Insurance

What Is a material misrepresentation?

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

Because an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe?

Apparent

the appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created.

Apparent Apparent authority (also known as perceived authority)

An underwriter is reviewing the medical questions in the application and needs further information due to a medical situation the applicant had in the past. What will the underwriter require?

Attending Physician Statement

Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process?

Buyer's Guide

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

Conditional.

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

Contracts of adhesion.

A key person insurance policy can pay for which of the following?

Costs of training a replacement

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

Inspection report

Which of the following best describes the MIB?

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

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

Material misrepresentations

Which of the following Insurance optlons would be considered a risk-sharing arrangement?

Mutual

A participating insurance policy may do which of the following?

Pay dividends to the policyowner

Pertaining to Insurance, what is the definition of a fiduciary responsibility?

Promptly forwarding premiums to the insurance company

Another name for a substandard risk classification is

Rate

Which of the following Insurance options would be considered a risk-sharing arrangement?

Reciprocal

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

Signed waiver of premium

Events In which a person has both the chance of winning or losing are classIfled as

Speculative risk.

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

The application given to a prospective insured

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

The application given to a prospective insured

Not all losses are insurable, and there are certain requirements that must be met before a risk is a proper subject for Insurance. These requirements include all of the following EXCEPT

The loss may be intentional

In terms of parties to a contract, which of the following does NOT describe a competent party?

The person must have at least completed secondary education

What is the purpose of the buyer's guide?

To allow the consumer to compare the costs of different policies

What Is the purpose of key person insurance?

To lessen the risk of financial loss because of the death of a key employee

In Insurance policles, 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 pollcy. What contract element does this describe?

Unilateral

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

When an insurer's underwriter approves coverage

When is the earliest a policy may go into effect?

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

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

The authority granted to an agent through the agent's contract is referred to as

express authority