Life Insurance Part 1

If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?: A. 5 days B. 7 days C. 10 days D. 3 days

A. 5 days

Which of the following is NOT the consideration in a policy?: A. The promise to pay covered losses B. The application given to a prospective insured C. Something of value exchanged between parties D. The premium amount paid at the time of application

B. The application given to a prospective insured

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?: A. Conditional receipt B. Disclosure rule C. Fair Credit Reporting Act D. Consumer Privacy Act

C. Fair Credit Reporting Act

Another name for a substandard risk classification is: A. Declined. B. Elevated. C. Rated. D. Controlled.

C. Rated.

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. Adhesion B. Conditional C. Aleatory D. Good health

C. Aleatory

What is a material misrepresentation?: A. Concealment B. A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company C. Any misstatement made by an applicant for insurance D. Any misstatement by the producer

B. A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company

What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act?: A. $100 per violation B. Revocation of license C. $2,500 D. $1,000

C. $2,500

The Medical Information Bureau (MIB) was created to protect: A. Insurance departments from lawsuits by policy owners B. Insureds from unreasonable underwriting requirements by the insurance companies C. Medical examiners that perform insurance physical examinations D. .Insurance companies from adverse selection by high risk persons.

D. .Insurance companies from adverse selection by high risk persons.

Representations are written or oral statements made by the applicant that are: A. Guaranteed to be true B. Found to be false after further investigation C. Immaterial to the actual acceptability of the insurance contract D. Considered true to the best of the applicants knowledge.

D. Considered true to the best of the applicants knowledge.

If a change needs to be made to the application for insurance, the agent may do all of the following EXCEPT: A. Draw a line through the first answer, record the correct answer, and have the applicant initial the change. B. Note on the application the reason for the change. C. Destroy the application and complete a new one. D. Erase the incorrect answer and record the correct answer.

D. Erase the incorrect answer and record the correct answer.

When an insurer begins underwriting procedures for an applicant, what will be the main source for its underwriting information? A. Medical records B. Application C. Interviews D. State records

B. Application

If an insurer issued a policy based on the application that had unanswered questions, which of the following will be TRUE?: A. The policy will be interpreted as if the insured did not have an answer to the question. B. The policy will be void. C. The insurer may deny coverage later, because of the information missing on the application. D. The policy will be interpreted as if the insurer waived its right to have an answer on the application.

D. The policy will be interpreted as if the insurer waived its right to have an answer on the application.

The term "illustration" in a life insurance policy refers to A. A presentation of non guaranteed elements of a policy. B. A depiction of policy benefits and guarantees. C. Pictures accompanying a policy. D. Charts and graphs.

A. A presentation of non guaranteed elements of a policy.

Part 2 of the application for life insurance provides questions regarding all of the following EXCEPT: A. Other insurance coverages. B. Family health history. C. Alcohol and tobacco consumption. D. Recent surgeries.

A. Other insurance coverages.

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. Representation B. Adhesion C. Consideration D. Good Faith

C. Consideration

All of the following information about the applicant is identified in the General Information section of a life insurance application EXCEPT: A. Gender. B. Occupation. C. Education. D. Age.

C. Education.

All of the following are duties and responsibilities of producers at the time of application EXCEPT: A. Change any incorrect statement on the application by personally initialing next to the corrected statement. B. Explain the nature and type of any receipt the producer is giving to the applicant. C. Probe beyond the stated questions if the producer feels the applicant is misrepresenting or concealing information. D. Check to make sure that there are no unanswered questions on the application.

A. Change any incorrect statement on the application by personally initialing next to the corrected statement.

Which of the following individuals must have insurable interest in the insured?: A. Beneficiary B. Underwriter C. Producer D. Policy owner

D. Policy owner

According to the Fair Credit Reporting Act, all of the following would be considered negative information about a consumer EXCEPT: A. Failure to pay off a loan. B. Disputes regarding consumer report information. C. Tax delinquencies. D. Late payments.

B. Disputes regarding consumer report information.

As a field underwriter, a producer is responsible for all of the following tasks EXCEPT: A. Issue the policy that is requested. B. Help prevent adverse selection. C. Solicit business that will fall within the insurer's underwriting guidelines. D. Obtain appropriate signatures on the application for insurance.

