Insurance Exam (Life):Completing the Application, Underwriting, and Delivering the Policy
to sell variable life insurance policies, an agent must receive all of the following EXCEPT A) a securities license B)a life insurance license C) SEC registration D) FINRA registration
SEC registration
which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information? A) unfair trade practices law B) the guaranty association C) consumer privacy act D) the fair credit reporting act
The fair credit reporting act
all of the following information about the applicant is identified in the general information section of a life insurance application EXCEPT A) education B) age C) gender D) occupation
education
part 2 of the application for life insurance provides questions regarding all of the following EXCEPT A) other insurance coverages B) family health history C) alcohol and tobacco consumption D) recent surgeries
other insurance coverages
if a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? A) 7 days B) 10 days C) 3 days D) 5 days
5 days
which of the following is a risk classification used by underwriters for life insurance? A) excellent B) standard C) poor D) normal
standard
an investor buys a life policy on an elderly person in order to see it for a life settlement. this is an example of A) a prearranged funeral plan B) a vatical settlement C) third-party ownership D) STOLI policy
STOLI policy
insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. what contract characteristics does this describe? A) conditional B) personal C) adhesion D) unilateral
adhesion
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) adhesion B) consideration C) good faith D) representation
consideration
which of the following is the basic source of information used by the company in the risk selection process? A) consumer report B) application C) agents report D) warranty
application
who makes up the medical information bureau? A) former insured B) physicians and paramedics C) insurers D) hospitals
insurers
what describes the specific information about a policy A) producers report B) policy summary C) illustration D) buyers guide
policy summary
if only one party to an insurance contract has made a legally enforceable promise, what kind of contract is it? A) unilateral B) adhesion C) conditional D) a legal (but unethical) contract
unilateral
which of the following best describes the concept that the insured pays a small amount of premium for a large amount of risk on the part of the insurance company? A) warranty B) aleatory C) adhesion D) subrogation
aleatory
according to the fair credit reporting act, all of the following would be considered negative information about a consumer EXCEPT A) failure to pay off a loan B) disputes regarding consumer report information C) tax delinquencies D) late payments
disputes regarding consumer report information
Why should the producer personally deliver the policy when the first premium has already been paid? A) to find out how the family has been doing since the initial presentation B) to make sure the policy is not stolen C) to help the insured understand all aspects of the contract D) to ensure the producer gets paid commission
to help the insured understand all aspects of the contract
which of the following best describes the aleatory nature of an insurance contract? A) policies are submitted to the insurer on a take it or leave it basis B) exchange of unequal values C) only on of the parties being legally bound by the contract D) ambiguities are interpreted in favor of the insured
exchange of unequal values
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 void B) the insurer may deny coverage later, because of the information missing on the application C) 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 insured did not have an answer to the question
the policy will be interpreted as if the insurer waived its right to have an answer on the application
in insurance, an offer is usually made when A) an applicant submits an application to the insurer B) the insurer approves the application and receives the initial premium C) the agent hands the policy to the policyholder D) an agent explains a policy to a potential applicant
an applicant submits an application to the insurer
what is a material misrepresentation? A) concealment B) a statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company C) any misstatement by an applicant for insurance D) any misstatement by the producer
a statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company
an insured pays $100 premium every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered loss. what characteristics of an insurance contract does this describe? A) good health B) adhesion C) conditional D) aleatory
aleatory
all of the following are duties and responsibilities of producers at the time of application EXCEPT A) explain the nature and type of any receipt the producer is giving to the applicant B) probe beyond the stated questions if the producer feels the applicant is misrepresenting or concealing information C) check to make sure that there are no unanswered questions on the application D) change any incorrect statement on the application by personally initialing next to the corrected statement
change any incorrect statement on the application by personally initialing next to the corrected statement
which of the following reports will provide the underwriter with the information about an insurance applicants credit? A) any federal report B) consumer report C) inspection report D) agents report
consumer report
