Insurance license CH 1
Aleatory
Exchange of unequal amounts
Medical exam reports
Conducted by physician or paramedics
In insurance, an offer is usually made when A An agent explains a policy to a potential applicant. B The completed application is submitted. C The insurer approves the application and receives the initial premium. D The agent hands the policy to the policyholder.
B
A life insurance policy has a legal purpose if both of which of the following elements exist? A Insurable interest and consent B Underwriting and reciprocity C Offer and counteroffer D Policyowners and named beneficiaries
A
An insurance contract must contain all of the following to be considered legally binding EXCEPT A Beneficiary's consent. B Offer and acceptance. C Consideration. D Competent parties.
A
Agent
A legal representative of an insurance company
Contract characteristics
Adhesión and aleatory
When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is A Unilateral. B Conditional. C Aleatory. D Personal.
B
In terms of parties to a contract, which of the following does NOT describe a competent party? A The person must be of legal age. B The person must be mentally competent to understand the contract. C The person must have at least completed secondary education. D The person must not be under the influence of drugs or alcohol.
C
Which of the following is NOT an essential element of an insurance contract? A Agreement B Legal purpose C Counteroffer D Consideration
C
Adhesion
One party prepares the contract the other party must accept it as is
Elements of a legal contract
Agreement, consideration, competent parties, legal purpose
What phase begins after a new policy is delivered? AGrace period BFree-look period CInsurability period DElimination period
B
Premium not paid with application protocol
If the premium is not paid with the application, the agent must obtain the premium and a statement of continued good health at the time of policy delivery
Insurance policy
A contract between a Policyowner( and or insured) and an insurance company which agrees to pay the insured or the beneficiary for loss caused by specific events
Applicant or proposed insured
A person applying for insurance
In which of the following examples would a contract between an insurer and prospective insured be legal? A The applicant has a prior felony conviction. B The applicant is intoxicated at the time of application. C The applicant is a 12-year-old student. D The applicant is under the influence of medication at the time of application.
A
Sources of insurability information
Attending Physician Report(APR) MIP Report Credit Report Medical Exam Report
Something of value exchanged between the insurer and the insured is considered an A Offer. B Acceptance. C Legal capacity. D Consideration.
D
Investigative consumers report
Information obtained through an investigation and interviews with associates, friends, and neighbors of the consumer
Consumers report
Information regarding a consumers credit, character, reputation, or habits collected from employment records, credit report, and other public sources
Attending Physician Report
Best for accurate information on the applicants medical history
An applicant for a health insurance policy returns a completed application to her agent, along with a check for the first premium. She receives a conditional receipt two weeks later. Which of the following has the insurer done by this point? A Approved the application B Issued the policy C Neither approved the application nor issued the policy D Both approved the application and issued the policy
C
Conditional
Certain conditions must be met
Agents responsibility for replacement policy
Compare benefits, limitations,exclusions found in the current and the proposed replacement policy Ensure current policy is not cancelled before the new policy is issued
MIB Report
Helps companies share adverse medical information on insureds
Legal purpose
Not against public policy
Competent parties
Of legal age, sound mental capacity, and not under the influence of drugs or alcohol
Consideration
Premiums and representations on the part of the insured. Payment of claims on the part of the insurer
Insurable interest
The Policyowner facing the possibility of losing something of value in the event of loss
Insurer
The company who issues the insurance policy
Premium
The money paid to the insurance company for the insurance policy
Policyowner
The person entitled to exercise the rights and privileges in the policy
Classification of Producer includes?
Agents and brokers
Credit reports
Contains factors related to a risks potential for loss. Include consumer reports and investigative consumer reports
Consent
Permission to do something
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? A) Good faith B) Representation C) Adhesion D) Consideration
D
What is a definition of a unilateral contract? A One-sided: only one party makes an enforceable promise B Two or more parties go into a contract understanding there may be an unequal exchange of value C One author: the company wrote the contract; the insured must accept it as written. D If one party makes a condition, the other party can counteroffer.
A
An agent is in the process of replacing the insured's current health insurance policy with a new one. Which of the following would be a proper action? A The old policy must be cancelled before the new one can be issued. B The old policy should stay in force until the new policy is issued. C There should be at least a 10-day gap between the policies. D Policies must overlap to cover pre-existing conditions.
B
An insured pays a $100 premium every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered loss. What characteristic of an insurance contract does this describe? A Conditional B Aleatory C Good health D Adhesion
B
Unilateral
Only one of the parties to the contract is legally bound to do anything
An insurer has made all of the decisions regarding the provisions included in the insured's policy. The insured finds an objectionable provision and wants to negotiate it with the insurer but is not allowed to do so. Her only options are to reject the policy or accept it as is. Which contract feature does this describe? A Adhesion B Unilateral C Conditional D Personal
A
Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract? A Warranty B Concealment C Indemnity D Representation
A
Agreement
Offer and acceptance
When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following? A Acceptance B Consideration C Legal purpose D Contract of adhesion
B
Which of the following best describes the MIB? AIt is a rating organization for health insurance. BIt is a nonprofit organization that maintains underwriting information on applicants for life and health insurance. CIt is a government agency that collects medical information on the insured from the insurance companies. DIt is a member organization that protects insured against insolvent insurers.
B
Underwriting is a major consideration when an insured wishes to replace her current policy for all of the following reasons EXCEPT A Premiums always stay the same. B Due to age or health, the policy may change dramatically. C Pre-existing conditions that were previously covered may not be covered under the replacing policy. D Benefits may change.
A
When would a misrepresentation on the insurance application be considered fraud? A If it is intentional and material B Never: statements by the applicant are only representations. C When the application is incomplete D Any misrepresentation is considered fraud.
A
Insured
Person covered by the insurance policy, may or may not be Policyowner
Who makes up the Medical Information Bureau? AInsurers BHospitals CFormer insured DPhysicians and paramedics
A
Which of the following best describes the concept that the insured pays a small amount of premium for a large amount of risk on the part of the insurance company? A Aleatory B Adhesion C Subrogation D Warranty
A
What is the term used for an applicant's written request to an insurer for the company to issue a contract, based on the information provided? A Request for Insurance B Application C Policy Request D Insurance Request Form
B