ExamFX exam

Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. What contract characteristic does this describe?

Adhesion

In insurance, an offer is usually made when

An applicant submits an application to the insurer.

Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in le decision-making process?

Buyer's Guide

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

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

What is the purpose of a conditional receipt?

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

All of the following are requirements for life insurance illustrations EXCEPT

They must be part of the contract

What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act?

$2,500

When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following?

Consideration

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated?

Consideration - on part of the insured is the payment of premiums and the health representations made in the application. Consideration on the part of the insurer is the promise to pay in the event of loss.

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

Considered true to the best of the applicant's knowledge.

Which of the following includes information regarding a person's credit, character, reputation, and habits?

Consumer report - include written and/or oral information regarding a consumer's credit, character, reputation, and habits collected by a reporting agency from employment records, credit reports, and other public sources.

Which of the following is NOT an essential element of an insurance contract?

Counteroffer

According to the fair credit Reporting act, all of the following would be considered negative info about a consumer execept?

Disputes regarding consumer report information.

All of the following information about the applicant is identified in the General Information section of a life insurance application

Education

Which of the following best describes the aleatory nature of an insurance contract?

Exchange of unequal values

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

If it is intentional and material

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

Insurable interest and consent

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 wil

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

What describes the specific information about a policy

Policy Summary

Upon policy delivery, the Producer may be required to Obtain and of the following except?

Signed waiver of Premium

Question 8 of 15 What is the purpose of the buyer's guide?

To allow the consumer to compare the costs of different policies

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

When an insurer's underwriter approves coverage

An insured pays a $100 premium every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered I What characteristic of an insurance contract does this describe?

Aleatory contract - unequal amounts are exchanged between payments and benefits. In this instance, the insured receives a large benefit for a small price.

Which of the following is the basic source of information used by the company in the risk selection process?

Application

When must insurable interest exist in a life insurance policy?

At the time of application

An 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

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

Return the application to the applicant for a signature

Question 8 of 15 Which of the following would qualify as a competent party in an insurance contract?

The applicant has a prior felony conviction.

Which of the following is NOT the consideration in a policy?

The application given to a prospective insured

An applicant gives an app fon 25,000 life Insurance policy, Pays the initial premiun, and receives a conditional receipt. If the applicant dies the following day, which is true?

The beneficary will receive the full death beneft if it is determined that the applicent qualifed for policy

An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will coverage begin?

When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health

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 information about the applicant is NOT included in the General Information section of the application for insurance?

Medical background

What is the definition of unilateral contract?

One-sided: Only one party makes an enforceable promise

A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will

Pay the policy proceeds only if it would have issued the policy.

Which of the following individuals must have insurable interest in the insured?

Policyowner

Which of the following will be included in a policy summary?

Premium amounts and surrender values

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

Substandard risk- indicates that an individual represents an under-average insurance risk because of physical condition, personal or family history of disease, occupation, habits or hobbies. This rating incurs the highest premium if policy is

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

Whether an insurable interest exists between the individuals.