Ch 1 Quiz

Insurance is a contract by which one seeks to protect another form

Loss. (Insurance will protect a person, business or entity from loss.)

If an applicant for a life insurance policy is found to be a substandard risk, the insurance company is most likely to...

Charge a higher premium

Another name for a substandard risk classification is...

Rated

Which would qualify as a competent party in an insurance contract?

The applicant has a prior felony conviction

The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective?

As of the application date

Applicants are considered substandard risks because...

Of physical condition, personal or family history of diseases, occupation, or dangerous habits.

What is a definition of a unilateral contract?

One-sided: only one party makes an enforceable promise

What statement is correct about a standard risk classification in the same age group and with similar lifestyles?

Standard risk is representative of the majority of people

In the underwriting process, it was determined that the applicant for life insurance is in poor health and has some dangerous habits. Which is true concerning the policy premium?

The policy premium will likely be higher because the applicant is a substandard risk.

If an insurer issued a policy based on the application that had unanswered questions, which is true?

The policy will be interpreted as if the insurer waived its right to hace an answer on the application

If an applicant for a life insurance policy and person to be insured by the policy are two different people, the underwriter would be concered about...

Whether an insurable interest exists between the individuals

Which documents delivered to the policyowner includes information about premium amounts, cash values, surrender values and death benefits for specific policy years?

A policy summary

Which report will provide the underwriter with the info about an insurance applicant's credit?

Consumer report

Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as...

Contracts of adhesion

What is the purpose of a conditional receipt?

It is intended to provide coverage on a date prior to the policy issue

If an agent fails to obtain an applicant's signature on the application, the agent must...

Return the application to the applicant for a signature

In terms of parties to a contract, which of the following does NOT describe a competent party?

The person must have at least completed secondary education

In insurance, an offer is usually made when...

An applicant submits an application to the insurer

If a policy includes a free-look period at least 10 days, the Buyer's Guide may be delivered to the applicant no later than

With the policy

Representations are written or oral statements made by the applicant that are...

Considered true to the best of the applicant's knowledge

Which is the appropriate action by the insurer (you) if a prospective insured (them) submitted an incomplete application?

Return the application to the applicant (them) for completion

Why should the producer personally deliver the policy when the first premium has already been paid?

To help the insured understand all aspects of the contract

If only one party to an insurance contract has made a legally enforceable promise, what kind of contract is it?

Unilateral