Ins chapter 1 quizzes

All of the following information about the applicant is identified in the General Information section of the application EXCEPT A. Occupation B. Education C. Age D. Gender

B. Education

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 A. Backdated receipt B. Warranty C. Premium receipt D. Statement of good health

C. Premium Receipt

Which of the following types of risk will result in the highest premium? A. Substandard risk B. Standard Risk C. Preferred risk D. All risks pay equal premiums

A. Substandard risk

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

A. The Federal Trade Commission

In forming an insurance contract, when does acceptance usually occur? A. When an insurer's underwriter approves the coverage B. When an insurer delivers the policy C. When an insurer receives an application D. When an insured submits an application

A. When an insurer's underwriter approves the coverage

If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant A. With the Policy B. Upon issuance of the policy C. Within 30 days after the first premium was collected D. Prior to filling out an application for insurance

A. With the policy

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 A. Illustrations B. Buyer's Guide C. Insurance Index D. Policy Summary

B. Buyer's Guide

An applicant is denied insurance because of information found on a consumer report. Which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company? A. Disclosure Role B. Fair Credit Reporting Act C. Consumer Privacy Act D. Conditional Receipt

B. Fair Credit Reporting Act

When an insurance company receives an application with some information missing and issues the policy anyway. What is it called? A. Aleatory B. Waiver C. Estoppel D. Subrogation

B. Waiver

Which of the following is considered to be a morale hazard?

Driving recklessly

The law that protects consumers against the circulation of inaccurate or obsolete information

Fair Credit Reporting Act

Which of the following premium modes would result in the highest annual cost for an insurance policy?

Monthly

Which of the following documents delivered to the policyowner includes information about premium amounts, cash values, surrender values and death benefits for specific policy years?

Policy summary

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

Warranty

Which of the following is the basic source of information used by the company in the risk selection process? A. Agent's report B. Warranty C. Consumer report D. Application

D. Application

Another name for substandard risk classification is A. Controlled B. Declined C. Elevated D. Rated

D. Rated

Created to keep telemarketers from calling consumers who do not wish to be contacted A. Freedom of Information Act B. Call Control Registry C. National Do Not Call Registry D. Confidential No Call Act

C. National Do Not Call Registry

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

Consideration

When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is A. Personal B. Unilateral C. Conditional D. Aleatory

C. Conditional

What is the purpose of a conditional receipt A. It is given only to applicants who fully prepay the premium B. It is intended to provide coverage on a date prior to the policy issue C. It guarantees that a policy will be issued in the amount applied for D. It serves as proof the applicant has been determined insurable

B. It is intended to provide coverage on a date prior to the policy issue

Which of the following would NOT be considered an exception to the National Do Not Call List? A. Calls which are not commercial or do not inculde unsolicited advertisements B. Calls by or on behalf of a tax-exemption non-profit organizations C. Calls based from outside the United States D. Calls for which the consumer has given prior written permission

C. Calls based from outside the United States

All of the following are marketing arrangements used by insurers EXCEPT A. Direct Response Marketing System B. Independent Agency System C. Reinsurance System D. General Agency System

C. Reinsurance System

Which of the following insurers are owned by stockholders? A. Reciprocal B. Fraternal C. Stock D. Mutual

C. Stock

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

C. Disclose commissions earned from the sale of the policy

Another name for a substandard risk classification is A. Declined B. Elevated C. Rated D. Controlled

C. Rated

An insurer wishes to compare the information given in an insurance application with previous insurance applications by the same applicant but for different companies. What organization can help the insurer accomplish this? A. The Medical Information of Insurance Bureau B. The State Dept of Insurance C. Social Security D. The National Assoc of Insurance Commissioners

A. The Medical Information Bureau

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

B. They must be part of the contract

The term "illustration" in a life insurance policy refers to A. A depiction of policy benefits and guarantees B. Pictures accompanying a policy C. Charts and graphs D. A presentation of nonguaranteed elements of a polichy

D. A representation of nonguaranteed elements of a policy

In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports? A. They provide additional information from an outside source about a particular risk B. They provide information about a customer's character and reputation C. The customer has no knowledge of this action D. The customer's associates, friends, and neighbors provide the report's data

D. The customer's associates, friends, and neighbors provide the report's data

If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? A. 5 days B. 7 days C. 10 days D. 3 days

A. 5 days

The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective? A. As of the application date B. As of the policy delivery date C. As of the first of the month after the policy issue D. As of the policy issue date

A. As of the application date

What document describes an insured medical history, including diagnosis and treatments? A. Attending Physician's Statement B. Physician's Review C. Individual Medical Summary D. Comprehensive Medical History

A. Attending Physician's Statement

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? A. On the designated effective date B. On the application date C. When the agent submits the application to the company and the company issues a conditional receipt D. When the agent delivers the policy, collect the initial premium, and the applicant completes an acceptable Statement of Good Health

D. When the agent delivers the policy, collect the initial premium, and the applicant completes an acceptable Statement of Good Health

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 A. Conditions B. Consideration C. Legal purpose D. Offer and acceptance

