Completing the Application, Underwriting, and Delivering The Policy

Which of the following is a term for a person who seeks insurance from an insurer? Beneficiary Applicant Agent Insured

Applicant The applicant is the person who is seeking insurance from an insurer.

Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process? -Policy Summary -Illustrations -Buyer's Guide -Insurance Index

-Buyer's Guide The Buyer's Guide is a consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process. It is a generic guide that does not address the specific policy of the insurer, instead explaining life insurance in a way that the average consumer can understand.

What was created to keep telemarketers from calling consumers who do not wish contacted? -Freedom of Information Act -Call Control Registry -National Do Not Call Registry -Confidential No Call Act

-National Do Not Call Registry The National Do Not Call Registry was created to allow consumers the choice to not be contacted by telemarketers.

Which is the appropriate action by the insurer if a prospective insured submitted an incomplete application? -Issue a policy anyway since the application has been submitted -Ask the producer who solicited the policy to complete and resign the application -Fill in the blanks to the best of the insurer's knowledge -Return the application to the applicant for completion

-Return the application to the applicant for completion Any unanswered questions need to be answered before the policy is issued. If the insurer receives incomplete applications, they need to be returned to the applicants for completion.

If a consumer requests additional information concerning an Investigative Consumer Report, how long does the insurer or reporting agency have to comply? 7 days 10 days 3 days 5 days

5 days Consumers must be advised that they have a right to request additional information concerning Investigative Consumer Reports, and the insurer or reporting agency has 5 days to provide the consumer with the additional information.

An insurer receives a report regarding a potential insured that includes the insured's financial status, hobbies and habits. What type of a report is that? Inspection Report Medical Information Bureau's report Agent's Report Underwriter's Report

Inspection Report Inspection reports cover moral and financial information regarding a potential insured, usually supplied by private investigators and credit agencies. Companies that use inspection reports are subject to the rules outlined in the Fair Credit Reporting Act.

Which of the following is a risk classification used by underwriters for life insurance? Excellent Standard Poor Normal

Standard The three ratings classifications that denote the risk level of insureds are standard, substandard, and preferred. This classification system helps insurers to decide if an insured should pay a higher premium.

If a loss occurs, insurance policies pay the proceeds to Beneficiary Applicant Insurer Agent

Beneficiary The beneficiary is the person who receives the benefits from the insurance policy.

Why should the producer personally deliver the policy when the first premium has already been paid? -To find out how the family has been doing since the initial presentation -To make sure the policy is not stolen or lost -To help the insured understand all aspects of the contract -To ensure the producer gets paid commission

-To help the insured understand all aspects of the contract It is the producer's responsibility to make sure that the policy is understood by the insured and all of their questions are satisfied, and the delivery receipt is signed.

Which of the following entities established the Do-Not-Call Registry? The Better Business Bureau The NAIC The Consumer Protection Agency The Federal Trade Commission

The Federal Trade Commission The FTC established the do-not-call list in order to protect consumers against unwanted solicitations.

If an agent fails to obtain an applicant's signature on the application, the agent must -Sign the application for the applicant. -Sign the application, stating it was by the agent. -Send the application to the insurer with a note explaining the absence of signature. -Return the application to the applicant for a signature.

-Return the application to the applicant for a signature. All applications must have the appropriate authorized signatures.

All of the following are requirements for life insurance illustrations EXCEPT -They must differentiate between guaranteed and projected amounts. -They must be part of the contract. -They may only be used as approved. -They must identify nonguaranteed values.

-They must be part of the contract. An illustration may not be altered by an agent and must clearly state that it is not part of the contract. It is legal to list nonguaranteed values in the contract, but they must be specifically labeled as projected, not guaranteed values.

Which of the following is NOT an example of insurable interest? Business partners in each other Employer in employee Child in parent Debtor in creditor

Debtor in creditor The three recognized areas in which insurable interest exists are as follows: a policyowner insuring his or her own life, the life of a family member (relative or spouse), or the life of a business partner, key employee, or someone who has a financial obligation to them. A debtor does not have an insurable interest in the creditor.

An underwriter may obtain information on an applicant's hobbies, financial status, and habits by ordering a(n) Attending Physician Statement. Inspection report. Medical Information Bureau report. Medical examination.

Inspection report.

