Completing the Application, Underwriting, Delivering Policies, Contract Law
An investor offers to fund a new policy only if the applicant agrees at inception to transfer it for settlement. What is the main concern?
Answer and explanation
Answer: B. Texas prohibits issuing, soliciting, marketing, or promoting purchase of a policy for the purpose of settling it. An inception agreement tying financing to later transfer is a strong STOLI/IOLI warning sign and must not be concealed.Source: Texas Legislature — Texas Insurance Code Chapter 1111A — §§ 1111A.002(11), 1111A.013, and 1111A.017(a)(1), (4)
More completing the application, underwriting, delivering policies, contract law questions
- An applicant with average health, normal build, and no hazardous hobbies is classified into which standard underwriting category?
- An applicant with superior health, excellent family history, and non-smoker status is placed in which underwriting risk class, receiving lower premium rates?
- An application stipulates that coverage will not begin until the policy is delivered, accepted, and the first premium is paid. If the policy is delivered but the initial premium remains unpaid, why is the insurer not liable for a claim?
- An insured pays a single monthly premium and dies the next week, and the insurer pays the full face amount. Which contract characteristic does this illustrate?
- An insurer declines an application partly because of a consumer report. Which item belongs in the FCRA adverse-action notice?
- An insurer issues a policy although one health question on the application was left completely blank. What is the usual legal consequence for the insurer?
590 Texas questions like this one.
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