NVPRC - Life Insurance Underwriting and Policy Issue

A student pilot can pay regular premium costs for her life insurance policy with the addition of which of the following? A) Guaranteed Insurability rider B) Aviation exclusion C) Impairment rider D) Accidental Death Benefit rider

B) Aviation exclusion A student piolet can pay standard premium costs for her life insurance policy with the addition of an aviation exclusion.

Who is NOT required to sign a life insurance application? A) Agent B) Beneficiary C) Adult insured D) Policyowner

B) Beneficiary All of the following individuals must sign a life insurance application EXCEPT the beneficiary.

Which of the following correctly explains the actions an agent should take if a customer wants to apply for an insurance policy? A) Have customer sign a blank application, then take the application back to his office to complete prior to sending it off to the insurance company B) Complete the application and review the information with the customer prior to obtaining the customer's signature, then send the application off to the insurance company C) Complete the application over the phone with the customer, sign the application for the customer, then send the application of to the insurance company D) Have the customer fill out the application and send it to his office for him to sign, then send it off to the insurance company

B) Complete the application and review the information with the customer prior to obtaining the customer's signature, then send the application off to the insurance company If a customer wants to apply for an insurance policy, the agent should complete the application and review the information with the customer prior to obtaining the customer's signature, then send the application off to the insurance company.

An insurance company may NOT reject a prospective insured's life application on the basis of which of the following factors? A) Medical history B) Gender C) Weight D) Hobbies

B) Gender An insurance company may NOT reject a prospective insured's life application on the basis of gender.

Which of these factors do NOT play a role in the underwriting of a life insurance policy? A) Occupation B) Martial status C) Credit status D) Avocations

B) Martial status Marital status does not affect the underwriting of a life insurance policy.

The underwriting process involves all of these, EXCEPT for: A) Risk classification B) Policy loan C) Application D) Credit report

B) Policy loan A policy loan is not a factor in the underwriting process.

Agent J takes an application and initial premium from an applicant and sends the application and premium check to the insurance company. The insurance company returns the check back to J because the check is made out to J instead of the insurance company. What action should J take? A) Cross off his name on the "pay to" portion of the check, write the name of the insurance company, and send the check back to the insurance company B) Return to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company C) Deposit the check in to his personal account, use the funds to purchase a cashiers check, and send the new cashiers check back to the insurance company D) Deposit the applicant's check into his account and make a personal check out to the insurance company from his personal account

B) Return to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company If an agent receives a check made out to them instead of the insurance company, they should return the check to the customer and collect a new check properly made out to the insurance company.

Which factors are taken into consideration when an insurance company determines the premium rate for a Whole Life policy on an applicant? A) Geographical location B) Risk classification C) Source of income D) Martial status

B) Risk classification To determine the premium rate on a Whole Life policy, an insurance company will consider the risk classification of the applicant.

Which of these terms accurately defines an underwriter's assessment of information on a life insurance application? A) Inspection report B) Risk classification C) Warranty review D) Insurable interest

B) Risk classification Underwriting, another term for risk selection, is the process of reviewing the many characteristics that make up the risk profile of an applicant to determine if the applicant is insurable and, if so, at standard or substandard rates.

Upon delivery of a rated life insurance policy, the Producer must obtain each of the following EXCEPT: A) Signed statement of Good Health B) Signed HIPAA disclosure C) Signed amendment D) The required premium

B) Signed HIPAA disclosure Upon delivery of a rated life insurance policy, the Producer must obtain all of these EXCEPT a "Signed HIPAA disclosure". The HIPAA disclosure should be taken at the time of sale with the application.

On delivery of a policy, a signed statement of good health is typically requested if: A) The quarterly premium payment mode was selected B) The application was submitted without the initial premium C) The policy contains a guaranteed insurability rider D) A conditional receipt was given to the applicant

B) The application was submitted without the initial premium On delivery of a policy, a signed statement of good health is typically requested if the application was submitted without the initial premium.

Which parts of a life insurance policy are guaranteed to be true? A) Rating B) Warranty C) Representation D) Statement

B) Warranty Warranties are statements that are considered literally true. A warranty that is not literally true in every detail, even if made in error, is sufficient to render a policy void.

The USA Patriot Act was enacted in: A) 2001 B) 2003 C) 2004 D) 2002

A) 2001 The USA Patriot Act was enacted in 2001 to detect and deter terrorism.

