Chapter: Completing the Application, Underwriting, and Delivering the Policy

the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act?

$2,500

Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. What contract characteristic does this describe?

Adhesion

All of the following information about the applicant is identified in the General Information section of a life insurance application EXCEPT

Education.

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

On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are...

Not taxable since the IRS treats them as a return of a portion of the premium paid.

What is the major difference between a stock company and a mutual company?

Ownership

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.

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

Policyowner

Which of the following will be included in a policy summary?

Premium amounts and surrender values

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

Signed waiver of premium.

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 would qualify as a competent party in an insurance contract?

The applicant has a prior felony conviction.

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

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

When is the earliest a policy may go into effect?

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

Aleatory

the concept that the insured pays a small amount of premium for a large amount of risk on the part of the insurance company?