Insurance Chapter 2

At what age may a minor purchase a life or health insurance contract?

15

An insurer requests that an applicant for life insurance undergo an HIV test. Which of the following is true?

A consent form must be signed by the applicant prior to the test.

Which of the following statements about a temporary insurance agreement is CORRECT?

It provides temporary coverage until an application is rejected or the policy is issued.

Part II of the life insurance application includes:

Medical information

Which of the following best describes the MIB?

Nonprofit trade organization that supplies insurability information to member companies

What action will the life insurance company most likely take when an applicant for a life insurance policy is discovered to be substandard risk?

Require the applicant pay an additional premium

All of the following statements are true regarding insurance application procedures, EXCEPT:

The application is one of the key sources of information used by underwriters. The producer is responsible for making sure the applicant has filled out the application completely. In many states the application becomes part of the insurance contract. *Producers can fill in any missing information they discover on the application.

Who administers the National Do Not Call Registry?

The federal trade commision

Insurance agent Margaret receives life insurance applications from Tim and Tom, who are identical twins, and are each applying for the exact same type of policy with the same face amount. The insurance company issues the policies as applied for, but charges Tom a 15% higher premium. Which of the following best explains the higher premium charged to Tom?

Tom's risk classification

Coverage is effective:

With collection of the initial premium, approval of the application, policy issuance and delivery

Which of the following is the primary source of information used in underwriting an insurance policy?

application

If required by the insurer, the statement of good health must be collected by the producer at the time of:

policy delivery

This employee of the insurer assigns risk categories to applicants:

underwriter

A life insurance application can usually be backdated for a maximum of how many months?

6 months

Telemarketers may call phone numbers not on the Do Not Call List from:

8am to 9pm

The term attributed to the person who applies for insurance coverage is _______; the term attributed to the person insured by the policy is ________.

Applicant; insured

In Ray's application for life insurance an applicant failed to complete one part regarding family history. In his statement, the agent described the family as long-lived and healthy. If an insurance company accepts the application in the incomplete form and the applicant for coverage dies young from a cardiac condition that had taken the lives of both his parents before age 50, will the company deny or accept the claim of the beneficiaries?

It will pay the claim, because in accepting the application, it waived its right to the missing information.

Which part of the insurance application is described by the following: the applicant's general information, including name, date of birth, age, sex, social security number, marital status, address, occupation and income are collected?

Part 1

All of the following are important underwriting factors for risk classification in a health insurance policy, EXCEPT:

Physical condition Financial status Occupation *Marital status

James has above average health and is physically active. He has never smoked. Which risk classification will James most likely be rated?

Prefered

Which of the following does demonstrate constructive delivery?

The agent mails the policy to the insured The insurer mails the policy to the agent, who in turn, mails the policy to the insured The insurer mails the policy to the insured

If a company issues a conditional receipt to an applicant who has paid an initial premium for a policy that does not require a medical examination:

The applicant is immediately covered

All of the following are involved in the collection of an applicant's medical history, EXCEPT:

The application for the insurance policy. The attending physician statement. The agent report *The consumer report

An individual signed an application for a $100,000 life insurance policy and paid the first premium on January 1. The agent issued an insurability receipt. A week later, the required medical examination proves the person insurable. If the person dies before the insurer approves the application:.

The coverage will be retroactively effective

Field underwriting ________ adverse selection.

reduces

Rates for insurance policies are based on:

sex and age

Which of the following best describes a life insurance policy in which the proposed insured is not required to undergo a medical examination?

simplified issue

Alexander's life insurance policy is rated. Of the following, who must explain the reason for the premium increase to Alexander?

the agent

The agent must provide the buyer's guide to the applicant:

when the policy is delivered

Which of the following best describes the process used to select and classify risks?

underwriting

Gerald has a chronic medical condition. What will his risk classification be? How will his premium be affected?

Gerald's risk classification will be substandard. His premium will be higher.

Which report may contain information gathered through a telephone call made to the proposed insured?

Inspection report