Completing the Application, Underwriting, Delivering Policies, Contract Law
Under Texas Insurance Code Chapter 1111A, why are Stranger-Originated Life Insurance (STOLI) transactions illegal?
Answer and explanation
Answer: A. TIC § 1111A.017 bans STOLI as illegal wagering contracts lacking genuine insurable interest at inception.Source: Texas Insurance Code Chapter 1111A — § 1111A.017, STOLI Prohibition
More completing the application, underwriting, delivering policies, contract law questions
- 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?
- 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?
- An applicant plans to surrender an existing whole life policy after the new policy is issued. How should the replacement question be answered?
- An applicant submits an application and initial premium for a preferred life insurance policy, but the insurer issues a standard-rated policy with a higher premium. In contract law, how is the issuance of this altered policy treated?
- An applicant submits an application with the initial premium, making an offer to buy coverage. The insurer issues the policy exactly as applied for. Which contract formation element is most directly demonstrated by the insurer's issuance of the policy?
- An applicant submits an application without premium. The policy is issued as applied for. Before delivery and premium collection, the applicant suffers a severe heart attack. What must the producer do at delivery?
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