Field Underwriting Procedures

Something of value exchanged between the insurer and the insured is considered a(n) A) Consideration. B) Offer. C) Acceptance. D) Legal capacity.

A

An insurance contract requires that both the insured and the insurer meet certain conditions in order for the contract to be enforceable. What contract characteristic does this describe? A) Contingent B) Aleatory C) Unilateral D) Conditional

D

In which of the following examples would a contract between an insurer and prospective insured be legal? A) The applicant is a 12-year-old student. B) The applicant is under the influence of medication at the time of application. C) The applicant has a prior felony conviction. D) The applicant is intoxicated at the time of application.

X

An insurer is attempting to determine the insurability of an applicant and decides to obtain medical information from several different sources. Which entity must be notified of the investigation? A) The applicant B) The Commissioner of Insurance C) The medical examiner D) The State Department of Insurance

A

An applicant for a health insurance policy returns a completed application to her agent, along with a check for the first premium. She receives a conditional receipt two weeks later. Which of the following has the insurer done by this point? A) Approved the application B) Issued the policy C) Neither approved the application nor issued the policy D) Both approved the application and issued the policy

C

Before a customer's agent delivers his policy, the insurer makes a last-minute change to the policy. The agent informs the customer of this change, and he accepts it. What must the agent do now? A) The agent should ask the customer to sign a statement acknowledging that he is aware of the change. B) Nothing. After the explanation, the agent is not legally bound to do anything else. C) The agent must notify the beneficiary of the change in policy. D) If the change would affect the premium, the agent must have the customer sign a statement acknowledging the change.

A

Insurable interest can be best described by which of the following? A) All beneficiaries need to have notification of their status. B) It is not necessary for the insured to be aware of the insurable interest or give permission for the insurance that is to be written C) The applicant must experience a financial loss due to an accident or sickness that befalls the insured. D) The insured must be genuinely interested in the life of the applicant.

C

Pre-existing conditions are defined as A) Illnesses for which the insured seeks medical treatment after policy issue. B) Accidents an insured had before policy issue. C) Illnesses for which the insured sought medical treatment prior to policy issue. D) Accidents an insured had after policy issue.

C

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 State Department of Insurance B) Social Security C) The National Association of Insurance Commissioners D) The Medical Information Bureau

D

An insurer has made all of the decisions regarding the provisions included in the insured's policy. The insured finds an objectionable provision and wants to negotiate it with the insurer but is not allowed to do so. Her only options are to reject the policy or accept it as is. Which contract feature does this describe? A) Personal B) Adhesion C) Unilateral D) Conditional

B

An insurance contract must contain all of the following to be considered legally binding EXCEPT A) Consideration. B) Competent parties. C) Beneficiary's consent. D) Offer and acceptance.

C

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? A) Representation B) Adhesion C) Consideration D) Good faith

C

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

C

All of the following are true regarding the Medical Information Bureau (MIB) EXCEPT A) MIB information is reported to underwriters in coded form. B) MIB reports contain previous insurance information. C) Insurers may not refuse to accept an application solely due to information in an MIB report. D) MIB reports are based upon information supplied by doctors and hospitals.

D

Before a customer's agent delivers his policy, the insurer makes a last-minute change to the policy. The agent informs the customer of this change, and he accepts it. What must the agent do now? A) Nothing. After the explanation, the agent is not legally bound to do anything else. B) The agent must notify the beneficiary of the change in policy. C) If the change would affect the premium, the agent must have the customer sign a statement acknowledging the change. D) The agent should ask the customer to sign a statement acknowledging that he is aware of the change.

D

In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe? A) Unidirectional B) Aleatory C) Conditional D) Unilateral

D

In terms of parties to a contract, which of the following does NOT describe a competent party? A) The person must not be under the influence of drugs or alcohol. B) The person must be of legal age. C) The person must be mentally competent to understand the contract. D) The person must have at least completed secondary education.

D

Underwriting is a major consideration when an insured wishes to replace her current policy for all of the following reasons EXCEPT A) Due to age or health, the policy may change dramatically. B) Pre-existing conditions that were previously covered may not be covered under the replacing policy. C) Benefits may change. D) Premiums always stay the same.

D

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

D

Mr. R. purchases a health insurance policy for his daughter, who recently graduated from college. The daughter receives the required medical examination, and the insurance application. Who needs to sign the application? A) The agent, Mr. R and his daughter B) Mr. R. since he is purchasing the policy C) The daughter since she is the proposed insured D) Both Mr. R. and his daughter

A

An insured is upset that her new health insurance policy was delivered to her by certified mail and not through her agent. Which of the following is true? A) There is nothing wrong with this form of policy delivery. B) The insured should complain to the insurer. C) The insured should ask for a new policy to be delivered. D) The policy will not be legal until it is delivered by an agent.

A

In a replacement situation, all of the following must be considered EXCEPT A) Assets. B) Benefits. C) Limitations. D) Exclusions.

A

Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as A) Binding contracts. B) Contracts of adhesion. C) Unilateral contracts. D) Aleatory contracts.

B

An agent tries to sell insurance over the phone to an applicant who appears to be confused, but is eventually able to give enough information for the application to be completed. After the policy was issued, the agent talked to the insured's family, and they explained that the insured was recovering from a surgery and might have been under the influence of medication at the time of application. Which of the following is true? A) The policy is not legal; agents cannot sell insurance over the phone. B) The policy may be voided if it can be proven that the applicant was not capable of making a buying decision at the time of application. C) The policy will remain in force as long as there are no material misrepresentations on the application. D) The policy is legal since the applicant was able to give all required information.

B

Which is true regarding obtaining underwriting sources? A) It is illegal to obtain information from outside sources in order to determine an applicant's insurability. B) The applicant must be informed of the sources contacted and how the information is being gathered. C) The insurer does not need to inform the applicant of how the information is gathered; informing only of the source is sufficient. D) The insurer only needs to inform the applicant of how the information is being gathered; it is not necessary to disclose the sources.

B

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

D