Application, underwriting, and delivering the policy

If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?

5 days

A producer agent must do all of the following when delivering a new policy to the insured EXCEPT: A) collect any premium due B) explain the rating procedures if the policy is rated differently than applied for. C) disclose commissions earned from the sale of the policy D) explain the policy provisions, rider and exclusions.

Disclose commissions earned from the sale of the policy

What information about the applicant is included on part 1 of the application for insurance?

Name, age, address, birth date, Gender, income, occupation, and marital status

When is the earliest a policy may go into effect?

When the application is signed and a check is given to the agent

Insurance is a contract by which one seeks to protect another from

loss

Most agents try to collect the initial premium for submission with the application. When an agent collects the initial premium from the applicant, the agent should issue the applicant a

premium receipt

If a policy includes a free-look period of at least 10 days, the Buyer's Guide must be delivered to the applicant

with the policy

What is the maximum penalty for habitual willful non compliance with the fair credit reporting act?

$2,500

An insurer has made all 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?

Adhesion

If an applicant for a life insurance policy if found to be a substandard risk, the insurance company is most likely to

Charge a higher premium

What protects consumers against the circulation of inaccurate or obsolete personal or financial information?

Fair Credit Reporting Act

An applicant is denied insurance because of information found on a consumer report. What requires that the insurance company supply the applicant with the name and address of the consumer reporting company?

Fair credit reporting act

The medical information bureau was created to protect:

Insurance companies from adverse selection by high risk persons.

Stranger- originated life insurance policies are in direct opposition to the principle of

Insurance interest

When Y applied for insurance and paid the initial premium on August 14, he was issued a conditional receipt. During the underwriting process, the insurance company found no reason to reject the risk or classify it other than as standard. Y was killed in an automobile accident on August 22, before the policy was issued. In this case, the insurance company will

Issue the policy anyway and pay the face value to the beneficiary

Under the fair credit reporting act, individuals rejected for insurance due to information contained in a consumer report

Must be informed of the source of the report

An insurance contract must contain what to be considered legally binding?

Offer and acceptance, Consideration, and Competent parties

Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements

Offer and acceptance, consideration, and legal purpose

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.

What will be included in a policy summary?

Premium amount and surrender values

Another name for a substandard risk classification is

Rated

Part 2 of the application for life insurance provides questions regarding....

Recent surgeries, family health history and alcohol and tobacco consumption

Upon policy delivery, the producer may be required to obtain any of the following EXCEPT A) signed waiver of premium B) statement of good health C) payment of premium D) delivery receipt

Signed waiver of premium

What is a risk classification used by underwriters for life insurance?

Standard

In comparison to consumer reports, what describes a unique characteristic of investigative consumer reports?

The customer's associates, friends, and neighbors provide the report's data

What is the purpose of the buyers guide?

To allow the consumer to compare the costs of different policies

Why should the producer personally deliver the policy when the first premium has already been paid?

To help the insured understand all aspects of the contract

Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract? A) representation B) warranty C) concealment D) indemnity

Warranty

In forming an insurance contract, when does acceptance usually occur?

When an insurer's underwriter approves coverage

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?

consideration

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

insurance

What best details the underwriting process for life insurance?

Selection, classification, and rating of risks

What statement about a standard risk classification in the same age group and with similar lifestyles?

Standard risk is representative of the majority of people

If only one party to an insurance contract had made a legally enforceable promise, what kind of contract is it?

Unilateral

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?

Aleatory

When would a misrepresentation on an insurance application be considered fraud?

When it is intentional and material

In classifying a risk, the Home Office underwriting department will look at all of the following

Applicant's past medical history, present physical conditions, and occupation, habits and morals

Representations are written or oral statements made by the applicant that are

Considered true to the best of the applicant's knowledge

According to the fair credit reporting act, what would be considered negative information about a consumer:

Customer's delinquencies, late payments, insolvency or any other form of default.

What is the appropriate action by the insurer of a prospective insured submitted an incomplete application?

Return the application to the applicant for completion

An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will coverage begin?

When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health

What 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?

Aleatory

The federal fair credit reporting act

Regulates consumer reports

What type of risk will result in the highest premium

Substandard risk

What includes information regarding a person's credit, character, reputation, and habits?

Consumer report

What Information about the applicant is identified in the general information section of a life insurance application

Age, gender, occupation

What report will provide the underwriter with the information about an insurance applicant's credit?

Consumer report

What is a material misrepresentation?

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

What would provide an underwriter with i formation concerning an applicant's health history?

The Medical Information Bureau (MIB)

What is the purpose of a conditional receipt?

It is intended to provide coverage on a date earlier than the date of the issuance of the policy.

The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective?

As of the application date

What is the basic source of information used by the company in the risk selection process?

Application

What documents delivered to the policyowner includes information about premium amounts, cash values, surrender values and death benefit for specific policy years?

A policy summary

The proposed insured makes the premium payment on a new insurance policy. If the insured should die, the insurer will pay the death benefit to the beneficiary of the policy is approved. This is an example of what kind of contract?

Conditional

When an insured makes truthful statements on the application for insurance and pays the required premium, is is known as which of the following: A) contract of adhesion B) acceptance C) consideration D) legal purpose

Consideration

Which of the following is not an essential element of the insurance contract? A) agreement B) legal purpose C) counteroffer D) consideration

Counteroffer

What best describes the MIB?

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

An insured stated on her application for life insurance that she had never had a heart attack, when in fact she had a series of minor heart attacks last year for which she sought medical attention. Which of the following will explain the reason a death benefit claim is denied?

Material misrepresentation