Chapter 1
What is the purpose of a conditional receipt?
It is intended to provide coverage on a date earlier than the date of the issuance of the policy.
2 parts of an insurance application
Part 1: General info Part 2: Medical info
What would provide an underwriter with information concerning an applicant's health history?
The Medical Information Bureau (MIB)
In forming an insurance contract, when does acceptance usually occur?
When an insurer's underwriter approves coverage
Purpose of the buyer's guide?
allow consumer to compare the costs of different policies
What type of report includes information regarding a person's credit, character, reputation, and habits?
consumer report
Stranger-originated life insurance policies are in direct opposition to the principle of
insurable interest
When does policy go in to effect?
on the date of the application or the date of the medical exam (whichever is later)
Under the Fair Credit Reporting Act, if the consumer challenges the accuracy of the information contained in his or her report, the reporting agency must
respond to the consumer's complaint
insurable interest
stranger originated life insurance policies are in direct opposition to the principle of:
Adhesion
take it or leave it
Basic source of information used by the company in the risk selection process?
the application
Aleatory Insurance Contract
unequal exchange
illustrations
-must differentiate between guaranteed and projected amounts -may only be used as approved -must identify nonguaranteed values
Representations
-statements believed to be true to the best of one's knowledge, but they are not guaranteed to be true -answers the insured gives to the questions on the insurance application
If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?
5 days
The four essential elements of all legal contracts?
Agreement, consideration, competent parties, and legal purpose
Another name for a substandard risk classification is?
"Rated"
An applicant who receives a preferred risk classification qualifies for
lower premiums than a person who receives a standard or substandard risk
What is the purpose of a disclosure statement in life insurance policies?
to explain features and benefits of a proposed policy to the consumer
A statement that is guaranteed to be true, and if untrue, may breach an insurance contract?
warranty
If a policy includes a free-look period of at least 10 days, the Buyer's Guide must be delivered to the applicant no later than
with the policy
4 elements of a legal contract
-agreement -consideration -competent parties -legal purpose