Chapter 1

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.

2 parts of an insurance application

Part 1: General info Part 2: Medical info

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

The Medical Information Bureau (MIB)

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

When an insurer's underwriter approves coverage

Purpose of the buyer's guide?

allow consumer to compare the costs of different policies

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

consumer report

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

insurable interest

When does policy go in to effect?

on the date of the application or the date of the medical exam (whichever is later)

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

respond to the consumer's complaint

insurable interest

stranger originated life insurance policies are in direct opposition to the principle of:

Adhesion

take it or leave it

Basic source of information used by the company in the risk selection process?

the application

Aleatory Insurance Contract

unequal exchange

illustrations

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

Representations

-statements believed to be true to the best of one's knowledge, but they are not guaranteed to be true -answers the insured gives to the questions on the insurance application

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

5 days

The four essential elements of all legal contracts?

Agreement, consideration, competent parties, and legal purpose

Another name for a substandard risk classification is?

"Rated"

An applicant who receives a preferred risk classification qualifies for

lower premiums than a person who receives a standard or substandard risk

What is the purpose of a disclosure statement in life insurance policies?

to explain features and benefits of a proposed policy to the consumer

A statement that is guaranteed to be true, and if untrue, may breach an insurance contract?

warranty

If a policy includes a free-look period of at least 10 days, the Buyer's Guide must be delivered to the applicant no later than

with the policy

4 elements of a legal contract

-agreement -consideration -competent parties -legal purpose