Types of Property Polices - Questions

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

Application

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

Buyer's Guide

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?

Consideration

What do individuals use to transfer their risk of loss to a larger group?

Insurance

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

Loss

Untrue statements on the application unintentionally made by insureds that, if discovered, would alter the underwriting decision of the insurance company, are called

Material misrepresentations

Whose responsibility is it to determine that all the questions on an insurance application are answered?

The producer

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

They get lower premiums

Four essential elements of a legally binding contract

1. Agreement - offer and acceptance 2. Consideration 3. Competent Parties 4. Legal Purpose

If a change needs to be made to the application for insurance, the agent may do all of the following:

1. Draw a line through the first answer, record the correct answer, and have the applicant initial the change 2. Note on the application the reason for the change 3. Destroy the application and complete a new one

What is the underwriting process for life insurance?

1. Selection 2. Classification 3. Rating of Risks

All of the following are requirements for life insurance illustrations:

1. They must identify nonguaranteed values 2. They must differentiate between guaranteed and projected amounts 3. They may only be used as approved

If an agent fails to obtain the applicant's signature on the insurance application, the agent must:

Return the application to the applicant for a signature

A producer must do all of the following when delivering a new policy to the insured:

1. Explain the policy provisions, riders, and exclusions 2. Collect any premium due 3. Explain the rating procedures if the policy is rated differently than applied for

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

1. Gender 2. Occupation 3. Age

In terms of parties to a contract, what is a competent party?

1. Must not be under the influence of drugs or alcohol 2. Must be of legal age 3. Must be mentally competent to understand the contract

An insurance contract must contain all of the following:

1. Offer and acceptance 2. Consideration 3. Competent parties

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

Issue the policy anyway and pay the face value to the beneficiary

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

Return the application to the applicant for completion

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?

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