contract in which only one party makes a legally enforceable
promise when entering into the contract
●● Bilateral Contract
, Answer: Both parties make legally enforceable promises
●● Commutative contract
Answer: parties agree to exchange specified items or services that are
equal in value
●● Aleatory contract
Answer: one party exchanges something of value for the other party's
conditional promise
●● Bargaining Contract
Answer: both parties set the terms and conditions
●● Contracts of Adhesion
Answer: one party sets the contract terms that the other party must
accept or reject outright
●● Voidable contract
Answer: contract under which one party has the right to avoid their
obligations under the contract and the other party is bound by the terms
of the contract
●● void contract
AND CORRECT ANSWERS COMPLETE
PREPARATION PACK
●● 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
●● Unilateral Contract
Answer: contract in which only one party makes a legally enforceable
promise when entering into the contract
●● Bilateral Contract
, Answer: Both parties make legally enforceable promises
●● Commutative contract
Answer: parties agree to exchange specified items or services that are
equal in value
●● Aleatory contract
Answer: one party exchanges something of value for the other party's
conditional promise
●● Bargaining Contract
Answer: both parties set the terms and conditions
●● Contracts of Adhesion
Answer: one party sets the contract terms that the other party must
accept or reject outright
●● Voidable contract
Answer: contract under which one party has the right to avoid their
obligations under the contract and the other party is bound by the terms
of the contract
●● void contract
