Chapter 1

which of the following documents delivered to the policy-owner includes information about premium amounts, cash values, surrender values and death benefits for specific policy years?

a policy summary.

The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. when does the policy coverage become effective?

as of the application date.

which of the following statements is correct about a standard risk classification in the same age group and with similar lifestyles?

Standard risk is representative of the majority of people.

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

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

loss.

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

return the application to the applicant for a signature.

which of the following types of risk will result in the highest premium?

substandard risk

if a policy includes a free-look period of at least 10 days, the buyer's guide may be delivered to the applicant

with the policy.

An insured stated on her application for life insurance that she had never had a heart attack, when in fact she had a series of minor heart attacks last year for which she sought medical attention. Which of the following will explain the reason a death benefit claim is denied?

Material misrepresentation.

which of the following is a risk classification?

Standard

when must insurable interest exist in a life insurance policy?

at the time of application

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

inspection report.

what will affect whether or not a policy is issued?

material representation.

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

policy-owner

The responsibility of making certain that an application for insurance is filled out completely, correctly, and to the best of his or her knowledge is the responsibility of whom?

The producer (agent)

which is the primary source of information used for insurance underwriting?

application

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.

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

Insurance

an insurance contract must contain all of the following to be considered legally binding EXCEPT

beneficiary's consent

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?

consideration.

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.

under the fair credit reporting act, if the consumer challenges the accuracy of the information contained in his or her report, the reporting agency must

respond to the consumer's complaint.

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

an individual 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 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.

when is the earliest a policy may go into effect?

when the application is signed and a check is given to the agent.

something of value exchange between the insurer and the insured is considered a

consideration.

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

signed waiver of premium.