Chapter 6: Life Underwriting

Which of these is considered to be a document that describes the critical segments of a life insurance policy? A. buyer's guide B. policy summary C. consumer report D. buyer's summary

B. policy summary

Which of the following statements is CORRECT regarding an individual applying for life or health insurance? A. the applicant waives all privacy rights B. the applicant's family medical history is always required C. the applicant's medical history is irrelevant D. the applicant's medical history may be analyzed and reported

D. the applicant's medical history may be analyzed and reported

Signatures for an insurance application MUST be obtained by the producer from all of the following sources EXCEPT A. the producer B. the insured C. the policyowner D. the beneficiary

D. the beneficiary

A change in an insurance application requires A. an initial made by the producer B. an initial made by the applicant C. approval by the insurer D. submitting a new application

B. an initial made by the applicant

Which of the following is requirement for ANY change in an insurance application? A. change must be initialed by the agent B. change must be initialed by the applicant C. change must be approved by the insurer D. change must be notorized

B. change must be initialed by the applicant

Which of the following would be considered an underwriting duty of an agent? A. requesting medical information from the medical information bureau (MIB) B. completing all applications and collecting initial premiums C. accepting or declining an application D. assigning a risk classification

B. completing all applications and collecting inital premiums

Which of the following pertains to the analysis of an applicant's personal information and determining whether insurance should be issued or declined? A. adverse calculation B. underwriting C. risk classification D. actuarial determination

B. underwriting

What happens when an insurance policy is backdated? A. the policy's elimination period is waved B. the time frame for reinstating a lapsed policy is extended C. the policys probation period is earlier than the present D. the policys effective date is earlier than the present

D. the policys effective date is earlier than the present

What guarantees that the statements supplied by an insurance applicant are true? A. assurance B. promise C. representation D. warranty

D. warranty

An individual most likely will have an insurable interest in insuring a person's life if A. an economic interest exists for the continuance of the insured's life B. a financial interest exists at the time of the insured's death C. there is any blood relationship with the insured D. a business relationship exisits

A. an economic interest exists for the continuance of the insured's life

An applicant's character and personal habits can be obtained for underwriting purposes from which source? A. investigative consumer report B. attending physician's statement C. medical information bureau (MIB) D. credit report

A. investigative consumer report

When does a life insurance policy typically become effective? A. when the policy is issued B. when initial premium is collected and policy is issued C. when the application is completed and signed D. when the completed application is signed and initial premium is collected

B. when initial premium is collected and policy is issued

An insurance company needs to obtain personal information from a third party concerning an applicant. Which law do all insurers and their producers need to comply with? A. USA Patriot Act B. Personal Information Act C. Fair Credit Reporting Act D. McCarran-Ferguson Act

C. Fair Credit Reporting Act

Upon policy delivery, which of the following must a producer have an applicant sign if no initial premium was collected with the life insurance application? A. a waiver of premium B. a replacement form C. a good health statement D. an exclusion

C. a good health statement

Statements made by an insurance applicant on an application are considered to be A. irrevocable B. warranties C. representations D. guarantees

C. representations

A field underwriter's main task is A. assign a risk classification to the insured B. report medical information to the medical information bureau (MIB) C. to ensure an applicant's medical information is accurate and complete D. to approve or decline an applicant

C. to ensure an applicant's medical information is accurate and complete

What is the purpose of the Medical Information Bureau (MIB)? A. to accept or decline insurance applicants B. to set the premium rates for insurers C. to help underwriters evaluate risk D. to perform physical examinations on applicants

C. to help underwriters evaluate risk

Preferred risk policies with reduced premiums are issued by insurance companies because the insured has A. a higher face amount than average B. a better ability to pay premiums over a long period of time C. worse than average mortality or morbidity experience D. better than average mortality or morbidity experience

D. better than average mortality or morbidity experience

Which of the following signatures is not required on an individual insurance application? A. producer B. applicant C. insured D. insurer

D. insurer

An insurer has a right to screen applicants for HIV in which of the following ways? A. Blood test for HIV B. Inquiring about risky sexual behavior C. Inquiring about sexual orientation D. Automatically declining an application due to sexual orientation

A. Blood test for HIV

Underwriters can acquire information for all of the following sources EXCEPT A. medical information bureau (MIB) B. consumer reports C. attending physician's statements D. genetic testing

D. genetic testing

Which of these is NOT considered to be a risk factor in life insurance underwriting? A. number of children B. health history C. hobbies D. occupation

A. number of children

An insurance applicant with a below-average likelihood of loss is typically considered to be a A. preferred risk B. subpar risk C. declined risk D. standard risk

