Insurance Ch. 1

3 days

Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained

Personally by the agent or mailed

How can health insurance policies be delivered to the insured?

Adverse selection

People who are more likely to submit insurance claims are seeking insurance more often than preferred risks

The Producer

The responsibility of making certain that an application for insurance is filled out completely, correctly, and to the best of his knowledge is the responsibility of

When it may alter the underwriting decision

When would a misrepresentation be considered material?

The Policyowner

Who must have insurable interest in the insured?

Discusses the agent's personal observations about the proposed insured that may help in the underwriting process

What is the purpose of the agent's report during the application process?

To allow the consumer to compare the costs of different policies

What is the purpose of the buyer's guide?

Buyer's Guide

A consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process.

Policy Replacement

A new policy is issued while an existing policy is terminated or reissued with a reduction in cash value.

the insurer approves a prepaid application

Acceptance occurs when

Warranty

An absolute true statement upon which the validity of the insurance contract is based

The policy will be interpreted as if the insurer waived its right to have an answer on the application

If an insurer issued a policy based on the application that had unanswered questions, which of the following is true?

Provide the applicant a Disclosure Authorization Notice

If an insurer needs to obtain information about the applicant from investigators, what is the insurer required to do?

The insurer

If an insurer requires a medical examination of an applicant in connection with the application for life insurance, who is responsible for paying the cost for the associated costs of the exam?

Standard, substandard, and preferred

What are the 3 types of risk rating classifications in life insurance?

Their premiums are lower

What is true regarding insureds who have been classified as preferred risks?

Preferred risk

What risk classification would typically qualify for lower premiums?

At the time of policy delivery

When must the policy summary for a life insurance policy be delivered to the policyowner?

Insurance underwriting

the process of risk selection and classification

Risk Selection

What is the main responsibility of a company's underwriting unit?

When an insurer's underwriter approves coverage

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

Loss

Insurance is a contract that protects the insured from what?

Policy Summary

What describes the specific information about a policy?

Consumer Report

Which of the following includes information regarding a person's credit, character, reputation, or habits?

Return to the applicant for completion

The insurer discovered that one of the applicants for life insurance missed a couple of questions on the application. What should the insurer do with the application?

A policy summary

A document delivered to the policyowner includes information about premium amounts, cash values, surrender values and death benefits for specific policy years

The agent

If an applicant does not receive his or her insurance policy, who would be held responsible?

Statement of good health, payment of premium, or delivery receipt

Upon policy delivery, the producer may be required to obtain

The Fair Credit Reporting Act

What law protects consumers form the circulation of inaccurate or obsolete information?

When the insurance application is submitted

In insurance, when is the offer usually made on a contract?

Insurers

What entities make up the MIB?

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

What is the purpose of a conditional receipt?

Investigative Consumer Report

What report is used to assess risk associated with a health insurance applicant's lifestyle and character?

Inspection Report

What type of report provides information about the applicant's hobbies, habits, and financial status?

Consideration

When an insured makes truthful statements on the application for insurance and pays the required premium

Through interviews with the applicant's associates, friends, and neighbors

How is the information obtained for an investigative consumer report?

Complete a new application or ask the applicant to initial the correction on the original application.

When a change needs to be made on the application for insurance, which is the best method for correcting the info?

When it is intentional and material

When would a misrepresentation on an insurance application be considered fraud?

The policyowner

Who must have insurable interest in the insured?

Selection, classification, and rating of risks

Underwriting process for life insurance

Insurable interest and consent

What 2 elements are necessary for a life insurance contract to have a legal purpose?

Agreement, consideration, competent parties, and legal purpose

What are the 4 elements of an insurance contract?

5 days

If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?

Charge a higher premium

If an applicant for a life insurance policy is found to be at substandard risk, the insurance company is most likely to

MIB

A nonprofit organization that maintains underwriting information on applicants for life and health insurance.

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 a 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?

The existence of insurable interest between the applicant and the insured

If an applicant for a life insurance policy and the potential insured are 2 different people, what would be the underwriter's main concern?

Insuring your own life, the life of a family member, or the life of a business partner or someone who has a financial obligation to the policyowner

What are the 3 main instances when insurable interest exists in life insurance?