LOMA 281 Correct Questions
And Answers(GRADED A)
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.
Insurable Interest - 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 - ANSWER - mutual assent
- legally adequate consideration
- lawful purpose
- contractual capacity
surrender benefit - ANSWER the amount of the cash value that a policyowner is entitled to receive
upon surrender of the policy
cost of benefits - ANSWER all of the insurer's potential benefit payments multiplied by the expected
probability that each benefit will be payable
simple interest - ANSWER interest on the original principal only
compound interest - ANSWER interest on both the principal and the accrued interest
Term life insurance - ANSWER Life insurance that pays a death benefit if the policyholder dies within
a specific time period (specified in the policy)
Level term life insurance - ANSWER term life insurance that provides a policy benefit that remains
the same over the term of the policy
, Decreasing term insurance - ANSWER provides a policy benefit that decreases in amount over the
term of coverage (ex: mortgage insurance)
Increasing term life insurance - ANSWER increases by some specified amount or percentage at stated
intervals over the policy term
Return of premium - ANSWER provides death benefit if the insured dies during the term of coverage
and promises a return of premiums if the insured does not die during the term of coverage
Renewable term insurance - ANSWER gives policyowner the option to continue the policy's coverage
at the end of the specified term without presenting evidence of insurability
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
And Answers(GRADED A)
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.
Insurable Interest - 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 - ANSWER - mutual assent
- legally adequate consideration
- lawful purpose
- contractual capacity
surrender benefit - ANSWER the amount of the cash value that a policyowner is entitled to receive
upon surrender of the policy
cost of benefits - ANSWER all of the insurer's potential benefit payments multiplied by the expected
probability that each benefit will be payable
simple interest - ANSWER interest on the original principal only
compound interest - ANSWER interest on both the principal and the accrued interest
Term life insurance - ANSWER Life insurance that pays a death benefit if the policyholder dies within
a specific time period (specified in the policy)
Level term life insurance - ANSWER term life insurance that provides a policy benefit that remains
the same over the term of the policy
, Decreasing term insurance - ANSWER provides a policy benefit that decreases in amount over the
term of coverage (ex: mortgage insurance)
Increasing term life insurance - ANSWER increases by some specified amount or percentage at stated
intervals over the policy term
Return of premium - ANSWER provides death benefit if the insured dies during the term of coverage
and promises a return of premiums if the insured does not die during the term of coverage
Renewable term insurance - ANSWER gives policyowner the option to continue the policy's coverage
at the end of the specified term without presenting evidence of insurability
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
