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