A. preferred risk

Which of the following does a life insurance policy summary normally include? A. the policy's cash value B. agent's report C. policyowner's MIB report D. stated beneficiary

A. the policy's cash value

All of these are considered sources of underwriting information about an applicant EXCEPT A. tobacco use B. health history C. age D. marital status

D. marital status

The principle of insurable interest, in regards to a life insurance contract, is accurately described in which statement? A. an agent establishes insurable interest B. an individual does not have insurable interest on his or her own life C. insurable interest only pertains to business arrangements D. insurable interest can be based on the love and affection of individuals related by blood or law

D. insurable interest can be based on the love and affection of individuals related by blood or law

What is involved when a life insurance policy has been backdated? A. setting a policy's effective date prior to a preexisting condition B. redating a policy after it has been issued C. reinstating a lapsed policy D. making the policy effective on an earlier date than the present

D. making the policy effective on an earlier date than the present

How many months can a life insurance policy normally be backdated from the date of the application? A. 3 B. 6 C. 9 D. 12

B. 6

Which scenario would most life insurance policies exclude coverage for? A. a tourist traveling abroad on a major airline carrier B. an individual who has a hobby racing cars once a month C. an airline pilot who flies for a commercial carrier D. a soldier on leave at home

B. an individual who has a hobby racing cars once a month

An underwriter's primary responsibility to an insurer is to protect against A. natural selection B. inverse selection C. adverse selection D. risk selection

C. adverse selection

All of these are typically sources of underwriting information for life or health insurance EXCEPT A. consumer reports B. medical information bureau (MIB) reports C. disclosure authorization response D. attending physician's statement (APS)

C. disclosure authorization response

An applicant intentionally lying to an insurance company on an application in order to obtain a cheaper premium is an example of A. rebating B. coercion C. fraud D. twisting

C. fraud

In regards to a life insurance contract, which of the following statements is NOT true regarding the concept of insurable interest? A. individuals are assumed to have insurable interest in themselves B. insurable interest is established by a court of law C. insurable interest can be established sufficiently by sentimental attachment alone D. insurable interest must exist at the time of the application

C. insurable interest can be established sufficiently by sentimental attachment alone

An attending physician's statement would be appropriate for which life insurance purpose? A. Attending physician's statements are mandatory during the application process B. At the request of the applicant to assist in the underwriting decision C. At the request of the producer to assist in the underwriting decision D. At the request of the insurer to assist in the underwriting decision

D. At the request of the insurer to assist in the underwriting decision

In which of the following relationships would there NOT be an insurable interest? A. parent to child B. business partner to business partner C. brother to sister D. business owner to business customer

D. business owner to business customer

What would happen if a life insurance applicant is given a conditional receipt for an insurance agent and then dies the next day? A. claim will be denied by insurer B. claim will be paid if money was received by the insurance company C. claim will be paid if underwriter has received the application D. claim will be paid if application is approved

D. claim will be paid if application is approved

Field underwriting performed by the producer involves? A. assigning a risk classification to the insured B. providing commission information to the applicant C. approving or declining an applicant D. completing the application and collecting initial premium

D. completing the application and collecting initial premium

Which of these is likely to occur when life or health insurance is being applied for? A. the medical information bureau (MIB) will determine the risk classification B. the agent is required to report all medical information to the medical information bureau (MIB) C. physical examinations are required D. medical history from the insured may be reviewed and reported

D. medical history from the insured may be reviewed and reported

All of these are considered sources of underwriting information about an applicant EXCEPT A. agents report B. medical information bureau (MIB) C. inspection reports D. national association of insurance underwriters

D. national association of insurance underwriters

A person who is a nonsmoker, of average weight, and in excellent health would most likely be in which risk classification? A. standard B. substandard C. acceptable D. preferred

D. preferred

An insurance producer is often responsible for field underwriting during the application process. All of these are possible field underwriting roles EXCEPT A. providing disclosure information to the applicant B. collecting initial premium C. policy delivery D. providing commission information to the applicant

D. providing commission information to the applicant

Which of the following describes a person who is NOT acceptable by an insurer at standard rates because of health history, occupation, or hobbies? A. standard risk B. preferred risk C. unacceptable risk D. substandard risk

D. substandard risk

Which of the following would be a valid reason why a policy premium would be higher than the standard premium? A. the insurer is not a member of the MIB B. the agent quoted the wrong price C. the insured does not have the necessary financial reserves D. the insured does not meet established underwriting requirements

D. the insured does not meet established underwriting requirements