an applicant is denied insurance because of information found on a consumer report. which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting agency? A) disclosure rule B) fair crediting reporting act C) consumer privacy act D) conditional receipt
fair credit reporting act
which of the following best describes the MIB? A) it is a nonprofit organization that maintains underwriting information on applicants for life and health insurance B) it is a government agency that collects medical information on the insured from the insurance companies C) it is a member organization that protects insured against insolvent insurers D) it is a rating organization for health insurance
it is a nonprofit organization that maintains underwriting information on applicants for life and health insurance
what is the maximum penalty for habitual willful noncompliance with the fair credit reporting act A) $1000 B) $100 per violation C) revocation of license D) $2500
$2500
contracts that are prepared by one party and submitted to the other party on a take it or leave it basis are classified as A) binding contracts B) contracts of adhesion C) unilateral contracts D) aleatory contracts
contracts of adhesion
which of the following is NOT an essential element of an insurance contract? A) consideration B) agreement C) legal purpose D) counteroffer
counteroffer
which of the following individuals must have insurable interest int he insured? A) producer B) policyowner C) beneficiary D) underwriter
Policyowner
an insurance contract requires that both the insured and the insurer meet certain conditions in order for the contract to be enforceable. what contract characteristics does that describe? A) contingent B) aleatory C) unilateral D) conditional
conditional
in insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. what contract element does this describe? A) unidirectional B) aleatory C) conditional D) unilateral
unilateral
which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract? A) representation B) warranty C) concealment D) indemnity
warranty
the proposed insured makes the premium payment on a new insurance policy. if the insured should die, the insurer will pay the death benefit to the beneficiary if the policy is approved. this is an example of what kind of contract? A) personal B) unilateral C) conditional D) adhesion
conditional
which is the primary source of information used for insurance underwriting? A) medical records B) private investigations C) apllication D) applicant interviews
application
which of the following types of risk will result in the highest premium? A) substandard B) standard C) preferred D) all risks pay equal premiums
substandard
when an insurer begins underwriting procedures for an applicant, what will be the main source for its underwriting information? A) state records B) medical records C) application D) interviews
application
which of the following includes information regarding a persons credit, character, reputation, and habits? A) agents report B) consumer report C) consumer history D) insurability report
consumer report
what is a definition of a unilateral contract? A) if one party makes a conniption, the other party can counteroffer B) one-sided only one party makes an enforceable promise C) two or more parties go into a contract understanding there may be an unequal exchange of value D) one author; the company wrote the contract; the insured must accept it as written
one-sided only one party makes an enforceable promise
as a field underwriter, a producer is responsible for all of the following task EXCEPT A) obtain appropriate signatures on the application for insurance B) issue the policy that is requested C) help prevent adverse selection D) solicit business that will fall within the insurers underwriting guidlines
issue the policy that is requested
when must insurable interest exist in a life insurance policy? A) at the time of loss B) at the time of application C) at the time of policy delivery D) when there is a change of the beneficiary
at the time of application
representations are written or oral statements made by the applicant that are A) found to be false after further investigation B) immaterial to the actual acceptability of the insurance contract C) considered true to the best of the applicants knowledge D) guaranteed to be true
considered true to the best of the applicants knowledge
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 A) backdated receipt B) warranty C) premium receipt D) statement of good health
premium receipt
A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability? A) medical exam and parents medical history B) proof of insurability is not required C) medical exam D) her parents federal income tax receipts
proof of insurance is not required
the federal fair crediting act A) regulates consumer reports B) protects customer privacy C) regulates telemarketing D) prevents money laundering
regulates consumer reports
If an agent fails to obtain the applicant's signature on the insurance application, what must the insurer do? A) sign the application for the applicant B) sign the application, stating it was by the agent C) send the application to the insurer with a note explain the absence of signature D) return the application to the applicant for a signature
return the application to the applicant for a signature
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? A) acknowledge the missed questions with a signature and continue the policy issue process B) proceed with issuing the policy C) return to the applicant for completion D) answer the missed questions for the applicant
return to the applicant for completion
