Underwriting and Policy Issue - Chapter Exam Answers

What is being delivered during a policy delivery?

insurance contract to the proposed insured

Which of these factors do NOT play a role in the underwriting of a life insurance policy?

marital status

Which of these do NOT constitute policy delivery?

policy issued with a rating

The underwriting process involves all of these EXCEPT for

policy loan

Q applied for life insurance and submitted the initial premium on January 1. The policy was issued February 1, but it was not delivered by the agent until February 7. Q is dissatisfied and returns the policy February 13. How will the insurer handle this situation?

policy was returned withing the free-look period, premium will be fully refunded

Consumer reports requested by an underwriter during the application process of a life insurance policy can be used to determine

probability of making timely premium payments

All of these are considered sources of underwriting information about an applicant EXCEPT

rating services

Which of these statements is true regarding the MIB?

All of the above

T applies for a life insurance policy and is told by the producer that the insurer is bound to the coverage as of the date of the application or medical examination, whichever is later. Assuming that T is an acceptable risk, what item is given to T?

Binding receipt

Which Federal law allows an insurer to obtain an inspection report on a potential insured?

Fair Credit Reporting Act

From what authority derives the requirement that an insurance application contains a disclosure stating that an investigative consumer report may be obtained on an applicant?

Fair Credit Reporting act

Who is NOT required to sign a life insurance application?

beneficiary

Why is an applicant's signature required on a life insurance application?

To attest that the statements on the application are accurate to the best of the applicant's knowledge

A substandard or special class risk typically results in

a premium that is higher than for a normal risk

Which of the following statements concerning a life insurance policy is TRUE?

an issued policy can never be changed by a producer

When an insurance application is taken by a producer, which of these statements is true?

any changes made on the application require the applicant's initials

Any changes made on an insurance application requires the initials of whom?

applicant

An applicant's medical information received from the Medical Information Bureau (MIB) may be furnished to the

applicant's physician

Before a life insurance policy is issued, which of these components of the contract is required?

applicant's signature on application

An incomplete life insurance application submitted to an insurer will result in which of these actions?

application will be returned to the writing agent

At what time must a policyowner have insurable interest on the insured in order for the life policy to be valid?

at the time of the application

A life insurance application must be signed by all of these EXCEPT

beneficiary

On August 6, D submitted an application for a $50,000 Life Insurance policy and did not pay the initial premium. On August 18, D went to his doctor complaining of chest pains and some tests were given by the doctor. The life policy was delivered by the producer on August 20 and D explains what had recently taken place with the doctor. What action should the producer then take?

collect initial premium along with a signed health statement

K applies for a life insurance policy on herself and submits the initial premium with the application. She is given a receipt by the agent stating that coverage begins immediately if the application is approved. What kind of receipt was used?

conditional

Pat applies for insurance, pays the initial premium, and receives a document from the agent. This document indicates that if the policy is issued, coverage begins on the date of the document. This document is called a(n):

conditional receipt

Rodney applies for an insurance policy and pays the first premium. The receipt given for the first premium is called a(n):

conditional receipt

What is the purpose of the USA Patriot Act

detect and deter terrorism

Which of the following is NOT a factor typically used by insurers to classify risk?

education level

An underwriter determines that an applicant's risk should be recategorized due to a health issue. This policy may be issued with a(n):

exclusion for the medical condition

What action should a producer take if the initial premium is NOT submitted with the application?

forward the application to the insurer without the initial premium

M completes an application for life insurance but does not pay the initial premium. All of these actions must occur before M's policy goes into effect EXCEPT

free-look period has expired

Which of these actions should a producer take when submitting an insurance application to an insurer?

inform insurer of relevant information not included on the application

Which of these terms accurately defines an underwriter's assessment of information on a life insurance application?

risk classification

P is a producer who notices 5 questions on a life application were not answered. What actions should P take?

set up a meeting with the applicant to answer the remaining questions

What kind of risk are amateur pilots normally classified as?

special class risks

The highest premium payment would be charged to which risk classification?

substandard

In order for coverage on a non-medical insurance application to take effect the same day, the producer must collect a signed application and

the initial premium

Which parts of a life insurance policy are guaranteed to be true?

warranty

Which of these is NOT a reason the insurance application is important?

when attached to the policy, the application becomes part of the insurance clause

When does a life insurance contract become effective if the initial premium is not collected during the application process?

when producer delivers policy and collects initial premium