Completing the Application, Underwriting, Delivering Policies, Contract Law
An applicant is offered free coverage and a cash payment by investors who will own the policy after two years. What should the producer conclude?
Answer and explanation
Answer: A. STOLI is a plan formed before issue to procure a policy for investors with no insurable interest. The pre-arranged transfer, not the timing, is what makes it unlawful, and the producer must not take part.Source: NAIC Life Insurance Buyer's Guide — Insurable interest and stranger-originated life insurance
More completing the application, underwriting, delivering policies, contract law questions
- An agent observes unusual funding behavior while selling a covered life product. What is the agent's proper AML role?
- An applicant applies without paying any premium. The insurer issues the policy exactly as requested. When is the contract formed?
- An applicant asks whether every answer on a life application is an absolute guarantee of literal accuracy. Which response is correct?
- An applicant attempts to purchase a single-premium $500,000 life policy using multiple cashier's checks under $10,000 from different banks. What action is the insurer required to take under AML rules?
- An applicant completes an application and pays the initial premium with it. In contract terms, what has the applicant done?
- An applicant gives an insurer a Social Security number and income information to obtain personal life coverage. How does the GLBA Privacy Rule generally classify that information?
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