The Application

When Y applied for insurance and paid the initial premium on August 14, he was issued a conditional receipt. During the underwriting process, the insurance company found no reason to reject the risk or classify it other than as standard. Y was killed in an automobile accident on August 22, before the policy was issued. In this case, the insurance company will A. Issue the policy anyway and pay the face value to the beneficiary B. Negotiate a reduced settlement with the beneficiary due to the unusual circumstances involved C. Return the premium to Y's estate, since it has no obligation to pay the death claim D. Keep the premium and reject the risk on the basis that the applicant died before the policy could be issued

A. Issue the policy anyway and pay the face value to the beneficiary

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

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

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 insurers 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 to complete and resign the application

B. Return the application to the applicant for completion

When is the earliest a policy may go into effect? A. When the first premium is paid and the policy has been delivered B. When the insurer approves the application C. After the underwriter reviews the policy D. When the application is signed and a check is given to the agent

D. When the application is signed and a check is given to the agent

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

A. Alcohol and tobacco consumption

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

A. Erase the incorrect answer and record the correct answer

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

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

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

C. Application

The insurer discovered that one of the applicants for life insurance missed a couple of questions on the application. What must the insurer do with the application? A. Acknowledge the missed questions with a signature and continue the policy issue process B. Proceed with issuing a policy C. Return to the applicant for completion D. Answer the missed questions for the applicant

C. Return to the applicant for completion

Which of the following is NOT a party to an applicant for life insurance? A. Proposed insured B. Applicant C. Policyowner D. Beneficiary

D. Beneficiary