Chap. 1: Completing the App, Underwriting, and Delivering the Policy

Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report... Must be ____ of the ____ of the report

Must be informed of the source of the report

Definition of an unilateral contract

One sided: only on party makes an enforceable promise

Which of the following will be included in a policy summary? (2) A. _____ amounts B. _____ values

Premium amounts and surrender values

The Federal Fair Credit Reporting Act

Regulates consumer reports

Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?

3 days

What describes the specific information about a policy?

Policy summary

A. Which is NOT the consideration in a policy? B. Which is considered consideration in a policy? (3)

A. The application given to a prospective insured B. a. the premium amount paid at the time of application b. the promise to pay covered losses c. something of value exchanged between parties

When is the earliest a policy may go into effect? A. When the app is ____ and B. A ____ is given to the ____.

A.When the application is signed and B. a check is given to the agent

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

"Illustration" refers to... A ____ of ____ elements in a policy

A presentation of nonguaranteed elements of a policy

Dividends issued to a mutual insurance company are A. taxable or not taxable? B. Why or why not?

A. Not taxable B. The IRS treats them as a return of a portion of the premium paid

Primary source of info used for insurance writing:

Application

When must insurable information exist in a life insurance policy? at the time of ____

At the time of application

An insurance contract requires that both the insured and the insurer meet certain conditions in order for the contract to be enforceable. What contract characteristic does this describe?

Conditional (requires both parties to meet certain conditions before contract can be executed)

When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as...

Consideration

Which part of an insurance application would contain information regarding the cause of death of the applicant's deceased relatives?

Medical Information

Under the Federal Credit Reporting Act, if the consumer challenges the accuracy contained in his/her report, the reporting agency must ____ to the consumer's ____

Respond to the consumer's complaint

Which is the appropriate action by the insurer if a prospective insured submitted an incomplete application? ____ the application to the applicant for ____.

Return the application to the applicant for completion

An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date? The date of the ___ ___.

The date of the medical exam

In forming an insurance contract, when does acceptance usually occur? When an insurer's _____ _____ coverage

When an insurer's underwriter approves coverage

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

With the policy

A. What statement is NOT true concerning insurable interest as it applies to life insurance? (debtor) B. Why?

A. A debtor has an insurable interest in the life of a lender. B. The debtor has an insurable interest in the DEBT of the lender.

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 ____ the policy ____ and pay the ____ ____ to the ____.

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

All of the following are requirements for life insurance illustrations EXCEPT: They must be ____ of the ____.

They must be part of the contract