what is the purpose of a disclosure statement in life insurance policies? A) to protect agents and insurers against lawsuits B) to explain features and benefits of a proposed policy to the consumer C) to obtain important underwriting information from the applicant D) to help consumers compare policy prices
to explain features and benefits of a proposed policy to the consumer
in forming an insurance contract, when does acceptance usually occur? A) when an insurer delivers the policy B) when an insure receives an application C) when an insured submits an application D) when an insurers underwriter approves coverage
when an insurers underwriter approves coverage
if an application for a life insurance policy is found to be a substandard risk, the insurance company is most likely to A) charge a higher premium B) require a yearly medical examination C) lower its insurability standards D) refuse to issue the policy
charge a higher premium
what is the purpose of a conditional receipt? A) it serves as proof that the applicant has been determined insurable B) it is given only to applicants who fully prepay the premium C) it is intended to provide coverage on a date prior to the policy issue D) it grantees that a policy will be issued in the amount applied for
it is intended to provide coverage on a date prior to the policy issue
what is the timeframe for filing relevant suspicious activity reports? A) within 90 days of initial discovery B) pithing 90 days of the suspicious transaction C) within 30 days of initial discovery D) within 30 days of the suspicious transaction
wishing 30 days of initial discovery
which part of an application would contain information regarding the cause of death of the applicants deceased relatives? A) inspection report B) agents report C) general information D) medical information
medical information
Under the Fair Credit and Reporting Act, individuals rejected for insurance due to information contained in a consumer report A) must be advised that a copy of that report is available to anyone who requests it B) may sure the reporting agency in order to get inaccurate date corrected C) must be informed of the source of the report D) are entitled to obtain a copy of the report from the party who ordered it
must be informed of the source of the report
an underwriter may obtain information on an applicants hobbies, financial status, and habits by ordering an A) attending physician statement B) inspection report C) medical information bureau report D) medical examination
inspection report
an agent and an applicant for a 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 being? A) when the agent delivered the policy, collects the initial premium, and the applicant completes an acceptable statement of good health B) on the designated effective date C) on the application date D) when the agent submits the application to the company and the company issues a conditional receipt
when the agent delivers the policy, collects the initial premium, and the applicant completes and acceptable statement of good health
in classifying a risk, the home office underwriting department will look at all of the following EXCEPT A) applicants present occupation B) applicants past income C) applicants past medical history D) applicants present physical condition
applicants past income
when both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is A) aleatory B) personal C) unilateral D) conditional
conditional
all of the following are requirements for life insurance illustrations EXCEPT A) they must differentiate between guaranteed and projected amounts B) they must be part of the contract C) they may only be used as approved D) the must identify non guaranteed values
they must be part of the contract
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? A) as of the policy delivery date B) as of the first month after the policy issue C) as of the policy issue date D) as of the application date
as of the application date
the term illustration in a life insurance policy refers to A) a presentation of nonguaranteed elements of a policy B) a depiction of policy benefits and guarantees C) pictures accompanying a policy D) charts and graphs
a presentation of non guaranteed elements of a policy
a life insurance policy has a legal purpose if both of which of the following elements exist? A) underwriting and reciprocity B) offer and counteroffer C) Policyowner and named beneficiaries D) insurable interest and consent
insurable interest and consent
which is the appropriate action by the insurer if a prospective insured submitted an incomplete application? A) issue a policy anyway since the application has been submitted B) ask the producer who solicited the policy to complete and resign the application C) fill in the blanks to the best to the insurers knowledge D) return the application to the applicant for completion
return the application to the applicant for completion
a producer agent must do all of the following when delivering a new policy to the insured EXCEPT A) collect any premium due B) explain the rating procedures if the policy is rated differently than applied for C) disclose commissions earned from the sale of the policy D) explain the policy provisions, riders, and exclusions
disclose commissions earned from the sale of the policy
the medical information bureau (MIB) was created to protect A) medical examiners that perform insurance physical examinations B) insurance companies from adverse selection by high risk persons C) insurance departments from lawsuits by policy owners D) insureds from unreasonable underwriting requirements by the insurance companies
insurance companies from adverse selection by high risk persons
