State RegulationsNY specificDifficulty 1/5
In an application for a New York life insurance policy, what financing-related question may the insurer ask the proposed owner?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Under N.Y. Ins. Law §7812, insurers — in addition to other questions they may lawfully pose — may inquire in the application for insurance whether the proposed owner intends to pay premiums with the assistance of financing from a lender that will use the policy as collateral to support the financing. The question alerts the insurer at underwriting to premium-finance arrangements that can later ripen into a change of ownership in satisfaction of the loan.
Why the other options are wrong
- A) The authorized inquiry concerns the owner's premium-financing intentions, not settlement history.
- B) Beneficiary consent to future settlements is not an authorized financing question on the application.
- C) The owner's net worth and capacity to self-finance premiums is not the collateral-financing question the statute authorizes.
Memory hook
The authorized application question: will a lender hold this policy as loan collateral?