Completing the Application, Underwriting, and Delivering Policy

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

Payment of premium

The term "illustration" in a life insurance policy refers to:

A presentation of nonguaranteed elements of a policy

In insurance, an offer is usually made when:

An applicant submits an application to the insurer

All of the following are duties and responsibilities of producers at the time of application EXCEPT:

Change any incorrect statement on the application by personally initialing next to the corrected statement

An insurance contract requires that both the insured and the insurer meet certain conditions in order for the contract to be enforceable? What contract characteristic does this describe?

Conditional

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

Conditional

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 (consideration is something of value that each party gives to the other)

Representations are written or oral statements made by the applicant that are:

Considered true to the best of the applicant's knowledge

Which of the following includes information regarding a person's credit, character, reputation, and habits?

Consumer report

Which of the following reports will provide the underwriter with the information about an insurance applicant's credit report?

Consumer report

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

Exchange of unequal values

An insurer receives a report regarding a potential insured that includes the insured's financial status, hobbies, and habits. What type of a report is that?

Inspection report

An underwriter may obtain information on an applicant's hobbies, financial status, and habits by ordering an:

Inspection report

Which of the following individuals must have insurable interest in the insured?

Policyowner

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

Premium amounts and surrender values

The Federal Fair Credit Act:

Regulates consumer reports

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

The application given to a prospective insured

An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date?

The date of medical exam

If an insurer issued a policy based on the application that has unanswered questions, which of the following would be true?

The policy will be interpreted as if the insurer waived its right to have an answer on the application (will not be able to deny coverage later because of unanswered questions)

Whose responsibility is it to make certain that an application for insurance is filled out completely and correctly?

The producer

All of the following are requirements for life insurance illustrations EXCEPT:

They must be part of the contract

What is the purpose of the buyer's guide?

To allow the consumer to compare the costs of different policies

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

When an insurer's underwriter approves coverage

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

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 Heath

When is the earliest a policy may go into effect?

When the application is signed and a check is given to the agent

If a policy includes a free-look period for at least 20 days, the Buyer's Guide may be delivered to the applicant no later than:

With the policy

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

Debtor in the life of the creditor

The Medical Information Bureau (MIB) was created to protect:

Insurance companies from adverse selection by high-risk persons

What is the purpose of a conditional receipt?

It is intended to provide coverage on a date prior to the policy issue

A life insurance policy has a legal purpose if both of which of the following of the elements exist?

Insurable interest and consent

A prospective insured receives a conditional receipt but dies before the policy issued. The insurer will:

Pay the policy only if it would have issued the policy (conditional receipt says that coverage will be effective either on the date of the application or the date of the medical exam, whichever occurs last, as long as the applicant is found to be insurable as a standard risk, and policy is issued exactly as applied for)

Why should the producer personally deliver the policy when the first premium has already be paid?

To help the insured understand all aspects of the contract

Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as:

Contracts of adhesion

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 (the conditional receipt says that coverage will be effective either on the date of the application or the date of the medical exam, whichever occurs last, as long as the applicant is found to be insurable as a standard risk, and policy is issued exactly as applied for)

A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will:

Pay the policy proceeds only if it would have issued the policy

Which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information?

The Fair Credit Reporting Act