A. Conditions

If an applicant for life insurance policy is found to be substandard risk, the insurance company is most likely to A. Charge a higher premium B. Require a yearly medical exam C. Lower it's insurability standards D. Refuse to issue the policy

A. Charge a higher premuim

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

B. Pay the policy proceeds only if it would have issued the policy

Under the Fair Credit Reporting Act, if consumer challenges the correctness of the information contained on the report, the reporting agency must A. Send an actual certified copy of the entire report to the consumer B. Respond to the consumer's complaint C. Defend the report if the agency feels it is accurate D. Change the report

B. Respond to the consumer's complaint

All of the following are considered to be income periods EXCEPT A. Income Dependence Period B. Family Dependency Period C. Retirement Period D. Preretirement Period

Income Dependency Period

What is the income period after the children are no longer dependent upon the surviving spouse for support, but before the surviving spouse qualifies for social security survivor benefits?

Preretirement Period

What is a definition of a Unilateral Contract? A. One author; the company wrote the contract; the insured must accept it as written B. If one party makes a condition, the other party can counteroffer C. One-sided, only one party makes an enforceable promise D. Two or more parties go into a contract understanding there may be an unequal exchange of value

C. One-sided, only one party makes an enforceable promise

All of the following are responsibilities of producers at the time of application EXCEPT A. Explain the nature and type of any receipt the producer is giving to the applicant B. Probe beyond the stated questions if the producer feels the applicant is misrepresenting or concealing information C. Check to make sure there are no unanswered questions on the application D. Change any incorrect statement on the application by personally initialing next to the corrected statement

D. Change any incorrect statement on the application by personally initialing next to the correct statement

Part 2 of the application for life insurance provides questions regarding all of the following EXCEPT A. Family health history B. Alcohol and tobacco consumption C. Recent surgeries D. Other insurance coverages

D. Other insurance coverages

Which of the following stipulates that life insurance premium can be paid in advance of the policy issue A. Grace Period provision B. Policy issuance clause C. Prepayment clause D. Payment of premium clause

D. Payment of premium clause

The factor added to the net premium to cover the costs of the insurer in obtaining and maintaining the business is called A. Dividend accumulation B. Premium Tax C. Expenses D. Legal reserve

C. Expenses

What documentation grants express authority to an agent? A. Agents Insurance license B. Fiduciary Contract C. State Provisions D. Agent's contract with the principal

D. Agent's contract with the principal

An applicant signs an application for a $25,000 life insurance policy, pays the initial premium, and receives a conditional receipt. If the applicant dies the next day, which of the following is true? A. The beneficiary will receive the full death benefit if it is determined that the applicant qualified for the policy B. The premium would be returned to the insured's estate because the policy was not issued C. The death claim would be rejected D. The application will be voided

A. The beneficiary will receive the full death benefit if it is determined that the application qualified for the policy

Which of the following best details the underwriting process for life insurance?

Selection, classification, and the rating of risks

What must happen when an individual policy or annuity has been personally delivered to the policyholder?

The policyowner must sign a delivery receipt

If a change needs to be made to the application for insurance, the agent may do all of the following EXCEPT A. Draw a line through the first answer, record the correct answer, and have the applicant initial the change B. Note on the application the reason for the change C. Destroy the application and complete a new one D. Erase the incorrect answer and record the correct answer

D. Erase the incorrect answer and record the correct answer

Agent D submitted an application for life insurance on client A. No money was sent with the application. When Agent D attempted to deliver the policy, he discovered that A had suffered a heart attack since the application was taken. The agent should A. Mail the policy to the address shown and enclose a statement for the premium B. Attempt to collect the premium and deliver the policy anyway C. Keep the policy until he determines whether A is going to recover D. Return the policy to the insurer

D. Return the policy to the insurer

An insured wants to transfer his personal insurance policy to a friend. Under what conditions would this be possible? A. It is impossible to transfer a policy B. The insured would have to surrender his policy to the insurer, and his friend could then ask to buy it C. The insured can transfer the policy to his friend and then notify the insurer of the change D. The insured will need a written consent of the insurer

D. The insured will need a written consent of the insurer

The factor added to the net premium to cover the costs of the insurer in obtaining and maintaining the business is called A. Expenses B. Legal reserve C. Dividend Accumulation D. Premium tax

A. Expenses

A producer is helping a married couple determine the needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as

Survivor protection

What is material misrepresentation?

A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company

Which is the appropriate action by the insurer if a prospective insured submitted an incomplete application? A. Fill in the blanks to the best of the insurer's knowledge B. Return the application to the applicant for completion C. Issue a policy anyway since the application has been submitted D. Ask the producer who solicited the policy t complete and resign the application

B. Return the application to the applicant for completion

Which of the following information about the applicant is NOT included in the General Information section of the application for insurance A. Marital status B. Medical background C. Gender D. Occupation

B. Medical Background

Telemarketing organizations are required to consult the National Do Not Call Registry at least every A. 31 days B. 6 months C. Year D. 2 weeks

A. 31 days