Texas life insurance ch1

Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. What contract characteristic does this describe? APersonal BAdhesion CUnilateral DConditional

B.)A contract of adhesion is prepared by only the insurer; the insured's only option is to accept or reject the policy as it is written.

What is a material misrepresentation? AAny misstatement made by an applicant for insurance BAny misstatement by the producer CConcealment DA statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company

D.)A material misrepresentation is a statement that, if discovered, would alter the underwriting decision of the insurance company.

An underwriter may obtain information on an applicant's hobbies, financial status, and habits by ordering a(n) AMedical examination. BAttending Physician Statement. CInspection report. DMedical Information Bureau report.

C.)An inspection report may be ordered about an applicant from an independent investigating firm or credit agency. It is a general report of the applicant's finances, character, work, hobbies, and habits.

In insurance, an offer is usually made when A.) an applicant submits an application to the insurer B.) The insurer approves the application and receives the initial premium C.)The agent hand the policy to the policy owner D.)An agent explains a policy to a potential applicant

A (In insurance, the offer is usually made by the applicant in the form of the application. Acceptance takes place when an insurer's underwriter approves the application and issues a policy.)

An insurer receives a report regarding a potential insured that includes the insured's financial status, hobbies and habits. What type of a report is that? AInspection Report BMedical Information Bureau's report CAgent's Report DUnderwriter's Report

A.)Inspection reports cover moral and financial information regarding a potential insured, usually supplied by private investigators and credit agencies. Companies that use inspection reports are subject to the rules outlined in the Fair Credit Reporting Act.

In classifying a risk, the Home Office underwriting department will look at all of the following EXCEPT AApplicant's present occupation. BApplicant's past income. CApplicant's past medical history. DApplicant's present physical condition.

B.)In classifying a risk, the Home Office underwriting department will look at the applicant's past medical history, present physical condition, occupation, habits and morals.

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

D.)A conditional contract requires both the insurer and policyowner to meet certain conditions before the contract can be executed, unlike other types of policies which put the burden of condition on either the insurer or the policyowner.

When is the earliest a policy may go into effect? AWhen the insurer approves the application BAfter the underwriter reviews the policy CWhen the application is signed and a check is given to the agent DWhen the first premium is paid and the policy has been delivered

C.)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.

Which of the following will be included in a policy summary? ACopies of illustrations and application BComparisons with similar policies CPrimary and secondary beneficiary designations DPremium amounts and surrender values

D.)A policy summary must be delivered along with the policy and will provide the producer's name and address, the insurance company's home office address, the generic name of the policy issued, and premium, cash value, surrender value and death benefit figures for specific policy years.

Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as AAleatory contracts. BBinding contracts. CContracts of adhesion. DUnilateral contracts.

C.)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.

Which of the following individuals must have insurable interest in the insured? A.)Beneficiary B.)Underwriter C.)Producer D.)Policyowner

D.)The policyowner must have an insurable interest in the insured (his/her own life if the policyowner and the insured is the same person), or in the life of a family member or a business partner.

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? APolicy Summary BIllustrations CBuyer's Guide DInsurance Index

C.)The Buyer's Guide is a consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process. It is a generic guide that does not address the specific policy of the insurer, instead explaining life insurance in a way that the average consumer can understand.

Which of the following best describes the MIB? AIt is a member organization that protects insured against insolvent insurers. BIt is a rating organization for health insurance. CIt is a nonprofit organization that maintains underwriting information on applicants for life and health insurance. DIt is a government agency that collects medical information on the insured from the insurance companies.

C.)The Medical Information Bureau (MIB) is a nonprofit trade organization which receives adverse medical information from insurance companies and maintains confidential medical impairment information on individuals.

If an applicant for a life insurance policy is found to be a substandard risk, the insurance company is most likely to ARequire a yearly medical examination. BLower its insurability standards. CRefuse to issue the policy. DCharge a higher premium.

D.)The premium rate will be adjusted to reflect the insurer's increased risk.

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? AAdhesion BConsideration CGood faith DRepresentation

B.)The binding force in any contract is consideration. Consideration on the part of the insured is the payment of premiums and the health representations made in the application. Consideration on the part of the insurer is the promise to pay in the event of loss.

If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? A5 days B7 days C10 days D3 days

A.)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.

Part 2 of the application for life insurance provides questions regarding all of the following EXCEPT AOther insurance coverages. BFamily health history. CAlcohol and tobacco consumption. DRecent surgeries.

A.)Part 2 of the application contains questions regarding the applicants' health history. Part I of the application includes questions regarding current coverage being applied for as well as any other insurance coverage with the same or other insurers.

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? AThe date of application BThe date of medical exam CThe date of policy delivery DThe date of issue

C.)If the company acknowledges receipt of the premium with a conditional receipt, the policy is in effect on the date of the application or the date of the medical exam (whichever is later), provided that the applicant is found insurable at the rate applied for.