General Principles Chapter 10

Question 1

Contract Definition

Answer 1

enforceable agreements between 2 or more parties
offger, agreement, acceptance

Question 2

Void contract

Answer 2

was never valid

Question 3

Voidable contract

Answer 3

one party has the option of voiding

i.e. a contract is made with a minor or inebriated person or ill person: incompetent party may void the contract, not the other party

Question 4

Agent

Answer 4

legal representative of insurance company
express, implied, sometimes apparent authority

Question 5

Broker

Answer 5

marketing intermediary, represents policy owner

Question 6

Express Authority

Answer 6

written, explicit direction

Question 7

Implied Authority

Answer 7

public believes individual based on indicators that one has authority

Question 8

Apparent Authority

Answer 8

agent appears to have authority because of past actions

Question 9

Conditional Receipt

Answer 9

provide coverage as long as premium accompanies an acceptable (would be IGO) application

Question 10

Fiduciaries

Answer 10

entity or person holding assets in trust for a bene. charge with responsibly investing for the bene

Question 11

Fiduciary Examples

Answer 11

CFPs, executors, receivers in bankruptcy, trustees, people who adnminister assets to incompetent people, financial planners, physicians

Question 12

Prudent Person Rule

Answer 12

act as a prudent individual, cfps to act like a prudent expert.

seek reasonable income, preserve assets, avoid speculative investments

Question 13

Ch 11 Bankruptcy

Answer 13

for people who do not qualify for 13 bc
they exceed debt limitations
do not have regular sources of income

Question 14

Ch 13 Bankruptcy

Answer 14

reorganization: payments to creditors are reduced, creditors cannot harass them. no relinquishing assets

Question 15

Chapter 7

Answer 15

debtor claims federal or state exemptions

-homstead
-some personal property
- HOH wages (more than 1/2 support)
-some equity in motor vehicle
- pension & retirement plans
- cash value of LI or annuity contract proceeds
- disability, workers comp, unemployment
TE property

Question 16

Debts not Cancellable

Answer 16

student/govt loans
recent income taxes due
child support
alimony

Question 17

Chapter 7 Means Test

Answer 17

monthly net income for 60 months > 10,000: not an option
<$6000: yes option
if between 6-10, can file if net monthly income is <25% of nonpriority unsecured debts
proof of consumer credit councelling
info on ret accts and earnings projections

Question 18

Roth + Traditional IRA Bankruptcy Exemption

Answer 18

$1mm

Question 19

Rollover IRA Bankruptcy Exemption

Answer 19

unlimited unless the income exceeds debtors needs

Question 20

Fair Credit Reporting Act

Answer 20

entitled to 1 free report a year (can request at any time for a nominal fee)
only interested parties may access
if denied credit, they can access their file

Question 21

Consumer Credit Protection Act/Truth In Lending

Answer 21

interest must be reported as annual percentage rate
credit terms must be disclosed
lost or stolen cards: limited liability of 50 per card

Question 22

Education Savings & 529 Plans in Bankruptcy

Answer 22

anything older than 2 years is exempt