Chapter Exam Life Insurance Underwriting and Policy Issue

An insurance company needs to obtain personal information from a third party concerning an applicant. Which law do all insurers and their producers need to comply with?

Fair Credit Reporting Act

The principle of insurable interest, in regards to a life insurance contract, is accurately described in which statement?

Insurable interest can be based on the love and affection of individuals related by blood or law

Which of the following statements is CORRECT regarding an individual applying for life or health insruance?

The applicant's medical history may be analyzed and reported

An individual most likely will have an insurable interest in insuring a person's life if

an economic interest exists for the continuance of the insured's life

A change in an insurance application requires

an initial made by the applicant

An attending physician's statement would be appropriate for which life insurance purpose?

at the request of the insurer to assist in the underwriting decision

An applicant has revealed conditions that require more information. Which of the following is needed next?

attending physician's statement

All of these are typically sources of underwriting information for life or health insurance EXCEPT

disclosure authorization response

An applicant intentionally lying to an insurance company on an application in order to obtain a cheaper premium is an example of

fraud

Underwriters can acquire information from all of the following sources EXCEPT

genetic testing

The Medical Information Bureau consists of

life and health insurance companies

What is involved when a life insurance policy has been backdated?

making the policy effective on an earlier date than the present

What are members of the Medical Information Bureau (MIB) required to reports

medical ailments discovered during the underwriting process

Which of these is NOT considered to be a risk factor is life insurance underwriting?

number of children

Which of these is considered to be a document that describes the critical segments of a life insurance policy?

policy summary

A person who is a nonsmoker, of average weight, and in excellent health would most likely be in which risk classification?

preferred

Which of the following risk classifications charges the lowest premium?

preferred

An insurance applicant with a below-average likelihood of loss is typically considered to be a

preferred risk

An insurance producer is often responsible for field underwriting during the application process. All of these are possible field underwriting roles EXCEPT

providing commission information to the applicant

Statements made by an insurance applicant on an application are considered to be

representations

What must an applicant do in order to authorize the release of an attending physician report?

sign a consent form

In regards to a life insurance contract, which of the following statements is NOT true regarding the concept of insurable interest?

insurable interest can be established sufficiently by sentimental attachment alone

Which of the following signatures is not required on an individual insurance application?

insurer

An applicant's character and personal habits can be obtained for underwriting purposes from which source?

investigative consumer report

What is the purpose of the Medical Information Bureau (MIB)

to help underwriters evaluate risk

Which of the following describes a person who is NOT acceptable by an insurer at standard rates because of health history, occupation, or hobbies?

unacceptable risk

Which of the following pertains to the analysis of an applicant's personal information and determining whether insurance should be issued or declined?

underwriting

How many months can a life insurance policy normally be backdated from the date of application?

3

Which scenario would most life insurance polices exclude coverage for?

An individual who has a hobby racing cars once a month

Which of these is likely to occur when life or health insurance is being applied for?

Medical history from the insured may be reviewed and reported

Most U.S. life insurance companies belong to the

Medical information Bureau

All of these are considered sources of underwriting information about an applicant EXCEPT

National Association of Insurance Underwriters

Which of the following is NOT an important reason for a life insurance application?

The beneficiary must sign the application before the insurer will issue the policy

When does a life insurance policy typically become effective?

When initial premium is collected and policy is issued

Upon policy delivery, which of the following must a producer have an applicant sign if no initial premium was collected with the life insurance application?

a good health statement

Preferred risk policies with reduced premiums are issued by insurance companies because the insured has

better than average mortality or morbidity experience

How does a conditional receipt differ from a binding receipt

binding receipts always provide insurance which starts from the date of the receipt

An insurer has a right to screen applicants for HIV in which of the following ways?

blood test for HIV

In which of the following relationships would there NOT be an insurable interest?

business owner to business customer

What would happen if a life insurance applicant is given a conditional receipt from an insurance agent and then dies the next day?

claim will be paid if application is approved

Which of the following would be considered an underwiring duty of an agent?

completing all applications and collecting initial premiums

Field underwriting performed by the producer involves

completing the application and collecting initial premium

A report which is based on creditworthiness and personal characteristics that influences an insurance applicant's eligibility for life and health insurance is called a(n)

consumer report

Signatures for an insurance application MUST be obtained by the producer from all of the following sources EXCEPT

the beneficary

Which of the following would be a valid reason why a policy premium would be higher than the standard premium

the insured does not meet established underwriting requirements

Which of the following does a life insurance policy summary normally include?

the policy's cash value

What happens when an insurance policy is backdated?

the policy's effective date is earlier than the present

A field underwriter's main task is

to ensure an applicant's medical information is accurate and complete

What guarantees that the statements supplied by an insurance applicant are true?

warranty