Life & Health Insurance: Chapter 1 missed questions

Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained? A. 3 days B. 5 days C. 10 days D. 14 days

A. 3 days Investigative consumer reports cannot be made unless the consumer is advised in writing about the report within 3 days of the date the report was requested.

All of the following are duties and responsibilities of producers at the time of application EXCEPT A. Change any incorrect statement on the application by personally initialing next to the corrected statement. B. Explain the nature and type of any receipt the producer is giving to the applicant. C. Probe beyond the stated questions if the producer feels the applicant is misrepresenting or concealing information. D. Check to make sure that there are no unanswered questions on the application.

A. Change any incorrect statement on the application by personally initialing next to the corrected statement. Any changes to information on an application must be initialed by the applicant.

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? A. Consideration B. Good faith C. Representation D. Adhesion

A. Consideration Consideration on the part of the insurer is the promise to pay in the event of loss.

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? A. Warranty B. Aleatory C. Adhesion D. Subrogation

B. Aleatory An insurance contract is an aleatory contract in that it requires a relatively small amount of premium for a large risk. (Unequal exchange)

When Y applied for insurance and paid the initial premium on August 14, he was issued a conditional receipt. During the underwriting process, the insurance company found no reason to reject the risk or classify it other than as standard. Y was killed in an automobile accident on August 22, before the policy was issued. In this case, the insurance company will A. Keep the premium and reject the risk on the basis that the applicant died before the policy could be issued. B. Issue the policy anyway and pay the face value to the beneficiary. C. Negotiate a reduced settlement with the beneficiary due to the unusual circumstances involved. D. Return the premium to Y's estate, since it has no obligation to pay the death claim.

B. Issue the policy anyway and pay the face value to the beneficiary. The conditional receipt says that coverage will be effective either on the date of the application or the date of the medical exam, whichever occurs last, as long as the applicant is found to be insurable as a standard risk, and policy is issued exactly as applied for.

Which of the following information about the applicant is NOT included in the General Information section of the application for insurance? A. Marital status B. Medical background C. Gender D. Occupation

B. Medical background Part 1 - General Information of the application includes the general questions about the applicant, including name, age, address, birth date, gender, income, marital status, and occupation. The applicant's medical background is addressed in Part 2 - Medical Information.

A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will A. Automatically pay the policy proceeds. B. Pay the policy proceeds only if it would have issued the policy. C. Pay the policy proceeds up to an established limit. D. Not pay the policy proceeds under any circumstances.

B. Pay the policy proceeds only if it would have issued the policy. The conditional receipt says that coverage will be effective either on the date of the application or the date of the medical exam, whichever occurs last, as long as the applicant is found to be insurable as a standard risk, and policy is issued exactly as applied for.

When is the earliest a policy may go into effect? A. After the underwriter reviews the policy B. When the application is signed and a check is given to the agent C. When the first premium is paid and the policy has been delivered D. When the insurer approves the application

B. When the application is signed and a check is given to the agent The policy can be effective as early as the date of the application, if the premium is submitted with the application and the policy is issued as applied for.

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 A. Prior to filling out an application for insurance. B. With the policy. C. Upon issuance of the policy. D. Within 30 days after the first premium payment was collected.

B. With the policy. If a life insurance policy contains a free-look period of at least 10 days, the buyer's guide can be delivered with the policy. If it doesn't, the buyer's guide must be delivered prior to accepting the initial premium.

Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as A. Aleatory contracts. B. Binding contracts. C. Contracts of adhesion. D. Unilateral contracts.

C. Contracts of adhesion Insurance policies are written by the insurer and submitted to the insured on a take- it-or-leave-it basis. The insured does not have any input into the contract, but simply adheres to the contract.

In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports? A. They provide information about a customer's character and reputation. B. The customer has no knowledge of this action. C. The customer's associates, friends, and neighbors provide the report's data. D. They provide additional information from an outside source about a particular risk.

C. The customer's associates, friends, and neighbors provide the report's data. Both consumer reports and investigative consumer reports provide additional information from an outside source about a customer's character and reputation, and both types of reports are used under the Fair Credit Reporting Act. The main difference is that the information for investigative consumer reports is obtained through an investigation and interviews with associates, friends and neighbors of the consumer.

If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? A. 7 days B. 10 days C. 3 days D. 5 days

D. 5 days Consumers must be advised that they have a right to request additional information concerning investigative consumer reports, and the insurer or reporting agency has 5 days to provide the consumer with the additional information.

A life insurance policy has a legal purpose if both of which of the following elements exist? A. Underwriting and reciprocity B. Offer and counteroffer C. Policyowners and named beneficiaries D. Insurable interest and consent

D. Insurable interest and consent To ensure legal purpose of a life insurance policy, it must have both insurable interest and consent.