What do individuals use to transfer their risk of loss to a larger group? Insurance Insurable interest Exposure Indemnity

Insurance Insurance is the mechanism whereby an insured is protected against loss by a specified future contingency or peril in return for the present payment of premium. Because many other individuals with the same or similar risk of loss are paying premiums, funds are available to indemnify those who actually suffer that loss.

Insurance is a contract by which one seeks to protect another from Uncertainty. Hazards. Loss. Exposure.

Loss. Insurance will protect a person, business or entity from loss.

What is the purpose of a conditional receipt? -It serves as proof that the agent has determined the applicant to be fully insurable for coverage by the insurance company. -It is given by the agent only to applicants who fully prepay all scheduled premiums in advance of policy issue. -It is intended to provide coverage on a date earlier than the date of the issuance of the policy. -It guarantees the applicant that a policy will be issued in the amount applied for in the application.

-It is intended to provide coverage on a date earlier than the date of the issuance of the policy. Coverage commences on the date of the application or the date of a medical examination, whichever is later, on the condition that the applicant is determined to be insurable at the rate applied for.

Which of the following would NOT be considered an exception to the National Do Not Call List? -Calls based from outside of the United States -Calls for which the consumer has given prior written permission -Calls which are not commercial or do not include unsolicited advertisements -Calls by or on behalf of tax-exempt nonprofit organizations

-Calls based from outside of the United States Calls from outside the United States are not an exception to the National Do Not Call List.

Which of the following types of risk will result in the highest premium? Substandard risk Standard risk Preferred risk All risks pay equal premiums

Substandard risk The "substandard" rating indicates that an individual represents an under-average insurance risk because of physical condition, personal or family history of disease, occupation, habits or hobbies. This rating incurs the highest premium if policy is issued.

If a telemarketer wants to make an unsolicited sales call to a potential customer, what is the earliest time the telemarketer can call the prospect's residence? -7 am -8 am -9 am -Noon

-8 am Permissible calling hours for telemarketers are between 8am and 9pm.

An applicant signs an application for a $25,000 life insurance policy, pays the initial premium, and receives a conditional receipt. If the applicant is killed in an automobile accident the next day, -The company could reject the application on the basis that the insured's death was not caused by an ongoing medical problem. -The beneficiary would receive $25,000 if it was determined that the insured qualified for the policy applied for. -The premium would be returned to the insured's estate because the policy was not issued. -The company could reject the death claim because the underwriting process was never completed.

-The beneficiary would receive $25,000 if it was determined that the insured qualified for the policy applied for. The conditional receipt provides that when the applicant pays the initial premium, coverage is effective on the condition that the applicant proves to be insurable either on the date the application was signed or the date of the medical examination, if one is required.

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 submits the application to the company and the company issues a conditional receipt -When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health -On the designated effective date -On the application date

-When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health If the initial premium is not paid with the application, the agent will be required to collect the premium at the time of policy delivery. In this case, the applicant will most likely need to fill out a Statement of Good Health.

A producer agent must do all of the following when delivering a new policy to the insured EXCEPT -Collect any premium due. -Explain the rating procedures if the policy is rated differently than applied for. -Disclose commissions earned from the sale of the policy. -Explain the policy provisions, riders, and exclusions.

-Disclose commissions earned from the sale of the policy. A producer must explain policy provisions, exclusions, and riders at the time of delivery, as well as the rating procedures, especially if the policy is rated differently than applied for. The producer must also collect any due premium and have the insured sign the statement of continued good health.

A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will -Pay the policy proceeds up to an established limit. -Not pay the policy proceeds under any circumstances. -Automatically pay the policy proceeds. -Pay the policy proceeds only if it would have issued the policy.

-Pay the policy proceeds only if it would have issued the policy. The conditional receipt says that coverage will be effective either on the date of the application or the date of the medical exam, whichever occurs last, as long as the applicant is found to be insurable as a standard risk, and policy is issued exactly as applied for.

Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract? Indemnity Representation Warranty Concealment

Warranty A warranty in insurance is a statement guaranteed to be true. When an applicant is applying for an insurance contract, the statements he or she makes are generally not warranties, but representations. Representations are statements that are true to the best of the applicant's knowledge.

Which of the following will be included in a policy summary? -Comparisons with similar policies -Primary and secondary beneficiary designations -Premium amounts and surrender values -Copies of illustrations and application

-Premium amounts and surrender values A policy summary must be delivered along with the policy and will provide the producer's name and address, the insurance company's home office address, the generic name of the policy issued, and premium, cash value, surrender value and death benefit figures for specific policy years.