Chapter 1: Completing the Application, Underwriting, and Delivering the Policy
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 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.
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. The consideration on the part of the insured is the payment of premium and the representations made in the application.
Representations are written or oral statements made by the applicant that are
Considered true to the best of the applicant's knowledge
If a change needs to be made to the application for insurance, the agent may do all of the following EXCEPT
Erase the incorrect answer and record the correct answer.
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 Inspection reports cover moral and financial information regarding a potential insured, usually supplied by private investigators and credit agencies. Companies that use inspection reports are subject to the rules outlined in the Fair Credit Reporting Act.
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 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.
What describes the specific information about a policy?
Policy summary
Which of the following will be included in a policy summary?
Premium amounts and surrender values
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.
Which of the following is a risk classification used by underwriters for life insurance?
Standard. The three ratings classifications that denote the risk level of insureds are standard, substandard, and preferred. This classification system helps insurers to decide if an insured should pay a higher premium.
Which of the following is NOT the consideration in a policy?
The application given to a prospective insured
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.
Why should the producer personally deliver the policy when the first premium has already been paid?
To help the insured understand all aspects of the contract
When is the earliest a policy may go into effect?
When the application is signed and a check is given to the agent The policy can be effective as early as the date of the application, if the premium is submitted with the application and the policy is issued as applied for.
