Chapter 5 Exam

Insurable interest in one's own life is legally considered as

Generally unlimited

The initial premium for life insurance policy is typically paid in what way?

It is typically obtained by the producer and forwarded to the insurer

All of these are duties that a producer may be required to perform when delivering an insurance policy except

Leave a conditional receipt with client

An applicant submits a life insurance application where an investigative consumer report is used in the underwriting process. Which of these statements is true?

Applicant has a right to receive a copy of the report

In what situation could an insurance policy's coverage be modified?

Applicant is a substandard risk

A policyowner pays the first annual premium for a $50,000 life insurance policy and dies one month after the policy effective date. Which of these statements is normally true?

Beneficiary receives $50,000 income tax-free

The principal source of information concerning the applicant's identity, age, and marital status is found in the

Completed application

What must be given to a life insurance applicant when the agent receives an application and the initial premium?

Conditional receipt

Which report contains information regarding an individual's general reputation and credit standing?

Consumer report

Mike applied for life insurance and was issued a conditional receipt. He is later found to be insurable and is issued a new policy. When does his coverage become effective?

Date of issuance of the conditional receipt. An applicant who is given a conditional receipt and is later found to be insurable will have the coverage effective at the time the conditional receipt is issued

Which of these is not an underwriting responsibility of a life insurance agent?

Determining the final rate classification

When an applicant applies for a large amount of life insurance coverage, which of the following would likely not be an underwriting requirement?

Eye examination

When the disclosure of an insured's non public information is involved, what is the insurer obligated to do?

Give notice, explain, and allow opting out

An insured may be required to sign which document at policy delivery to ensure there has not been any adverse medical conditions since the time of application?

Good health statement

The medical information bureau consists of members from which group?

Insurance companies

An insurance policy may be issues with a preferred insurance premium in all of these situations except

Living in a rural area

Which of these is not used as selection criteria in the underwriting process of a life insurance application?

National origin

A signed good health statement may be requested by a life producer at the time of

Policy delivery

When must a producer provide disclosure about information practices to an applicant?

Prior to or at the time of signing the application

When a producer submits an application that discloses personal information regarding the applicant, who supplies the privacy notice?

Producer

Which of these is not considered the responsibility of a producer during the underwriting process?

Selecting the final approval date

K is an agent who takes an application who takes an application for individual life insurance and accepts a check from the client. He submits the application and check to the insurance company, however the check was never signed by the applicant. If the application was approved, when will the coverage be effective?

The date the agent delivered the policy, collected the initial premium, and obtained a good health statement from the insured.

An agent gives a conditional receipt to a client for an insurance policy after collecting the initial premium. When will the policy become effective?

When the conditions of the receipt are met

When does the producer give a premium receipt for a life insurance application?

When the initial premium has been paid with the application

After an applicant reads and signs an insurance application, he/she should be conscious of the fact that

a false statement could lead to loss of coverage

After an insurance application has been originated, the producer normally

is the major personal contact to the insured

Field underwriting by a producer

may result in the disclosure of hazardous activities of the applicant

Where is the difference between a standard risk and a substandard risk reflected?

premium charges

The reason for backdating a policy is

to obtain a premium rate based on an earlier age