Chapter 1 Quiz

In an insurance contract, consideration refers to:

Exchange of something of value by both parties.

All of the following may have an insurable interest in the insured EXCEPT:

Insured's best friend.

Over several years, a policy owner paid $10,000 in premiums for his insurance policy. When he suffered a loss, the insurance company paid %40,00 in benefits. What characteristic of an insurance contract does this describe?

Aleatory

Which of he following is considered a field underwriter?

An agent.

When must insurable interest exist in life insurance?

Application or issue date.

Representations are statements made by the applicant that are:

Considered true to the best part of the applicant's knowledge.

Which of the following includes information regarding a person's credit, character, reputation, and habits?

Consumer Report.

What is the main responsibility of a company's underwriting unit?

Risk selection and classification.

If the agent feels that there could be misrepresentation on the part of the applicant for insurance, what must the agent do?

Inform the insurance company.

An insured submits the full premium along with a completed application, and the policy is issued 10 days later. When does the coverage begin?

On the date of the application.

If no receipt is issued at the time of application, a statement of good health is usually required at the time of:

Policy delivery.

If an agent fails to obtain an applicants signature on the insurance application, the agent must:

Return the application to the applicant for signature.

The Medical Information Bureau is:

A source of medical information to alert insurers to adverse medical history.

Which of the following would be the main source of underwriting information used by the company in the risk selection process?

Application

Which of the following best describes the purpose of the USA PATRIOT Act with regards to the insurance industry?

To prevent terrorism activities through monitoring of financial transactions.