Chapter 1: Completing the application, underwriting, and delivering the policy

What is the maximum penalty for habitual willful non compliance with the Fair Credit Reporting Act?

$2,500

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

5 days

Which is the primary source information used for insurance underwriting?

Application

Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT

Conditions

When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following?

Consideration

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

Erase the incorrect answer and record the correct answer.

Which of the following best describes the aleatory nature of an insurance contract?

Exchange of unequal values

An applicant is denied insurance because of info found on a consumer report. Which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company?

Fair Credit Reporting Act

Who makes up the Medical Information Bureau?

Insurers (this is so the insurers can compare the info that have collected on the individual)

Which part of the insurance application would contain information regarding the cause of death of the applicants deceased relatives?

Medical information

Part 2 of the application for life insurance provides questions regarding all of the following except

Other insurance coverages

What describes the specific information about a policy?

Policy summary (A policy summary describes the features and elements of the specific policy for which a person is applying.)

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

Return the application to the applicant for completion

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

Signed waiver of premium

Which of the following statements is correct about a standard risk classification in the same age group and with similar lifestyles?

Standard risk is representative of the majority of people

Which of the following would be qualify as a competent party in an insurance contract?

The applicant has a prior felony

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

The application given to a prospective insured

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

Their premiums are lower.

What is the purpose of the buyers guide?

To allow the consumer to compre the costs of different policies.

In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe?

Unilateral

In forming an insurance contract, when does acceptance usually occur:

When an insured underwriter approves coverage.

If an applicant for a life insurance policy and person to be insured by the policy are two different people, the underwriter would be concerned about:

Whether an insurable interest exist between the individuals.

If a policy includes a free-look period of at least 10 days, the Buyer's Guide must be delivered to the applicant

with the policy

Which of the following documents delivered to the policy owner includes information about premium amounts, cash values, surrender values and death benefits for specific policy years?

A policy summary

Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?

Warranty