Hawaii Life

what are the most common penalties for violations of insurance statues?

A cease and desist order, a fine, and license suspension or revocation

What is policy replacement?

A new policy is issued while an existing policy is terminated or reissued with an reduction in cash value.

What is a black out period for social security benefits?

A period of time during which the surviving spouse does not receive benefits

When risk with higher probability of loss are seeking insurance more often than other risks, this is known as what?

Adverse selection

What are the four elements of an insurance contract?

Agreement (offer and acceptance), consideration, competent parties, and legal purpose.

What type of insurer is formed under the laws of another country?

Alien

insurable interest exist in a life insurance policy?

At the time of application

When must the policy summary for a life insurance policy be delivered to the policy owner?

At the time of policy delivery

What does "liquidity" mean in a life insurance policy?

Availability of cash value

A state-issued document empowering an insurance company to become an admitted insurer is called what?

Certificate of Authority

At what point does coverage begin when an agent issues a conditional receipt for a life insurance policy?

Either on the date of the application or the date of the meical exam (whichever occurs last)

Life insurance may be used to pay state inheritance taxes and federal estate taxes eliminating the need to sell assets from the estate. What is this called?

Estate Conservation

Insurance is used to transfer what to the insurance company?

Financial responsibility for loss

An insurance company is domiciled in California and transacts insurance in Nevada. what is this insurer's classification in Nevada

Foreign

An insurance company that is formed under the laws of another state is known as what type of insurer?

Foreign

What type of insurer is a voluntarily formed organization that provides insurance benefits for members of an affiliated lodge or religious organization with a representative form of government?

Fraternal Insurer

What type of policy is typically issued without proof of insurability from the insured?

Group policy

What type of policy issues certificates of insurance to the insureds

Group policy

Conditions that increase the chance of a loss are known as what?

Hazards

How does the premium mode affect the total premium paid for insurance for the year?

Higher frequency of premium payments will result in higher overall premium

What type of report provides information about the applicant's hobbies, habits, and financial status?

Inspection report

In the agent/insurer relationship, who is considered the principal?

Insurer

When agents act within the scope of their contract, their actions will be assumed to be the acts of whom?

Insurer

What entities make up the medical information bureau?

Insurers

What are the three main instances when insurable interest exists in life insurance?

Insuring your own life, the life of a family member, or the life of a business partners or someone who has a financial obligation to the policyowner

If an insured changes his payment plan from monthly to annually, what happens to the total premium?

It will decrease

Mortality tables are used by insurance companies to predict what?

Life expectancy and the death rates for specific groups of individuals

What type of insurance creates an immediate estate?

Life insurance

What type of insurance would perform the function of cash accumulation?

Life insurance

The reduction, decrease, or disappearance of value of the person or property insured on a policy is known as what?

Loss

insurance is a contract that protects the insured from what?

Loss

What is included in Part 2 of a life insurance application?

Medical information about the prospective insured

All other factors being equal, which premium payment mode will require an overall higher premium: monthly or annual?

Monthly

An applicant conceals relevant health information on the application. the applicant presents what type of hazard?

Moral

A person who does not lock the doors to his or her house shows an indifferent attitude. This person presents what type of hazard?

Morale

What are the three factors that determine the premium for a particular life insurance policy?

Mortality, Interest and expense

An insurance policy paid a nontaxable dividend to the insured one year, and nothing the next. From what type of insurer did the insured purchase the new polict?

Mutual

The type of insurance company organized to return any surplus money to its poilcyholders is known as what?

Mutual company

What document must a producer provide to the insured during policy replacement?

Notice Regarding Replacement

If someone wants to buy a life insurance policy that will provide lifetime protection against premature death, what type of life insurance policy should it be?

Permanent

What type of life insurance offers an applicant a cash value element?

Permanent insurance (usually, whole life)

What are the three types of hazards?

Physical, Moral, Morale

What document describes the specific information about a policy?

Policy summary

What term describes the free a person pays an insurance company to receive coverage?