which of the following will be included in a policy summary? A) copies of illustrations and application B) comparisons with similar policies C) primary and secondary beneficiary designations D) premium amounts and surrender values
premium amounts and surrender values
which of the following best details the underwriting process for life insurance? A) reporting and rejection of risks B) selection, classification, and rating of risks C) solicitation, negotiation and sale of policies D) issuance of policies
selection, classification, and rating of risks
In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports? A) the customer has no knowledge of this action B) the customers associates, friends, and neighbors provide the reports data C) they provide additional information from an outside source about a particular risk D) they provide information about a customers character and reputation
the customers associates, friends, and neighbors provide the reports data
When is the earliest a policy may go into effect? A) after the underwriter reviewed the policy B) when the application is signed and a check is given to the agent C) when the first premium is paid and the policy has been delivered D) when the insurer approves the application
when the application is signed and a check is given to the agent
which of the following would qualify as a competent party in an insurance contract? A) the applicant is intoxicated at the time of the application B) the applicant is a 12 year old student C) the applicant is under the influence of a mind-impairing medication at the time of application D) the applicant has a prior felony conviction
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 is killed in an automobile accident the next day, which of the following is TRUE? A) the premium would be returned to the insureds estate because the policy was not issued B) the death claim will be rejected C) the application will be voided D) the beneficiary will receive the full death benefit if it is determined that the applicant qualified for the policy
the beneficiary will receive the full death benefit if it is determined that the applicant qualified for the policy
which of the following would provide an underwriter with information concerning an applicants health history? A) the medical information bureau B) a medical examination C) the agents report D) the inspection report
the medical information bureau
In terms of parties to a contract, which of the following does NOT describe a competent party? A) the person must not be under the influence of drugs or alcohol B) the person must be legal age C) the person must be mentally competent to understand the contract D) the person must have at least completed secondary education
the person must have completed secondary education
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? A) the beneficiary of the applicant B) the insurance company C) the applicant D) the producer
the producer
which is generally true regarding insureds who have been classifies as preferred risks? A) they keep a higher percentage of any interest earned on their policies B) their premiums are lower C) they can borrow higher amounts off of their policies D) they can decide when to pay their monthly premiums
their premiums are lower
which of the following statements is NOT true concerning insurable interest as it applies to life insurance? A) a husband or wife has an insurable interest in their spouse B) an individual has an insurable interest in his or her own life C) a debtor has an insurable interest in the life of a lender D) business partners have an insurable interest in each other
a debtor has an insurable interest in the life of a lender
if an insurance company wishes to order a consumer report on an application to assist in the underwriting process, and if a notice of insurance information practices has been provided, the report may contain all of the following information EXCEPT the applicants A) habits B) prior insurances C) ancestry D) credit history
ancestry
when would a misrepresentation on the insurance application be considered fraud? A) never; statements by the applicant are only representations B) when the application is incomplete C) any misrepresentation is considered fraud D) if it is intentional and material
if it is intentional and material
another name for substandard risk classification is A) elevated B) rated C) controlled D) declined
rated
stranger- originated life insurance policies are in direct opposition to the principle of A) law of large numbers B) good faith C) indemnity D) insurable interest
insurable interest
an insurer receives a report regarding a potential insured that includes the insureds financial status, hobbies and habits. what type of report is that? A) underwriters report B) inspection report C) medical information bureaus report D) agents report
inspection report
what is the purpose of the buyers guide? A) to allow the consumer to compare the costs of different policies B) to provide the name and address of the agent/producer issuing the policy C) to list all policy riders D) to provide information about the issues policy
to allow the consumer to compare the costs of different policies
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) a privacy notice B) a buyers guide C) a policy summary D) a notice regarding replacement
a policy summary
if a change needs to be made to the application for insurance, the agent may do all of the following EXCEPT A) erase the incorrect answer and record the correct answer B) draw a line thought the first answer, record the correct answer, and have the applicant initial the change C) note on the application the reason for the change D) destroy the application and complete a new one
