Podcast
Questions and Answers
According to the passage, what is typically included in an agency agreement between an insurance company and a financial professional?
According to the passage, what is typically included in an agency agreement between an insurance company and a financial professional?
- A description of the financial professional's authority to represent the company and perform certain tasks.
- A statement that the financial professional is either an employee or independent contractor.
- Limitations on the financial professional's authority and performance requirements.
- All of the above. (correct)
Which of the following is NOT mentioned as a limitation on the financial professional's authority in an agency agreement?
Which of the following is NOT mentioned as a limitation on the financial professional's authority in an agency agreement?
- The financial professional cannot alter contracts.
- The financial professional cannot determine the scope of their own authority. (correct)
- The financial professional cannot change premium rates.
- The financial professional cannot incur debts on behalf of the company.
What type of compensation is typically included in an agency agreement between an insurance company and a financial professional?
What type of compensation is typically included in an agency agreement between an insurance company and a financial professional?
- Salary
- Commission, service fees, and bonuses (correct)
- Hourly wage
- Profit-sharing
According to the passage, what is one type of termination provision that may be included in an agency agreement?
According to the passage, what is one type of termination provision that may be included in an agency agreement?
What is the primary reason an insurance company would include limitations on a financial professional's authority in an agency agreement?
What is the primary reason an insurance company would include limitations on a financial professional's authority in an agency agreement?
What is the main purpose of an agency agreement between an insurance company and a financial professional?
What is the main purpose of an agency agreement between an insurance company and a financial professional?
Who must demonstrate a financial interest in the continued life of the insured to satisfy insurable interest requirements?
Who must demonstrate a financial interest in the continued life of the insured to satisfy insurable interest requirements?
In the context of insurable interest, who has an insurable interest in the lives of its key employees?
In the context of insurable interest, who has an insurable interest in the lives of its key employees?
In what scenario would someone who is not a close relative of an insured have a financial interest in the insured's life and qualify for an insurable interest?
In what scenario would someone who is not a close relative of an insured have a financial interest in the insured's life and qualify for an insurable interest?
Which of the following is NOT considered to create an insurable interest?
Which of the following is NOT considered to create an insurable interest?
Who usually names themselves as the beneficiary when purchasing insurance on another person's life?
Who usually names themselves as the beneficiary when purchasing insurance on another person's life?
Which relationship would grant a creditor an insurable interest in someone's life according to the text?
Which relationship would grant a creditor an insurable interest in someone's life according to the text?
What is the main difference between binding premium receipts and conditional premium receipts?
What is the main difference between binding premium receipts and conditional premium receipts?
Under a binding receipt, when does the insurer provide insurance coverage?
Under a binding receipt, when does the insurer provide insurance coverage?
What type of condition is the coverage provided by a binding premium receipt subject to?
What type of condition is the coverage provided by a binding premium receipt subject to?
When does temporary coverage under a binding premium receipt typically end?
When does temporary coverage under a binding premium receipt typically end?
Why are the terms of binding premium receipts considered more advantageous to applicants?
Why are the terms of binding premium receipts considered more advantageous to applicants?
How does the ability to cancel temporary insurance coverage differ between conditional and binding premium receipts?
How does the ability to cancel temporary insurance coverage differ between conditional and binding premium receipts?
Who were the primary beneficiaries of Daphne Christou's $300,000 insurance policy?
Who were the primary beneficiaries of Daphne Christou's $300,000 insurance policy?
What portion of the insurance policy proceeds would Adrian receive?
What portion of the insurance policy proceeds would Adrian receive?
Who were the secondary beneficiaries of Daphne Christou's insurance policy?
Who were the secondary beneficiaries of Daphne Christou's insurance policy?
Why did Julius Devine decide to change the beneficiary on his life insurance policy?
Why did Julius Devine decide to change the beneficiary on his life insurance policy?
Was Carina's consent required for Julius Devine to change the beneficiary on his life insurance policy?
Was Carina's consent required for Julius Devine to change the beneficiary on his life insurance policy?
When an insurer issues a life insurance policy, what must the policyowner do to keep it in force?
When an insurer issues a life insurance policy, what must the policyowner do to keep it in force?
What is generally true about insurance agents regarding acceptance of renewal premium payments?
What is generally true about insurance agents regarding acceptance of renewal premium payments?
When can an insurer be bound by an agent's actions outside their scope of authority?
When can an insurer be bound by an agent's actions outside their scope of authority?
What establishes an agent's apparent authority to accept renewal premiums?
What establishes an agent's apparent authority to accept renewal premiums?
If an agent has apparent authority, what is the status of a renewal premium payment made to them?
If an agent has apparent authority, what is the status of a renewal premium payment made to them?
How is the scope of an agent's authority determined?
How is the scope of an agent's authority determined?
What knowledge is considered the insurer's knowledge when an agent acts on its behalf?
What knowledge is considered the insurer's knowledge when an agent acts on its behalf?
Study Notes
Agency Agreements
- Agency agreements outline the terms of the relationship between the insurance company and the financial professional, including the financial professional's authority, performance requirements, compensation, and termination provisions.
- The agreement specifies whether the financial professional is an independent contractor or an employee of the insurance company.
- The financial professional's authority is limited, and they cannot change premium rates, alter contracts, or incur debts on behalf of the company.
Insurable Interest
- State laws do not presume an insurable interest in the case of distant relatives, such as cousins, aunts, and uncles, and stepchildren.
- An individual must demonstrate a financial interest in the continued life of the insured to satisfy the insurable interest requirements.
- Financial dependence or business relationships can create an insurable interest, such as:
- Partners having an insurable interest in each other's lives
- An employer having an insurable interest in the lives of key employees
- A creditor having an insurable interest in the lives of debtors
Binding Premium Receipts
- Binding premium receipts provide temporary insurance coverage without requiring specified conditions to be met.
- The terms of binding premium receipts are more advantageous to applicants and less advantageous to insurers.
- Temporary coverage remains effective until the earliest of:
- The insurer issuing the applicant a policy
- The insurer declining the application
Policy Ownership and Premium Payments
- A policyowner must pay premiums as they come due to keep a policy in force.
- Agents generally do not have actual authority to accept renewal premium payments.
- An insurer may confer apparent authority on an agent to accept future renewal premium payments if the insurer has established a pattern of accepting payments from the agent.
- Payment of a renewal premium to an agent with apparent authority is considered payment to the insurer.
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Description
Test your knowledge on the concept of insurable interest in insurance law, including the requirements for demonstrating financial interest in the insured's continued life. Explore scenarios involving close relatives, distant relatives, and individuals with business relationships.
