Life Insurance Test

Which is the primary source of information used for insurance underwriting.

Application The application contains most of the information used for underwriting purposes. This is why its completeness and accuracy are so crucial.

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

Insurance Insurance is the mechanism whereby an insured is protected against loss by a specified future contingency or peril in return for the present payment of premium. Because many other individuals with the same or similar risk of loss are paying premiums, funds are available to indemnify those who actually suffer that loss.

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

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 Consideration is something of value that each party gives to the other. The consideration on the part of the insured is the payment of premium and the representations made in the application.

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

Policyowner The policyowner must have an insurable interest in the insured (his/her on life if the policyowner and the insured is the same person), or in the life of a family member or a business partner.

Another name for a substandard risk classification is

Rated Substandard risk classification is also referred to as "rated" since these policies could be issued with the premium rated-up, resulting in a higher premium.

Insurance is the transfer of

Risk Insurance is the transfer of financial responsibility associated with a potential of a loss (risk) to an insurance company.

Which of the following statements is correct about a standard risk classification in the same age group and with similar lifestyles?

Standard risk is representative of the majority of people.

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

The application given to a prospective insured Consideration is something of value that is transferred between the two parties to form a legal contract.

If a policy includes a free-look period of at least 10 days, the buyer's guide may be delivered to the applicant

With the policy If a life insurance policy contains a free-look period of at least 10 days, the buyer's guide can be delivered with the policy. If it doesn't, the buyer's guide must be delivered prior to accepting the initial premium.