Chapter 1 Need to study

Another name for a substandard risk classification is?

Rated

What is the purpose of the buyer's guide?

To allow the consumer to compare 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

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 of the following is NOT an example of a valid insurable interest?

Debtor in the life of the creditor

An underwriter may obtain information on an applicant's hobbies, financial status, and habits by ordering a(n)

Inspection report

An investor buys a life policy on an elderly person in order to sell it for a life settlement. This is an example of

A STOLI policy

If an insurance company wishes to order a consumer report on an applicant to assist in the underwriting process, and if a notice of insurance information practices has been provided, the report may contain all of the following information EXCEPT the applicant's

Ancestry

In classifying a risk, the Home Office underwriting department will look at all of the following EXCEPT

Applicant's past income

If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered to be

Authorized

When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is

Conditional

Stranger-originated life insurance policies are in direct opposition to the principle of

Insurable interest

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

Other insurance coverages

What is the major difference between a stock company and a mutual company?

Ownership

The Federal Fair Credit Reporting Act

Regulates consumer reports

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

All of the following are requirements for life insurance illustrations EXCEPT

They must be part of the contract

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

3 days

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?

Aleatory

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 of the following best describes the MIB?

It is a nonprofit organization that maintains underwriting information on applicants for life and health insurance.

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

Their premiums are lower

Which of the following will be included in a policy summary?

Premium amounts and surrender values

An applicant signs an application for a $25,000 life insurance policy, pays the initial premium, and receives a conditional receipt. If the applicant is killed in an automobile accident the next day,

The beneficiary will receive the full death benefit if it is determined that the applicant qualified for the policy.

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 exists between the individuals

What is the timeframe for filing relevant Suspicious Activity Reports?

Within 30 days of initial discovery

As a field underwriter, a producer is responsible for all of the following tasks EXCEPT

issue the policy that is requested