Completing the Application, Underwriting, and delivering the policy

When is the earliest a policy may go into effect?

When the application is signed and a check is given to the agent

Which of the following types of risk will result in the highest premium?

Substandard Risk

In which of the following examples would a contract between an insurer and prospective insured be legal?

The applicant has a prior felony conviction

The Federal Fair Credit Reporting Act

Regulates consumer reports

When would a misrepresentation on the insurance application be considered fraud?

If it is intentional and material

When Y applied for insurance and paid the initial premium on August 14, he was issued a conditional receipt. During the underwriting process, the insurance company found no reason to reject the risk or classify it other than as standard. Y was killed in an automobile accident on August 22, before the policy was issued. In this case, the insurance company will

Issue the policy anyway and pay the face value to the beneficiary

Which of the following best describes the MIB?

It is a nonprofit organization that maintains underwriting informatoin on applicants for life and health insurance

An insured stated on her application for life insurance that she had never had a heart attack, when in fact she had a series of minor heart attacks last year for which she sought medical attention. Which of the following will explain the reason a death benefit claim is denied?

Material misrepresentation

What is a definition of a unilateral contract?

One-sided: only one party makes an enforceable promise

What describes the specific information about a policy?

Policy summary

Another name for substandard risk classification is

Rated - these policies could be issued with the premium rated-up, resulting in a higher premium

All of the following are duties and responsibilities of producers at the time of application EXCEPT

Change any incorrect statement on the application by personnally initialing next to the corrected statement

The proposed insured makes the premium payment on a new insurance policy. If the insured should die, the insurer will pay the death benefit to the beneficiary if the policy is approved. This is an example of what kid of contract?

Conditional

What is the purpose of the buyers guide?

To allow the consumer to compare the costs of different policies

Which of the following best details the underwriting process for life insurance?

Slection, classification and rating of risks

If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reportign agent have to comply?

5 days

Which of the following would be considered a nonmedical insurance application?

An application on which the medical information is completed by the applicant and the agent only

An insurer receives a report regarding a potential insured that includes the insured's financial status, hobbies, and habits. What type of report is that?

Inspection report

A life insurance policy has a legal purpose if both of which of the following elements exist?

Insurable interest and consent

Upon policy delivery, the producer may be required to obtain any of the following except

signed waiver of premium (may require to get a statement of good health from the applicant at the time of policy delivery. Waiver of premium is a rider that can be added to a life insurance policy and not something to be obtained from the applicant.

If a policy includes a free-look period of at least 10 days, the Buyers Guide may be delived to the applicant

with the policy

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

Loss

According to the Fair Creidt Reporting Act, all of the following would be considered negative information about a consumer EXCEPT

Disputes regarding consumer information

Which of the following statements 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

Which of the following reports will provide the underwriter the information about an insurance applicant's credit?

Consumer Report - include written and/or oral info regarding a consumers credit, character, reputation, or habits collected by a reporting agency from employment records, credit reports, and other public sources.

Abn applicant is denied insurance because of information found on a consumer report. Which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company?

Fair Credit Reporting Act

Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report

Must be informed of the source of the report.

Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?

Warranty

An agent tries to sell insurance over the phone to an applicant who appears to be confused, but is eventually able to give enough information for the application to be completed. After the policy was issued the agent talked to the insured's family, and they explained that the insured was revovering from a surgery and might have been under the influence of medication at the time of application. Which of the following is true?

The policy may be voided if it can be proven that the applicant was not capable of making a buying decision at the time of application

Who makes up the Medical Infomration Bureau?

Insurers

Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT

Conditions - are part of the policy structure. Consideration is an essential part of a contract.

In forming an insurance contract, when does acceptance usually occur?

When an insurer's underwriter approves coverage

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

An insurer wants to begin underwriting procedures for an applicant. What source will it consilt for the majority of its underwriting information?

Application

Which of the following statements regarding HIV testing for insurance purposes is NOT true

Insurers are barred from requesting HIV testing - It is common for insurers to require HIV resting when an applicant seeks a policy with a large face amount. The insurer must abide by a variety of rules created by its respective state.