Basic Fundamentals of Insurance (Quiz)

An insured pays a $100 premium 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

An agent makes a mistake on the application and then corrects his mistake by physically entering the necessary information. Who must then initial that change?

Applicant

When delivering a policy, which of the following is an agent's responsibility?

Collect payment at time of delivery

Who makes up the Medical Information Bureau?

Insurers

Insurance is the transfer of

Risk

The law that protects consumers against the circulation of inaccurate or obsolete information is known as

The Fair Credit Reporting Act

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

The applicant has a prior felony conviction?

Insurable interest can be best described by which of the following?

The applicant must experience a financial loss due to an accident or sickness that befalls the insured.

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

The application given to a prospective insured

In forming an insurance contract, when does acceptance usually occur?

When an insurer's underwriter approves coverage

What document describes an insured's medical history, including diagnoses and treatments?

Attending Physician's Statement

An insurance contract must contain all of the following information to be considered legally binding except?

Beneficiary's consent

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?

Conditional

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

Conditional

A life insurance policy has legal purpose if both of which of the following elements exist?

Insurable interest and consent

Which of the following best describes the MIB?

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

An agent is in the process of replacing the insured's current health insurance policy with a new one. Which of the following would be a proper action?

The old policy should stay in force until the new policy is issued.

If an insurance company wishes to order an inspection report on an applicant to assist in the underwriting process, and if a notice of insurance information practices has been provided, the report could contain all of the following information except the applicant's

Ancestry

The proposed insured makes the premium payment on a new insurance policy. If the insured should die, the insurer will pay the death benefit to the beneficiary if the policy is approved. This is an example of what kind of contract?

Conditional

Before an agent delivers a policy, the insurer makes a last-minute change to the policy. The agent informs the insured of this change, and he accepts it. In response, the insurer must

Have the insured sign a statement acknowledging that he is aware of the change.