What are speculative risks? - ANSWER Risks that involve three outcomes: loss, gain, or no change
What are pure risks? - ANSWER Risks that involve no possibility of gain
What risks are insurable? - ANSWER Only pure risks
Speculative risks involve the possibility of gain so they cannot be in...
LOMA 281 Questions &
Answers 100% Correct!!
What are speculative risks? - ANSWER Risks that involve three outcomes: loss, gain, or no change
What are pure risks? - ANSWER Risks that involve no possibility of gain
What risks are insurable? - ANSWER Only pure risks
Speculative risks involve the possibility of gain so they cannot be insured
Is a life insurance policy a commutative or aleatory contract? - ANSWER Aleatory
Are life insurance contracts bargaining contracts? - ANSWER No, they are contracts of adhesion. The
insurance company sets the terms and the applicant can either accept or reject
Are insurance contracts formal or informal? - ANSWER Informal
What are the requirements of a valid contract? - ANSWER Mutual assent
Legally adequate consideration
Lawful purpose
Contractual capacity
What is a retention limit? - ANSWER The maximum amount of risk the insurer is willing to carry at its
own risk
What is a commutative contract? - ANSWER The parties agree to exchange specified items or services
that are equal in value
, What is an aleatory contract? - ANSWER One party exchanges something of value for the other
party's conditional promise
Which relatives automatically satisfy the requirement of insurable interest? - ANSWER Spouses,
children, parents, siblings, grandparents, and grandchildren
What is ROP insurance? - ANSWER A form of term life insurance that provides a 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.
What are the two main elements of cash value life insurance that term life does not have? - ANSWER
Lifetime coverage
A savings element
Can a cash value policy with outstanding loans be surrendered? - ANSWER Yes, the surrender value
will just be reduced by the amount of any outstanding policy loans
What is a modified-premium whole life insurance policy? - ANSWER A whole life insurance policy for
which the annual premium amount increases after a specified initial period
What is universal life insurance? - ANSWER A form of cash value life insurance that is characterized
by its flexible premiums, its flexible face amount and death benefit amount, and its separation of the
three primary policy elements.
What is variable universal life insurance? - ANSWER Cash value life insurance that combines the
premium and death benefit flexibility of universal life insurance with the investment flexibility and
risk of variable life insurance. Also called flexible-premium variable life insurance.
Are annuities life insurance products according to U.S. regulations? - ANSWER Yes
What does SPIA stand for? - ANSWER Single Premium Immediate Annuity
What is the time span between each annuity payment? - ANSWER Annuity period
Ex: 1 month or 1 year
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