Premium

What are illustrations in a life insurance policy?

Presentations of nonguaranteed elements of the policy

If an insurer needs to obtain information about the applicant from investigators, what is the insurer required to do?

Provide the applicant a Disclosure Authorization Notice

A situation in which a person can only experience a loss and no gain presents what type of risk?

Pure Risk

What are the strategies used by the underwriters to prevent adverse selection?

Restriction of coverage, refusal to accept a risk, and accepting a risk at a higher rate

What is the best way to handle incomplete insurance applications?

Return the application to the applicant for completion

What is the main responsibility of a company's underwriting unit?

Risk selection

Wagering on a sporting event is known as what type of risk?

Speculative

What are the personal uses of life insurance?

Survivor protection, estate creation and conservation, cash accumulation and liquidity.

Whose responsibility is it to determine that all the questions on an insurance application are answered?

The Agents

What is the purpose of the agent's report during the application process?

The agent's report discusses the agent's personal obervations about the proposed insured that may help in the underwriting process

A business is the owner and beneficiary of a key-person life policy. When the business collects the policy benefit, how is it taxed?

The benefit is received tax free.

Who is a replacing insurer?

The company that issues a new policy during policy replacement

Who is the beneficiary on a key- person life insurance policy?

The employer

If an applicant for a life insurance policy and the potential insured are two different people, what would be the underwriter's main concern?

The existence of insurable interest between the applicant and the insured

What law protects consumers from the circulation of inaccurate or obsolete information?

The fair credit reporting act

Who is responsible for the contents of insurance advertisements?

The insurance company

When planning for survivor protection in life insurance, what needs to be considered?

The insured's current assets, liabilities and survivor's needs

Who must have insurable interest in the insured?

The policyowner

In calculating the amount of life insurance needed, what is the needs approach based on?

The predicted needs of a family after the premature death of the insured

What is insurance underwriting?

The process of risk selection and classification

What is the main purpose of the regulation on life insurance policy illustrations?

To help the public make educated decisions about buying life insurance

What is the purpose of key person insurance?

To minimize the risk of financial loss cause by the death of a key employee

For the purpose of insurance, what is risk?

Uncertainty of loss

What is the name of the process that insurance companies use to determine whether or not an applicant Is insurable?

Underwriting

An insured receives a monthly ssummary for his life insurance policy, He notices that the cash value of the policy is significantly lower this month than it was last month. What type of policy does the insured have?

Variable

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

When it is intentional or material

In insurance, when is the offer usually made on a contract?

When the insurance application is submitted

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

When the insurer approves a prepaid application

When does an insurance policy go into effect?

When the policy is delivered and the premium is paid

According to the Law of Agency, a principal is represented by whom?

agent or producer

What document is required for an insurance company to transact insurance.

certificate of authority

in order to transact insurance within a given state , an alien insurer must first obtain what?

certificate of authority

When change needs to be made on the application for insurance, which is the best method for correcting the information?

complete a new application or ask the applicant to initial the correction on the original application

insurers are classified according to their domicile. what are the three types of insurers?

domestic foreign and alien

What are the three types of agent authority?

express, implied, apparent

What two elements are necessary for a life insurance contract to have a legal purpose?

insurable interest and consent

What do individuals use to transfer their risk of loss to a larger group?

insurance

whom does an insurance agent represent

insurance company

What law is the foundation of the statistical prediction of loss upon which rates for insurance are claculated?

law of large numbers

What is the term for the causes of loss insured against in an insurance policy?

peril

What is the term that describes the frequency and the amount of the premium payment?

premium mode

What type of risk is insurable?

pure risk

if an agent fails to obtain the applicants signature on the insurance application, what must the insurer do?

send the application back to the applicant for signature

The insurer organized to return a profit to the stockholders is what type or insurer?

stock company

Who owns stock companies?

stockholders

if an applicant does not receive his or her insurance policy, who would be held responsible?

the agent