CH 1 Quiz1

Which part of an insurance application would contain the information regarding the cause of death of the applicant's deceased relatives? A. Medical Information B. Inspection Report C. Agent's Report D. General Information

A. Medical Information

A producer agent must do all of the following when delivering a new policy to the insured EXCEPT A. Disclose commissions earned from the sale of the policy. B. Explain the policy provisions, riders, and exclusions. C. Collect any premium due. D. Explain the rating procedures if the policy is rated differently than applied for.

A. Disclose commissions earned from the sale of the policy.

In the underwriting process, it was determined that the applicant for life insurance is in poor health and has some dangerous habits. Which if the following is true concerning the policy premium? A. It will likely be higher because the applicant is a substandard risk. B. It will likely be the average premium issues to standard risks. C. The applicant's habits and health do not affect the premiums. D. It will likely be lower because the applicant is a preferred risk.

A. It will likely be higher because the applicant is a substandard risk.

An applicant who receives a preferred risk classification qualifies for A. Lower premiums than person who receives a standard risk. B. Dividends payable for lack of claims C. Higher premiums than a person who receives a sub-standard risk. D. Higher premiums than a person who receives a standard risk.

A. Lower premiums than person who receives a standard risk.

What do individuals use to transfer their risk of loss to a larger group? A. Indemnity B. Insurance C. Insurable interest D. Exposure

B. Insurance

A prospective insured received a conditional receipt but dies before the policy is issued. The insurer will A. Automatically pay the policy proceeds. B. Pay the policy proceeds only if it would have issued the policy. C. Pay the policy proceeds up to an established limit. D. Not pay the policy processed under any circumstances.

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

All of the following are requirements for life insurance illustrations EXCEPT A. They must differentiate between guaranteed and projected amounts. B. The must be part of the contract. C. The may only be used as approved. D. They must identify non-guaranteed values.

B. The must be part of the contract.

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated? A. Representation B. Adhesion C. Consideration D. Good Faith

C. Consideration

Another name for a substandard risk classification is A. Declined B. Elevated C. Rated D. Controlled

C. Rated

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 A. Negotiate a reduced settlement with the beneficiary due to the unusual circumstances involved. B. Return the premium to Y's estate, since it has no obligation to pay the death claim. C. Keep the premium and reject the risk on the basis that the applicant died before the policy could be issued. D. Issue the policy anyway an pay the face value to the beneficiary.

D. Issue the policy anyway an pay the face value to the beneficiary.

Which of the following is a statement that is guaranteed to be true, and correct? A. Concealment B. Indemnity C. Representation D. Warranty

D. Warranty

All of the following are duties and responsibilities of producers at the time of application EXCEPT A. Check to make sure that there are no unanswered questions on the application. B. Change any incorrect statement on the application by personally initialing next to the corrected statement. C. Explain the nature and type of any receipt the producer is giving to the applicant. D. Probe beyond the stated questions if the producer feel the applicant is misrepresenting of concealing information.

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

An underwriter may obtain information on an applicant's hobbies, financial status, and habits by ordering a(n) A. Medical examination B. Attending Physician Statement C. Inspection Report D. Medical Information Bureau report

C. Inspection Report

Which of the following information about the applicant is NOT included in the General Information section of the application for insurance? A. Gender B. Occupation C. Marital Status D. Medical background

D. Medical background

If an insurer issued a policy based on the application that had unanswered questions, which of the following will be TRUE? A. The policy will be interpreted as if the insured did not have an answer to the question. B. The policy will be void. C. The insurer may deny coverage later because of the information missing on the application. D. The policy will be interpreted as if the insurer waived its right to have an answer on the application.

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