Chapter 1 - Quiz Questions

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

3 days

The term "illustration" in a life insurance policy refers to __________________.

A presentation of nonguaranteed elements of a policy

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 must insurable interest exist in life insurnace?

At the time the policy is purchased

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 if the policy is approved. This is an example of what type of contract?

Conditional

Which of the following reports will provide the underwriter with the information about an insurance applicants credit?

Consumer Report

What best describes the aleatory natures of an insurance contract?

Exchange of uneven values

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

If it is intentional and material

A life insurance policy has 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

What is an example of information about the application is NOT included in the General Information section of the application for insurance?

Medical Background

What are the 4 required elements of insurance contracts?

Offer and Acceptance, Consideration, Competent Parties, and Legal Purpose

What is the definition of an unlateral contract?

One-Sided; Only one party makes an enforceable promise

What two parts make-up a life insurance application?

Part 1, General Information and Part 2, Medical Information

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

Another name for a substandard rick classification is ______________.

Rated

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

When an insurer's underwriter approves coverage

If an application 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

According to the Fair Credit Reporting Act, what is an example of something that wouldn't be considered negative information?

Disputes regarding consumer reporting information

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

What is the purpose of the buyers guide?

To allow the consumer to compare the cost of different policies

In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe?

Unilateral