A. Issue the policy that is requested.

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. Adhesion B. Subrogation C. Warranty D. Aleatory

D. Aleatory

Whose responsibility is it to make certain that an application for insurance is filled out completely and correctly?: A. The producer B. The beneficiary of the applicant C. The insurance company D. The applicant

A. The producer

The Gramm-Leach Bailey Act was passed to: A. Allow consumers access to credit and private consumer reports B. Allow insurance companies access to medical information for underwriting purposes C. Protect private customer information filed with a financial institution D. Define insurance as interstate commerce.

C. Protect private customer information filed with a financial institution

A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will: A. Pay the policy proceeds only if it would have issued the policy B. Pay the policy proceeds up to an established limit C. Not pay the policy proceeds under any circumstances D. Automatically pay the policy proceeds

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

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. Adhesion B. Consideration C. Good faith D. Representation

B. Consideration

What is the purpose of a conditional receipt?: A. It is given only to applicants who fully prepay the premium. B. It is intended to provide coverage on a date prior to the policy issue. C. It guarantees that a policy will be issued in the amount applied for. D. It serves as proof that the applicant has been determined insurable.

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

If an insurer issued a policy based on the application that had unanswered questions, which of the following will be TRUE?: A. The policy will be void. B. The insurer may deny coverage later, because of the information missing on the application. C. The policy will be interpreted as if the insurer waived its right to have an answer on the application. D. The policy will be interpreted as if the insured did not have an answer to the question.

C. The policy will be interpreted as if the insurer waived its right to have an answer on the application.

When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is: A. Aleatory. B. Personal. C. Unilateral. D. Conditional.

D. Conditional.

Which of the following best describes the aleatory nature of an insurance contract A. Only one of the parties being legally bound by the contract B. Ambiguities are interpreted in favor of the insured C. Policies are submitted to the insurer on a take-it-or-leave-it basis D. Exchange of unequal values

D. Exchange of unequal values

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. Warranty B. Aleatory C. Adhesion D. Subrogation

B. Aleatory

Which of the following best describes the MIB?: A. It is a member organization that protects insured against insolvent insurers. B. It is a rating organization for health inTseurmancsea. nd Conditions C. It is a nonprofit organization that maintains underwriting information on applicants for life and health insurance. D. It is a government agency that collects medical information on the insured from the insurance companies.

C. It is a nonprofit organization that maintains underwriting information on applicants for life and health insurance.

Which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information?: A. The Guaranty Association B. Consumer Privacy Act C. The Fair Credit Reporting Act D. Unfair Trade Practices Law

C. The Fair Credit Reporting Act

If an insurer requires a medical examination of an applicant in connection with the application for life insurance, who is responsible for paying the cost of the examination?: A. The examiner B. The applicant C. The insurer D. The cost of the examination will be waived.

C. The insurer

As a field underwriter, a producer is responsible for all of the following tasks EXCEPT: A. Help prevent adverse selection. B. Solicit business that will fall within the insurer's underwriting guidelines. C. Obtain appropriate signatures on the application for insurance. D. Issue the policy that is requested.

D. Issue the policy that is requested.

Under the Fair Credit Reporting Act, if a consumer challenges the accuracy of the information contained in a consumer or investigative report, the reporting agency must: A. Defend the report if the agency feels it is accurate. B. Change the report. C. Send an actual certified copy of the entire report to the consumer. D. Respond to the consumer's complaint.

D. Respond to the consumer's complaint.

Why should the producer personally deliver the policy when the first premium has already been paid?: A. To ensure the producer gets paid commission B. To find out how the family has been doing since the initial presentation C. To make sure the policy is not stolen or lost D. To help the insured understand all aspects of the contract

D. To help the insured understand all aspects of the contract

In insurance, an offer is usually made when: A. An applicant submits an application to the insurer. B. The insurer approves the application and receives the initial premium. C. The agent hands the policy to the policyholder. D. An agent explains a policy to a potential applicant.

A. An applicant submits an application to the insurer.

The Federal Fair Credit Reporting Act: A. Regulates telemarketing. B. Prevents money laundering. C. Regulates consumer reports. D. Protects customer privacy.

C. Regulates consumer reports.

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. Consideration B. Legal purpose C. Contract of adhesion D. Acceptance

A. Consideration