NC State LIFE Insurance Exam Questions and Answers Already Graded A
Insurable Interest -✔✔ Something of value that, if lost, would cause you financial harm. Must exist upfront at time of application. Legitimate financial reason for buying insurance.
Impersonation -✔✔ Wrong person takes medical examination/test in connection with application for insurance. **Can be contested beyond 2 year incontestable clause**
Adhesion -✔✔ Ins. Co. designs original contract. Insured has little or no control of content, no room for bargaining, no negotiations. Insured must take it or leave it.
Indemnity -✔✔ Person restored to original condition he/she enjoyed prior to loss. Does not profit a gain from the insurance.
Aleatory -✔✔ Ins. contract is "out of balance". Insured or bene might receive much more than he she pays into the policy or may pay premiums for a long time and yet have no loss.
Conditional -✔✔ Ins. contract is conditional. Both parties must meet conditions. Even when a loss occurs. Ex) Life Ins. policy only pays on condition that proof of death is provided.
Reinsurance -✔✔ Ins. between ins. co's. Ins. co's go to each other for help. Ex) A given risk is not acceptable to an ins. co. due to adverse medical/underwriting considerations or large amt of ins. involved is over co's retention limit
Misrepresentation/Concealment -✔✔ Making misleading statements. Intentionally misrepresenting benefits, terms of policy. Concealing known material facts. Ex) Implying ins.policy equates shares of stock, implying dividends are guaranteed, overstating future values
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Interested Adjusted Cost Comparisons -✔✔ Similar policies are compared & int. is taken into account. Cost determined by considering int. that might have been earned on premiums had they been invested. (Surrender Cost Index measured at 10 & 20 years)
Traditional Net Cost Comparisons -✔✔ Similar policies compared without taking the effect of int. into account. (Net Payment Cost Index measured at 10 & 20 yrs)
Capital Stock ("Stock") -✔✔ Ins. Co. owned by stockholders. Ex) Lincoln Financial
Mutual Insurance Company -✔✔ Ins. Co. owned by the policyholders. Ex) State Farm, NW Mutual
Fraternal Benefit Societies -✔✔ Under jurisdiction of Dept. of Ins.-nonprofit org.-a society, voluntary assoc. or corp.-cannot issue capital stock -org. solely for mutual benefit of members & their families -must have lodge system w/ ritualistic form of work -do not issue any prop/liability pol. (No homeowners/auto ins) -agents who sell to captive audience must be licensed by NCDOI Ex) International Order if the Forester, Woodland of the World
Health Maintenance Organization (HMO) -✔✔ Form of Ins. Co. Ownership
Commissioner of Insurance -✔✔ Elected by the ppl for period of 4 yrs. Oversees state's dept. of ins. Approves rates, but does not set them. Authority to give notice of hearing regarding violation, notice must specify time & place of hearing & take place no less than 10 days after notice served.
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