Podcast
Questions and Answers
What year was the McCarren-Ferguson Act enacted?
What year was the McCarren-Ferguson Act enacted?
1945
Which of the following requires insurers to disclose when an applicant's consumer or credit history is being investigated?
Which of the following requires insurers to disclose when an applicant's consumer or credit history is being investigated?
A nonprofit incorporated society that operates for the sole benefit of its members is known as?
A nonprofit incorporated society that operates for the sole benefit of its members is known as?
fraternal benefit society
What type of reinsurance contract involves two companies automatically sharing their risk exposure?
What type of reinsurance contract involves two companies automatically sharing their risk exposure?
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Who elects the governing body of a mutual insurance company?
Who elects the governing body of a mutual insurance company?
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At what point must a life insurance applicant be informed of their rights that fall under the Fair Credit Reporting Act?
At what point must a life insurance applicant be informed of their rights that fall under the Fair Credit Reporting Act?
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What is the name of the law that requires insurers to disclose information gathering practices?
What is the name of the law that requires insurers to disclose information gathering practices?
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A group-owned insurance company that is formed to assume and spread the liability risks of its members is known as a?
A group-owned insurance company that is formed to assume and spread the liability risks of its members is known as a?
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Which of these describes a participating life insurance policy?
Which of these describes a participating life insurance policy?
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An insurance applicant MUST be informed of an investigation regarding his/her reputation and character according to the?
An insurance applicant MUST be informed of an investigation regarding his/her reputation and character according to the?
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The stated amount or percent of liquid assets that an insurer must have on hand is called?
The stated amount or percent of liquid assets that an insurer must have on hand is called?
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The exchange of unequal values in an insurance contract reflects which feature?
The exchange of unequal values in an insurance contract reflects which feature?
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In an insurance contract, what kind of contract is it when the insurer is the only party who makes a legally enforceable promise?
In an insurance contract, what kind of contract is it when the insurer is the only party who makes a legally enforceable promise?
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Insurance contracts are known as ____ because certain future conditions or acts must occur before any claims can be paid.
Insurance contracts are known as ____ because certain future conditions or acts must occur before any claims can be paid.
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Stranger Originated Life Insurance has been found to be in violation of which contractual element?
Stranger Originated Life Insurance has been found to be in violation of which contractual element?
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A policy of adhesion can only be modified by whom?
A policy of adhesion can only be modified by whom?
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At what point does an informal contract begin binding?
At what point does an informal contract begin binding?
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When third-party ownership is involved, applicants who are also the stated primary beneficiary are required to have?
When third-party ownership is involved, applicants who are also the stated primary beneficiary are required to have?
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A life insurance arrangement that circumvents insurable interest statutes is called?
A life insurance arrangement that circumvents insurable interest statutes is called?
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Statements made on an insurance application that are believed to be true to the best of an applicant's knowledge are called?
Statements made on an insurance application that are believed to be true to the best of an applicant's knowledge are called?
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Which of these require an offer, acceptance, and consideration?
Which of these require an offer, acceptance, and consideration?
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The part of a life insurance policy guaranteed to be true is called a?
The part of a life insurance policy guaranteed to be true is called a?
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What is the consideration given by an insurer in the consideration clause of a life policy?
What is the consideration given by an insurer in the consideration clause of a life policy?
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All of the following are considered to be typical characteristics describing the nature of an insurance contract except?
All of the following are considered to be typical characteristics describing the nature of an insurance contract except?
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If a contract has complicated language, to whom would the interpretation be in favor of?
If a contract has complicated language, to whom would the interpretation be in favor of?
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Taking receipt of premiums and holding them for the insurance company is an example of?
Taking receipt of premiums and holding them for the insurance company is an example of?
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Study Notes
McCarren-Ferguson Act
- Enacted in 1945, this act provides a framework for the regulation of insurance by states rather than the federal government.
Fair Credit Reporting Act
- Requires insurers to disclose when an applicant's consumer or credit history is being investigated and inform the applicant of their rights during the application process.
- Insurers must disclose information gathering practices and the source of information.
Fraternal Benefit Society
- A nonprofit incorporated society without capital stock, operating solely for the benefit of its members.
Reinsurance Contracts
- A treaty involves two companies automatically sharing risk exposure, enhancing risk management for insurers.
Mutual Insurance Company Governance
- Policyholders elect the governing body, giving them a direct stake in the company's operations.
Rights of Life Insurance Applicants
- Applicants must be informed of their rights under the Fair Credit Reporting Act upon completing their application.
Risk Retention Group
- A group-owned insurance company formed to spread and assume liability risks among its members.
Participating Life Insurance Policy
- Policyowners have the right to receive dividends, sharing in the profits of the insurance company.
Aleatory Insurance Contract Feature
- In scenarios where there is an exchange of unequal values, such as premiums paid versus the death benefit, the contract exhibits aleatory nature.
Unilateral Contracts
- Insurance contracts are unilateral; only the insurer makes enforceable promises to pay benefits.
Conditional Insurance Contracts
- Claims payments depend on the occurrence of specific future conditions or actions, classifying them as conditional contracts.
Legal Purpose in Insurance
- Policies like Stranger Originated Life Insurance have been deemed to fail legal purpose requirements regarding insurable interest.
Policy of Adhesion
- Can only be modified by the insurance company, reflecting a one-sided nature of contract modification.
Informal Contract Binding
- A binding contract begins when one party offers and the other accepts the offer.
Third-Party Ownership and Insurable Interest
- When third-party ownership exists, the applicant named as the primary beneficiary must have insurable interest in the proposed insured.
Investor-Originated Life Insurance
- A life insurance arrangement that violates insurable interest statutes and is viewed unfavorably in legal terms.
Representations in Insurance Applications
- Statements made that are believed to be true to the best of the applicant's knowledge are classified as representations.
Contract Essentials
- A contract requires an offer, acceptance, and consideration, forming the basis of legal agreements.
Warranties in Insurance Policies
- The guaranteed true part of a life insurance policy, which if deemed not literally true, can void the policy.
Consideration in Life Insurance Policies
- An insurer's consideration in the policy's consideration clause is the promise to pay a death benefit to beneficiaries.
Characteristics of Insurance Contracts
- Typical characteristics exclude bilateral nature, emphasizing the unilateral aspect of insurance agreements.
Interpretation of Complicated Contract Language
- In cases of complicated language, the interpretation favors the insured, protecting them from misunderstandings.
Fiduciary Responsibility
- The act of taking receipt of premiums and holding them represents fiduciary responsibility, underscoring the trust placed in insurance agents.
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Description
Test your knowledge on key insurance laws and concepts, including the McCarren-Ferguson Act and the Fair Credit Reporting Act. Explore the roles of fraternal benefit societies and mutual insurance companies, as well as reinsurance contracts and the rights of life insurance applicants. This quiz is essential for understanding the regulatory landscape of insurance.
