Chapter 1

IF a change needs to be made to the application for insurance, the agent may do all the following EXCEPT

erase the incorrect answer and record the correct answer

Which of the following statements is NOT true concerning insurable interest as it applies to life insurance

A debtor has an insurance interest in the life of a lender.

Which of the following is NOT an example of valid insurable interest

Debtor in the life of the creditor

Which of the following is NOT an essential element of an insurance contract?

Counteroffer

Which of the following is NOT true concerning insurable interest as it applies to life insurance?

A debtor has an insurable interest in the life of a lender

Which is the primary source of information used for insurance underwriting

Application

What describes the specific information about a policy

Buyer's guide

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?

Buyer's guide

All of the following are duties and responsibilities of producers at the time of application EXCEPT

Change any incorrect statement on the application by personally intialing next to the corrected statement.

A producer must do all of the following when delivering a new policy to the insured

Collect any premium due Explain the rating procedures if the policy is rated differently than applied for Explain the policy provisions, riders, and exclusions

When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is

Conditional

Because an insurance policy is legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT

Conditions

Most of the agents try to the 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

Premium receipt

When agents try to collect the initial premium for submission with the application. When an agent collects the initial premium for the applicant, the agent should issue the applicant a

Premium receipt

A producer must do all of the following when delivering a new policy to the insured EXCEPT

Disclose the commissions earned from the sale of the policy

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

If it is intentional and material

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

What do individuals use to transfer the risk of loss to a larger group

Insurance

Who makes up the medical information board?

Insurers

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 ...

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

If an agent fails to obtain an applicant's signature on the application, the agent must

Return the application to the applicant for a signature

As a field underwriter, a producer is responsible for all of the following tasks EXCEPT

Issue the policy that is requested

Which of the following best describes the MIB?

It is a nonprofit organization that maintains underwriting information on applicants for life and health insurance.

Which of the following information about the insurance is NOT included in the General information section of the application for insurance?

Medical background

Which is the appropriate action by the insurer if a prospective insured submitted an incomplete application

Return the application to the applicant for completion

Insurance is the transfer of

Risk

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

Selection, classification, and rating of risks

Which of the following statements is correct about a standard risk classification in the same age group and with similar lifestyles

Standard risk is representative of majority of people

Which of the following types of risk will result in the highest premium

Substandard risk

Which of the following would qualify as a competent party in an insurance contract

The applicant has a prior felony conviction

Which of the following would qualify as a competent party in an insurance contract?

The applicant has a prior felony conviction

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 beneficiary will receive the full death benefit if it determined that the applicant qualified for the policy

An individual applied for an insurance policy and paid the initial premium. The insurer issues a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective data?

The data of medical exam

Which of the following would provide an underwriter with information concerning an applicant's health history

The medical Information Bureau

What is the purpose of the buyer's guide

To allow the consumer to compare the costs of different policies

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

Warranty

If an applicant for a life policy and person to be insured by the policy are two different people, the underwriter would be concern about

Whether an insurable interest exists between the individuals

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated?

Consideration

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

Which of the following is NOT an essential element of an insurance contract

Counteroffer

Which of the following will be included in a policy summary?

Premium amounts and surrender values

Which of the following is NOT the consideration in a policy?

The application given to a prospective insured

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

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

Which employees of an insurance company are responsible for the final risk selection

Underwriters