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LOMA 281(questions with 100% correct answers)
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LOMA 281(questions with 100% correct answers)
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LOMA 281waiver of premium for payor benefit - correct 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 - correct 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 - correct answer ✔✔life insurance policies which state the benefit payable at the time
of the policy issue
Retrocessionaire - correct answer ✔✔The reinsurer that assumes all or part of the reinsurance risk
accepted by another reinsurer
Stock Insurer - correct 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 - correct 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 - correct 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 - correct 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 - correct 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 - correct 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 - correct answer ✔✔Created the Federal Insurance Office (FIO) with authority to
monitor the insurance industry
The Life and Health Insurance Guaranty Association - correct 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 - correct answer ✔✔contract in which only one party makes a legally enforceable
promise when entering into the contract
Bilateral Contract - correct answer ✔✔Both parties make legally enforceable promises
Commutative contract - correct answer ✔✔parties agree to exchange specified items or services that are
equal in value
Aleatory contract - correct answer ✔✔one party exchanges something of value for the other party's
conditional promise
Bargaining Contract - correct answer ✔✔both parties set the terms and conditions
, Contracts of Adhesion - correct answer ✔✔one party sets the contract terms that the other party must
accept or reject outright
Voidable contract - correct 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 - correct answer ✔✔contract that does not meet all legal requirements
Mutual Assent - correct answer ✔✔all parties to the contract have an understanding of the terms and
agree to those terms
Insurable Interest - correct answer ✔✔Any financial interest in life or property such that, if the life or
property were lost or harmed, the insured would suffer financially
Requirement for a valid contract - correct answer ✔✔- mutual assent
- legally adequate consideration
- lawful purpose
- contractual capacity
surrender benefit - correct answer ✔✔the amount of the cash value that a policyowner is entitled to
receive upon surrender of the policy
cost of benefits - correct answer ✔✔all of the insurer's potential benefit payments multiplied by the
expected probability that each benefit will be payable
simple interest - correct answer ✔✔interest on the original principal only
compound interest - correct answer ✔✔interest on both the principal and the accrued interest
Term life insurance - correct answer ✔✔Life insurance that pays a death benefit if the policyholder dies
within a specific time period (specified in the policy)
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