Nevada Life: Day 1

used to compare the cost of one life insurance policy against another in order to guide prospective purchasers to policies that are competitively priced?

cost comparison methods

WHEN would a misrepresentation on the insurance application be considered fraud

if it is intentional and material

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

issue the policy anyway and pay the death benefit to the beneficiary

all of the following are essential elements of a contract except ... legal purpose consideration competent parties counteroffer agreement (offer and acceptance)

counteroffer

what is the risk classification of those who are average risk

standard

the federal law that protects consumers against the distribution of incorrect and obsolete personal or financial information and allows the consumer to question the validity and source of information is called...

fair credit reporting act

If the agent feels that there could be misrepresentation on the part of the applicant for insurance, what must he agent do?

inform the insurance company through the agent's report

WHICH of the following individuals must have insurable interest in the insured - beneficiary - underwriter - producer - policy owner

policy owner

which of the following is not the consideration in a life insurance policy? -the premium amount paid at the time of application -the promise to pay covered loss - the application given to a prospective insured - statements made on the application

the application given to a prospective insured

IF a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply

5 days

the suspicious activity reports rules (SARs) makes it mandatory to report any transactions involving

5000 or more due to suspicious activities

what federal law protects health information

HIPPA health insurance probability and accountability act

the USA PATRIOT Act was enacted on

October 26 2001

a life insurance arrangement in which person with no relationship to the insured purchases a life policy on the insured's life therefore violation the principle of insurable interest is called...

STOLI

in life insurance an insurable interest between the policy owner and the insured must exist

at the time of application

insurers must provide applicants with a buyers guide

at the time of application

the consumer publication that explains life insurance in general terms to assist the applicant in making an informed decision at the time of application is called a

buyers guide

changed to a written life insurance application must be

initialed by the applicant

a financial interest in the life of another person or the possibility of loosing something of value in the event of a loss is called

insurable interest

a life insurance policy has a legal purpose if both of which of the following elements exist - underwriting and reciprocity - offer and agreement - policy owners and named beneficiaries - insurable interest and consent

insurable interest and consent

the social mechanism for the transfer of risk

insurance

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 is the risk classification for those who are insurable but have a higher than average risk

substandard/rated

in term of parties to a contract, which of the following does not describe a competent party -mentally competent - least completed secondary education - must be of legal age - must not be under the influence of drugs or alcohol

the person myst have at least completed secondary education

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 rights to have an answer on the application

when is a statement of good health required

when the policy is delivered and the initial premium is collected

insurable interest exists in all of the following EXCEPT - a debtor insuring the life of a lender - a husband insuring the life of the wife - a business partner insuring the life of another partner - an individual insuring his/her own life

a debtor insuring the life of a lender

the Medical Information Bureau (MIB) is

a nonprofit trade organization put together by insurance companies to alert insurers to adverse medical history

a presentation or depiction that distinguish between guaranteed and nonguaranteed elements of a policy is called

a policy illustration

A contract offered on a take it or leave it basis by the insurer in which the insured's only option is to either accept or reject the contract

adhesion

a contract in which both parties exchange unequal values (for example the insured pays a small amount of premium for a large amount of risk on the part of the insurance company, what is this called)

aleatory

who is considered a field underwriter

an agent

the basic and main source of underwriting information for an insurer is the

application

an insurance contract that requires that both the insured and the insurer meet certain conditions for the contract to be enforceable (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 )

conditional

AS a field underwriter, an agent has all of the following responsibilities except -solicit business - help prevent adverse selection - obtain appropriate signatures on the application for the insurance - issue the policy

issue the policy

statements in an insurance application that must be true to the best of the applicant's knowledge are called

representations

which is the appropriate action by the insurer if it receives an incomplete application

return the application to the applicant for completion

WHICH of the following best detail the underwriting process for life insurance - selection and issue of policies - evaluation and classification of risks - selection reporting and rejection of risks - selection classification and rating of risks

selection classification and rating of risks

in comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports

the customer's associates, friends, and neighbors provide the reports data

an individual applied for an insurance policy and paid the initial premium. the insurer issued a conditional receipt. five dats 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 the medical exam

considered to be the most important source of information available to the insurer

the field underwriter (agent's report)

all of the following must sign the insurance application except - the agent - the insurer - the policyowner - the insured

the insurer

if a medical exam is required for the underwriting of a life insurance application, who is responsible for the cost of the medical exam?

the insurer

WHAT is the purpose of a disclosure statement in life insurance policies

to explain features and benefits of a proposed policy to the consumer

the insured is not legally bound to any particular action in the insurance contract (only one party, the insurer, is legally binded and obligated to pay losses covered by the policy) what contract element does this describe?

unilateral

defined as an absolutely true statement upon which the validity of the insurance policy depends

warranty

IN forming an insurance contract, when does acceptance usually occur?

when an insurer's underwriter approves coverage

If an agent accepts a completed application without the first premium, when does coverage become effective for the insured

when the policy is delivered and the first premium is paid and the statement of good health is collected

if an applicant for a life insurance policy is found to be a substandard risk, the insurance company is most likely to

charge a higher premium

an insurer mails a new policy to the policyowner. when the insurer relinquishes control of the policy, it is considered

delivered

medical examinations when required by the insurance company are conducted by physicians or paramedics. what is true regarding this process

the insurer must disclose the use of testing to the applicant and obtain written consent from the applicant on the approved form

which of the following best describes the purpose of the USA PATRIOT act with regards to the insurance industry

to prevent terrorism and money laundering activities through monitoring of financial transactions

which document is delivered to the policy owner that includes specific information about premium amount, cash value, surrender values and death benefits

a policy summary

WHICH of the following includes information regarding a person's credit, character, reputation, and habits - agents report - MIB report - consumer report - fair credit report

consumer report

information regarding the insured's medical history can be found in which part of the application for life insurance

part 2

the MIB helps insurers compare medical information they have collected on a potential insured with the information received from ...

other member insurers

WHICH of the following actions would be considered an offer -an agent explaining a policy to a potential applicant -an insurer issuing a policy -an insurer's underwriter approving the application - an applicant submitting the application

an applicant submitting the application

information regarding the insureds general information can be found in which part of the application for life insurance

part 1

which receipt issued at the time of application may provide coverage on the date the receipt is issued or after the results of medical tests

conditional

WHICH policy provision states that each party must provide something of value to each other in order for the contract to be valid?

consideration

AN agent is filling out an insurance application for a client the applicant realized she should have answered an earlier question differently. which of the following methods should the agent use to make the change

cross out the incorrect information, write in the correct answer, and have the applicant initial the change

all of the following information about the applicant is identified in the general information section of a life insurance application except..

education

THE solicitation and sale of a life insurance contract to a third party who has no insurable interest in the insured is called

life settlement

untrue statements on the application that are discovered during the underwriting process that could void the contract are called

misrepresentation

WHICH of the following terms means the frequency of premium payments

mode

which premium payment mode would result in the highest overall premium for a year's worth of life insurance?

monthly

UNDER the Fair Credit Reporting Act individuals rejected for insurance due to information contained in a consumer report

must be informed of the source of the report

AN insured submits the full premium along with a completed application, and the policy is issued 10 days later. when does the coverage begin

on the date of the application

for the purposes of life insurance underwriting, a 35 year old male who is in excellent physical condition with no known medical problems or hazardous hobbies would most likely pay the lowest premium and be a classified as a

preferred risk

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

when an agent delivered an insurance policy to the insured he collected the initial premium as well as a document verifying that the insured has not had any injuries or illness since the application date

statement of good health