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Louisiana Life, Health, and Accident Insurance Licensing Exam Questions with Verified Answers
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Louisiana Life, Health, and Accident Insurance Licensing Exam Questions with Verified Answers
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Louisiana Life, Health, and AccidentInsurance Licensing Exam Questions
with Verified Answers
Insurance - Answer-the transfer of Pure risk to the insurance company in consideration
for a premium
must be pure risk and calculable.
Pure Risk - Answer-the chance of loss without any chance of gain; insurable
Speculative Risk - Answer-possibility for gain or loss; not insurable
Risk - Answer-Chance of loss
Exposure - Answer-a condition that could result in loss
hazard - Answer-something that increases the chance of loss
eg. presence of physical hazard increases the chance of a loss occuring
peril - Answer-cause of loss
eg. fire
law of large number - Answer-allows insurers to predict claims more accuratley; applies
to grops of people not individuals. The more people in the group, the more accurate the
predictions are
Reinsurance - Answer-A form of insurance whereby one insurance company (the
reinsurer) in consideration of a premium paid to it, agrees to indemnify another
insurance company (the ceding company) for part or all of its liabilities from insurance
policies it has issued.
stock insurer - Answer-may pay dividends to shareholders (stockholders), thought not
guarenteed
reciprocal insurance company - Answer-managed by an attorney-in-fact; unincorporated
association of individuals who insure each other
government insurance offering - Answer-offers insurance for social needs (eg. flood
insurance, workers compensation), but doesn't offer to prevent fraud
,foreign company - Answer-has their home office in another state
alien company - Answer-a insurer incorporated outside the US
producer liability - Answer-personally liable when violate producer's contract
producer represenation - Answer-represent the insurance company, not the insured
independent producer - Answer-owns their own accounts, and are not insurance
company employees
producer authority - Answer-expressed
implied
apparent
express authority of producer - Answer-authority of producer that is written in his or her
contract
implied authority of producer - Answer-authority not expressly (writtten) granted, but
actual authority producer has to transact normal business activities
Legal Elements of Contract - Answer-Consideration
Offer
Acceptance
Legal Purpose
Legal Capacity
Consideration Clause - Answer-something of value must be exchanged, though it does
not have to be equal; policy can't be voided for unequal consideration
Offer - Answer-specific and definte proposal to enter into a contract
insurance contracts are - Answer-contracts of adhesion ("take it or leave it"), therefore
policy ambiguities always favor the insured; unilateral contracts (only the insurer has a
legal obligation to uphold)
Principle of Indemnity - Answer-the purpose of insurance is to restore the insured to the
same position as before the loss occurred
Principle of Utmost Good Faith - Answer-all parties to an insurance transaction are
honest
Representation - Answer-the truth to the best of one's knowledge
Warranty - Answer-a sworn truth, guaranteed to be true, and if a breach of warranty is
found, it could potentially makes the contract voidable.
, Concealment - Answer-the failure to disclose a material fact
Giving up the right to obtain information requires... - Answer-a waiver
Life Insurance Insurable Interest - Answer-must exist at the time of application, but not
necessarily at the tie of a claim
may be based on economics or family relationship
exists if someone would benefit if another person continues to live
Personal Uses of Life Insurance - Answer-- Provide a benefit to loved ones in case of
the policy owner's death
- Creates an immediate estate
- Estate Conversion
- A life settlement contract
Estate Conversion - Answer-when life insurance is used to pay estate taxes
Life Settlement Contract - Answer-between the insurance policy owner and a third party
Human Life Value Approach (Life Insurance) - Answer-establishes what a family would
lose in income upon the death of the sole or chief income provider
Needs Approach (life insurance) - Answer-approach to life insurance that doesn't
consider future earnings
Business Use of Life Insurance - Answer-- Buy-sell agreements funded by life policies
-
Cross purchase Buy/sell Agreement - Answer-A policy that provides for business
continuation in the event that a business partner dies
Stock Redemption Plan - Answer-agreement whereby a corporate agrees to buy back
the stock of a deceased shareholder
Third Party Policyowner examples - Answer-- Key-person & Partnership Insurance
- Policy Written on the life of a spouse or minor child
Executive Bonus - Answer-the premium paid to the employee as a bonus is deductible
by the business and the amount paid to or for the employee is reportable as taxable
income to the employee;
Life Insurance policy belongs to the employee
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