Chapter 1 exam.fx

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

Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following except

Conditions

Contracts that are prepared by one party and submitted to the other party on a take it or leave it bases are classified as

Contracts of adhesion

Medical Information Bureau (MIB) was created to protect

Insurance companies from adverse selection by high risk persons.

Which of the following is not an essential element of an insurance contract? 1. Legal purpose 2. Counteroffer 3. Consideration 4. Agreement

Counteroffer

Which of the following will be included in a policy summary

Premium amounts and surrender values

An applicant is the night insurance because of information found in a consumer report. Which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company

Fair credit reporting act

What is the purpose of a conditional receipt?

It is intended to provide coverage on a date prior to the policy issue.

Federal Fair Credit Reporting Act 1. Regulates telemarketing 2. Prevents money laundering 3. Regulate consumer reports 4. Protects customer privacy

Regulates consumer reports

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

Return the application to the applicant for a signature

The term "illustration" in a life insurance policy refers to 1. Pictures accompanying a policy 2. Charts and graphs 3. A presentation of non-guaranteed elements of a policy 4. A depiction of policy benefits and guarantees

A presentation of non-guaranteed elements of a policy

A producer agent must do all of the Following when delivering a new policy to the insured except 1. Disclose commissions earned from the sale of the policy 2. Explain the policy provisions, riders, and exclusions 3. Collect any premium due. 4. Explain the rating procedures if the policy is rated differently than applied for

Disclose Commission earned from the sale of the policy

An individual applies for an insurance policy and paid the initial premium. The insured issued a conditional receipt. Five days later the applicant has to submit to a medical exam. It's a policy is issued what would be the policies effective date

The date of medical exam

An agent in an applicant for life insurance policy fill out and sign The application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will coverage begin? 1. On the designated effective date 2. on the application date 3. When the agent submit the application to the company and the company issues a conditional receipt 4. With the agent delivers a policy, can Lexi and I shall premium, and the applicant complete an acceptable statement of good health

When the agent delivers a policy

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

premium receipt

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

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

Stranger-originated life insurance policies are in direct opposition to the principle of 1. Law of large numbers 2. Good faith 3. Indemnity 4. Insurable interest

Insurable interest

A life insurance policy has a legal purpose of both of which of the following elements exist? 1. Policy owners and named beneficiaries 2. Insurable interest and consent 3. Underwriting and reciprocity 4. Offer and counter offer

Insurable interest and consent

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 affect 1. When the first premium is paid in the policy has been delivered 2. When the insurer approves application 3. After the underwriter reviews the policy 4. When the application is signed and a check is given to the agent.

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

if a change needs to be made to the application for insurance, the agent must do all the following except 1. Erase the incorrect answer and record the correct answer 2. Draw a line through the first answer, record the correct answer, and have the applicant initial the change 3. Note on the application the reason for the change 4. Destroy the application and complete a new one

Erase the incorrect answer and record the correct answer

A man applied for insurance and paid initial premium on August 14th. During the underwriting process the insurance company decided to give him standard risk. He was killed in a car accident august 22 before the policy was issued. The insurance company will..

issue the policy anyway and pay the face value to the beneficiary.

All of the following duties and responsibilities of producers at the time of application except

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

A prospective insured received a conditional receipt but dies before the policy is issued. The insurer will

Pay the policy proceeds only if it would have issue the policy

All of the following are requirements for life insurance illustrations EXCEPT 1. They must differentiate between guaranteed and projected amounts. 2. They must be part of the contract 3. They may be only used as approved 4. They must identify non-guaranteed values

They must be part of the contract

Why should the producer personally deliver the policy when the first premium has already been paid? 1. To make sure the policy is not stolen or lost 2. To help the insured understand all aspects of the contract 3. To ensure the producer gets paid commission 4. To find out how the family has been doing since the initial presentation

To help the insured understand all aspects of the contract

When would a misrepresentation on the insurance application be considered fraud

If it is intentional and material

In forming an insurance contract, when does acceptance usually occur

When an insurer's underwriter approves coverage

And insured stated on her application for life insurance that she had never had a heart attack, when she had a series of minor heart attacks last year. Which of the following explains the reason a death benefit claim is denied? 1. Material misrepresentation 2. Waiver 3. Utmost good faith 4. Estoppel

Material misrepresentation

Which of the following would provide an underwriter with information concerning an applicants health history? 1. Medical medical examination 2. The agents report 3. The inspection report 4. The medical information bureau

Medical Information Bureau

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

Upon policy delivery, the producer may be required to obtain any of the following except 1. Delivery receipt 2. Signed waiter of premium 3. Statement of good health 4. Payment of premium

Signed waiver of premium