chapter 1 insurance

in order for insurance contracts to be legally binding, they must have 4 essential elements

1. agreement-offer and acceptance 2. consideration 3. competent parties and 4. legal purpose

Who makes up the Medical Information Bureau?

Insurers

all of the following information about the applicant is identified in the general information section of a life insurance application

age gender occupation

which of the following best describes the concept that the insured pays small amount of premium for a large amount of risk on the part of the insurance company

aleatory

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

conditions

an insurer neglects to pay a legitimate claim that is covered under the terms of the policy. which of the following insurance principals has the insurer violated

consideration

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

considered true to the best of the applicant's knowledge

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

if it is intentional material

offer and acceptance

in insurance, the applicant usually makes the offer when submitting the application. Acceptance takes place when an insurer's underwriter approves the application and issues a policy

an insurance contract is an aleatory contract

in that it requires relatively small amount of premium for a large risk

a life insurance policy has a legal purpose if both of which of the following elements exist

insurable interest and consent

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

insurance

The medical information bureau (MIB) was created to protect

insurance companies from adverse selection by high risk persons

consideration

is something of value that each party gives to the other

when y applied for insurance and paid the initial premium on August 14, he was issued a conditional receipt. During the underswrititing process, the insurance compnay found no reason to reject the risk or classify it other than as standard. Y was killed in automoble accident on agust 22, before the policy was issued. in this calss the compnay will

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

what is the purpose of a conditional receipt

it is intended to provide coverage on a date prior to the policy issue

insurance is a contract by whcih one seeks protect another from

losss

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

all of the following would be considered an insurance transaction except

obtaining an insurance license

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 describes the specific information about a policy

policy summary

which of the following would be included in a policy summary

premium amounts and surrender values

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

a gram leach bliley act was passed to

protect private customer information filed with financial instiution

Under the Fair Credit Reporting Act, if the consumer challenges the accuracy of the information contained in his or her report, the reporting agency must

respoond to the consumer's complaint

insurance is the transfer of

risk

the term insurance transaction includes any of the following

solicitation negotiations sale advising an individual concerning coverage or claims

which of the following would qualify as a competent party in an insurance contract

the applicant has a prior felony conviction

in terms of parties to a contract which of the following does describe a competent party

the person must be legal age the person must be mentally competent to understand the contract the person must not be under the influence of drugs or alcohol

whose responsibility is it to make certain that an application for insurance is filled out completely correctly

the producer

insurance is

the transfer of risk of loss. The cost of an insured loss is transerfeered over to the insurer and spread amoung other insureds

all of the following are requirements for life insurance illustrations

they must identify nonguaranteed values they must differentiate between guaranteed and projected amounts they may only be used as approved

insurer's consideration is the promise

to pay for losses; insured's consideration is the payment of premium and statements on the application.

which employees of an insurance company are responsible for the final risk selection

underwriters

which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract

warranty

in forming an insurance contract when does acceptance usually occur

when an insurer's underwriter approves coverage

if an applicant for a life insurance policy and person to be insured by the policy are two different people the underwriter would be concerned about `

whether an insurable interest exists between the individuals

if a policy includes a free look period of at least 10 days, the buyer guide may be delivered to the applicant no later than

with the policy