Finance Chapter 1

Disputes regarding consumer report information

According to the Fair Credit Reporting Act, all of the following would be considered negative information about a consumer EXCEPT

Change any incorrect statement on the application by personally initialing next to the corrected statement

All of the following are duties and responsibilities of producers at the time of application EXCEPT

Education

All of the following information about the applicant is identified in the General Information section of a life insurance application EXCEPT

When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health

An agent and an applicant for life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will coverage begin?

Lower premiums than a person who receives a standard risk

An applicant who receives a preferred risk classification qualifies for

The date of the medical exam

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?

Beneficiary's Consent

An insurance contract must obtain all of the following to be considered legally binding EXCEPT

conditional

An insurance contract requires that both the insured and insurer meet certain conditions in order for the contract to be enforceable. What contract characteristic does this describe?

Consideration

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?

Inspection Report

An insurer receives a report regarding a potential insured that includes the insured's financial status, hobbies, and habits. What type of report is that?

Rated

Another name for a substandard risk classification is

Contracts of Adhesion

Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as

Contracts of adhesion

Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as

With the policy

If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant no later than

Unilateral

If only one party to an insurance contract has made a legally enforceable promise, what kind of contract is it?

Applicant's past income

In classifying a risk, the Home Office underwriting department will look at all of the following EXCEPT

An applicant submits an application to the insurer

In insurance, an offer is usually made when

Loss

Insurance is a contract by which one seeks to protect another from...

As of the application date

The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective?

Signed waiver of premium

Upon policy delivery, the producer may be required to obtain any of the following EXCEPT

It is intended to provide coverage on a date prior to the policy issue

What is the purpose of a conditional receipt?

Return the application to the applicant for completion

Which is the appropriate action by the insurer if a prospect insured submitted an incomplete application?

Application

Which is the primary source of information used for insurance underwriting?

Aleatory

Which of the following best describes the concept that the insured pays a small amount of premium for a large amount of risk on the part of the insurance company?

Policy owner

Which of the following individuals must have insurable interest in the insured?

The application given to a prospective insured

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

Application

Which of the following is the basic source of information used by the company in the risk selection process?

A debtor has an insurable interest in the life of a lender.

Which of the following statements is NOT true concerning insurable interest as it applies to life insurance?

Premium amounts and surrender values

Which of the following will be included in a policy summary?

To help the insured understand all aspects of the contract.

Why should the producer personally deliver the policy when the first premium has already been paid?