erase the incorrect answer and record the correct answer
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 benefit claim C) keep the premium and reject the risk on the basis that the application died before the policy could be issued D) issue the policy anyway and pay the face value to the beneficiary
issue the policy anyways and pay the face value to the beneficiary
in the underwriting process, it was determined that the applicant for life insurance is in poor health and has some dangerous habits. which of the following is true concerning the policy premium? A) the applicants habits and health do not affect the premium B) it will likely be lower because the applicant is a preferred risk C) it will likely be higher because the applicant is a substandard risk D) it will likely be the average premium issued to standard risks
it will likely be higher because the applicant is a substandard risk
a prospective insured receives a conditional receipt but dies before the policy is issued. the insurer will A) pay the policy proceeds up to an established limit B) not pay the policy proceeds under any circumstances C) automatically pay the policy proceeds D) pay the policy proceeds only if it would have issued the policy
pay the policy proceeds only if it would have issued the policy
Under the Fair Credit and Reporting Act, if the consumer challenges the accuracy of the information contained in his or her report, the reporting agency must A) defend the report if the agency feels it is accurate B) change the report C) send an actual certified copy of the entire report to the consumer D) respond to the consumers complaint
respond to the consumers complaint
an insured stated on her application for life insurance that she 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? A) estoppel B) material misrepresentation C) waiver D) utmost good faith
material misrepresentation
an individual applied for an insurance policy and paid the initial premium . the insurer issued a conditional receipt. five days later the application had to submit to a medical exam. if the policy is issued, what would be the policy effective date? A) the date of medical exam B) the date of policy delivery C) the date of issue D) the date of application
the date of medical exam
if an insurer requires a medical examination of an applicant in connection with the application for life insurance, who is responsible for paying the cost of the examination? A) the examiner B) the applicant C) the insurer D) the cost of the examination will be waived
the insurer
which of the following is NOT an example of insurable interest? A) child in parent B) debtor in creditor C) business partner in eachother D) employer in employee
debtor in creditor
If an applicant for a life insurance policy and the potential insured are two different people, what would be the underwriter's main concern? A) the gender of the applicant B) the type of policy requested C) which individual will pay the premium D) whether an insurable interest exists between the indiviudals
whether an insurable interest exists between the individuals
which of the following is NOT the consideration in a policy? A) the promise to pay covered losses B) the application given to a prospective insured C) something of value exchange between parties D) the premium amount paid at the time application
the application given to a prospective insured
If a policy includes a free-look period of at least 10 days, the Buyer's Guide must be delivered to the applicant no later than A) upon issuance of the policy B) within 30 days after the first premium payment was collected C) prior to filling out an application for insurance D) with the policy
with the policy
which of the following information about the applicant is NOT included in the general information section of the application for insurance? A) marital status B) medical background C) gender D) occupation
medical background
Upon policy delivery, the producer may be required to obtain any of the following EXCEPT A) signed waiver of premium B) statement of good health C) payment of premium D) delivery receipt
signed waiver of premium
within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained? A) 3 days B) 5 days C) 10 days D) 14 days
3 days
Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT A) consideration B) legal purpose C) offer and acceptance D) conditions
conditions
When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following? A) legal purpose B) contract of adhesion C) acceptance D) consideration
consideration
which of the following statements is correct about a standard risk classification in the same age group and with similar lifestyles A) standard risk pays a higher premium than a substandard risk B) standard risk requires extra rating C) standard risk is also know as high exposure risk D) standard risk is representative of the majority of people
standard risk representative of the majority of people
An applicant who receives a preferred risk classification qualifies for A) higher premiums than a person who receives a sub standard risk B) higher premiums than a person who receives a standard risk C) lower premiums than a person who receives a standard risk D) dividends payable for lack of claims
lower premiums than a person who receives a standard risk
an insurance contract must contain all of the following to be considered legally binding EXCEPT A) offed and acceptance B) consideration C) competent parties D) beneficiary consent
beneficiary consent
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? A) illustration B) buyers guide C) insurance index D) policy summary
buyers guide