Completing the Application, Underwriting, and Delivering the Policy

Material Misrepresentation

A statement that, if discovered, would alter the underwriting decision of the insurance company.

An insured pays a premium of $100 every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered loss. What characteristic of an insurance contract does this describe?

Aleatory

Conditional Receipt

An interim insuring agreement under which the insurance company agrees to start coverage on the later of either the date of application or the date of the medical exam IF the proposed insured is found to be insurable on that date.

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

Buyers guide

Contract of adhesion

Contract prepared by one of the parties (insurer) and accepted or rejected by the other party (insured). The insured has little to say about the policy provisions. In other words, the insurance contracts are offered on a take-it-or-leave-it basis by the insurer.

Life insurance

Coverage on human lives

A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will

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

What describes the specific information about a policy?

Policy summary

which of the following will be included in a policy summary

Premium amounts and surrender values

representations

Statements made by the applicant on the insurance application that are believed to be true, but are not guaranteed to be true.

premium receipt

The receipt an agent normally gives an applicant when the applicant submits an application for life insurance with the first premium payment. The receipt is designed to offer interim coverage while the application is being approved and the policy is being formally issued

misrepresentations

Untrue statements on the application

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

Warranty

Insurance Policy

a contract between a policyowner and an insurance company which agrees to pay the insured or beneficiary for any loss caused by specific events

Agent/Producer

a legal representative of an insurance company; the classification of producer usually includes agents and brokers; agents are the agents of the insurer

Applicant or proposed insured

a person applying for insurance

Warranties

absolutely true statement upon which the validity of the insurance policy depends

Death Benefit

amount paid upon the death of the insured in a life insurance policy

in insurance, an offer is usually made when

an applicant submits an application to the insurer

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

consideration

Which of the following describes the aleatory nature of an insurance contract

exchange of unequal values

Adverse selection

insuring of risks that are more prone to losses than the average risk

Fraud

intentional misrepresentation or deceit with the intent to induce a person to part with something of value

what is the purpose of the conditional receipt

it is intended to provide coverage on a date prior to the policy issue

in the underwriting process, it was determined that the applicant for life insurance is in poor health and has some dangerous habits. Which of the following is true concerning the policy premium

it will likely be higher because the applicant is a substandard risk

Untrue statements on the application unintentionally made by insureds that, if discovered, would alter the underwriting decision of the insurance company

material misrepresentations

Premium

money paid to insurance company for the insurance policy.

Beneficiary

one who receives benefits of insurance policy

Insured

person covered by insurance policy

Policy Owner

person entitled to exercise the rights and privileges in the policy

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

Lapse

policy termination due to nonpayment of premium

Insurer (principal)

the company who issues an insurance policy

An individual applied for an insurance policy and paid the initial premium. The insurer issued 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 date?

the date of medical exam

Aleatory Contract

values exchanged may not be equal but depend on an uncertain event