Health and Life Exam

What is a definition of a unilateral contract?

One-sided: only one party makes an enforceable promise

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

Other insurance coverages

The insurer discovered that one of the applicants for life insurance missed a couple of questions on the application. What must the insurer do with the application?

Return to the applicant for completion

Insurance is the transfer of...

Risk

Representations

Statements made by the applicant on the insurance application that are believed to be true, but are not guaranteed to be true.

Conditional Receipt

means the applicant may be covered as early as the date of the application

All of the following are correct about the required provisions of a health insurance policy except

A reinstated policy provides immediate coverage for an illness.

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

Conditional. The contract is formed on the basis that certain conditions are met.

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

Conditions

Which of the following riders Would not increase the premium for a policy owner?

Impairment Rider

The policy owner must have insurable interest

In the life of the insured

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

Insurable interest and consent

Which of the following information about the applicant is NOT included in the general information section of the application for insurance?

Medical background

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 allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or became disabled?

Payor benefit

A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability?

Proof of insurability is not required.

For which of the following actions can an agent's License be suspended or revoked?

Rebate of premiums

Which of the following is called a " Second to die" policy?

Survivorship life

Underwriting

The process of reviewing applications for insurance and the information on the application

What is the name of the insured who enters into a viatical settlement?

Viator. Viator means the owner of a life insurance policy who enters into or seeks to enter into a viatical settlement contract.

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

When it insurer's underwriter approves coverage

In a replacement situation, all of the following must be considered EXCEPT

assets

Insurable Interest must

exist at the time of application

Which of the following entities can legally bind coverage?

insurer

All of the following long-term care coverages Would allow an insured to receive care at home except

skilled care

An insured pays a monthly premium of $100 for her health insurance. What would be the duration of the grace period under her policy?

10 days. The grace period is 7 days if paid weekly, 10 days if paid monthly and 31 days for all other modes.

Viatical settlements may be rescinding within what time period after the victor receives the proceeds?

15 days

When a disabled dependent child reaches the age limit for coverage, how long does the policyowner have to provide proof of dependency in order for the dependent to remain covered under the policy?

31 days

Application

A document that provides information for underwriting purposes.

Replacement

A practice of terminating an existing policy or letting it lapse, and obtaining a new one.

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

An insurance contract must contain all of the following to be considered legally binding except

Beneficiary's consent. The four essential elements of all legal contracts are offer and acceptance; consideration; competent parties; and legal purpose.

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

Considered true to the best of the applicant's knowledge

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

Items stipulated in the contract that the insurer will not provide coverage for are found in the

Exclusions clause

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

Issue the policy that is requested

Within how many days must the insured notify the insurer Of a child's birth and pay any required fees?

31 days

What is a material misrepresentation?

A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company

Which of the following is another term for an authorized user

Admitted

An insured pays a $100 premium every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered loss. What characteristic of an insurance contract does this describe?

Aleatory

Which of the following is NOT an essential element of an insurance contract?

Counteroffer

A health insurance policy that pays a lump sum if the insured suffers a heart attack or stroke is known as

Critical illness. A critical illness policy covers multiple illnesses, such as heart attack, stroke, renal failure, and pays a lump-sum benefit to the insured upon the diagnosis (and survival) of any of the illnesses covered by the policy.

Two individuals are in the same risk and age class; yet, They are charged different rates for their insurance policies due to an insignificant factor. What is this called?

Discrimination. Permitting individuals of the same class to be charged a different rate for the same insurance is the unfair trade practice of discrimination.

All of the following information about the applicant is identified in the general information section of a life insurance application EXCEPT

Education

The provision in a health insurance policy that ensures that the insurer cannot refer to any document that is not contained in the contract is the

Entire contract clause

A life insurance producer is the company's

Field underwriter

An insurance company is domiciled in Montana and transacts insurance in Wyoming. Which term best describes the insurer's classification in Wyoming?

Foreign

Which of the following types of LTC is not provided in an Institutional setting?

Home health care Home health care is given in the home, but skilled nursing, intermediate, and custodial care may all be provided in an institutional setting.

What is the purpose of a free look period in insurance policies

It allows the insured to reject the policy with a full refund.

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 a unilateral contract, the insured is not legally bound to do anything. The insurer, however, must pay losses covered by the policy.

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

Warranty. A warranty in insurance is a statement guaranteed to be true. When an applicant is applying for an insurance contract, the statements he or she makes are generally not warranties, but representations. Representations are statements that are true to the best of the applicant's knowledge.

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

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.

Which of the following is true of a PPO?

Its goal is to channel patients to providers that discount services.

Insurance is a contract by which one seeks to protect another from

Loss. Insurance will protect a person, business or entity from loss.

Untrue statements on the application unintentionally made by the insureds that, if discovered, would alter the underwriting decision of the insurance company are called

Material misrepresentations

Most agents try to collect the initial premium for submission with the application. When an agent collects the initial premium from the applicant, the agent should issue the applicant a

Premium receipt

Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance?

Replacement rule anytime a new policy is issued that replaces or modifies existing insurance, a replacement form must be submitted to the ceding company

If an agent fails to obtain the applicant's signature on the application, the agent must

Return the application to the applicant for a signature

If an applicant does not receive A copy of the new insurance policy, who is held responsible?

The agent

An applicant signs an application for a $25,000 life insurance policy, pays the initial premium, and receives a conditional receipt. If the applicant dies the following day, which of the following is TRUE?

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

What do individuals use to transfer their risk of loss to a larger group?

Insurance Insurance is the mechanism whereby an insured is protected against loss by a specified future contingency or peril in return for the present payment of premium. Because many other individuals with the same or similar risk of loss are paying premiums, funds are available to indemnify those who actually suffer that loss.

Under a health insurance policy, benefits, other than death benefits, that have not otherwise been assigned, will be paid to

The insured Payments for loss of life benefits are to be made to the designated beneficiary. If no beneficiary has been named, payment proceeds are to be paid to the deceased insured's estate. Claims other than death benefits are to be paid to the insured or the insured's estate, unless otherwise assigned by the insured.

If an insurer issued a policy based on the application that had unanswered questions, which of the following will be TRUE?

The policy will be interpreted as if the insurer waived its right to have an answer on the application

Which provision states that the insurance company must pay medical expense claims immediately?

Time of Payment of Claims

If only one party to an insurance contract has made a legally enforceable promise, what kind of contract is it?

Unilateral