Before a life insurance policy is issued, which of these components of the contract is required? A) Applicant's signature on application B) Beneficiary's signature C) Attending Physician Statement (APS) D) A conditional receipt

A) Applicant's signature on application A signature on an application is required before a life policy will be issued.

K applies for a life insurance policy on herself submits the initial premium with the application. She is given a receipt by the agent stating that coverage begins immediately if the application is approved. What kind of receipt was used? A) Conditional B) Initial Premium C) Contingent D) Binding

A) Conditional A condition receipt indicates that certain conditions must be met in order for the insurance coverage to go into effect.

T applies for a life insurance policy and is told by the producer that the insurer is bound to the coverage as of the date of the application or medical examination, whichever is later. Assuming that T is an acceptable risk, what item is given to T? A) Conditional receipt B) Backdated receipt C) Warranty receipt D) Binding receipt

A) Conditional receipt A conditional receipt binds the insurer to coverage as of the date of the application or medical exam, provided the proposed insured is determined to be an acceptable risk.

What action should a producer take if the initial premium is NOT submitted with the application? A) Forward the application to the insurer without the initial premium B) Keep the application until premium is paid C) Forward the application to the insurer after giving the applicant a binding receipt D) Forward the application to the insurer after giving the applicant a conditional receipt

A) Forward the application to the insurer without the initial premium The producer should submit the application to the insurance company without the premium. However, if a premium is not paid with the application, the policy will not become valid until the initial premium is collected.

Which of these actions should a producer take when submitting an insurance application to an insurer? A) Inform insurer of relevant information not included on the application B) Disclose to the applicant the amount of commissions to be earned on this transaction C) Issue a binding receipt to applicant if no initial premium is submitted D) Arrange for a copy of the Attending Physician Statement (APS) to be sent to the producer

A) Inform insurer of relevant information not included on the application One of the actions a producer is to advise the insurer of any other relevant information not contained in the application.

What is the purpose of a Policy Summary? A) It highlights the critical parts of the policy issued B) It details the commissions earned by the agent C) It allows the consumer to compare the costs of different policies D) It guarantees a policy will be issued

A) It highlights the critical parts of the policy issued A Policy Summary highlights the critical parts of the policy issued and describes the coverages, riders, and exclusions.

An underwriter determines that an applicant's risk should be recategorized due to a health issue. This policy may be issued with a(n): A) exclusion for the medical condition B) delayed effective date C) extended Contestable period D) Concealment clause

A) exclusion for the medical condition The policy may be issued with an exclusion for the medical problem.

M completes an application for life insurance but does not pay the initial premium. All of these actions must occur before M's policy goes into effect, EXCEPT: A) free-look period has expired B) insurance company issues policy C) Policy is delivered D) initial premium is collected

A) free-look period has expired The policy will go into effect after all these actions occur EXCEPT the expiration of the free-look period.

In order for coverage on a non-medical insurance application to take effect the same day, the producer must collect a signed application and A) the initial premium B) Attending Physican Statement C) forward it immediately to the insurer D) a Medical Information Report

A) the initial premium Coverage begins on the day in which the producer collects the initial premium and has the applicant sign the insurance contract.

Under the USA Patriot Act, insurers are required to report receipt of cash payments in excess of: A) $7,500 B) $2,500 C) $10,000 D) $5,000

C) $10,000 The anti-money laundering provisions of the USA Patriot Act require insurers to report any cash payments received that are greater than $10,000.

When an insurance application is taken by a producer, which of these statements is true? A) Any changes made on the application can later be initialed by the producer if the applicant is unavailable B) The producer has the discretion to ask or not to ask any of the questions listed on the application C) Any changes made on the application require the applicant's initials D) The applicant should have an attorney present during the application process

C) Any changes made on the application require the applicant's initials The producer should have the applicant initial any changes made on the application.

Any changes made on an insurance application requires the initials of whom? A) Agent B) Insured C) Applicant D) Beneficiary

C) Applicant When an applicant makes a mistake in the information given to an agent in completing the application, the applicant can have the agent correct the information, but the applicant must initial the correction.

An incomplete life insurance application submitted to an insurer will result in which of these actions? A) Application will be approved with restrictions B) Application will be pending until a MIB report is sent to the insurer C) Application will be returned to the writing agent D) Application will be automatically declined

C) Application will be returned to the writing agent If the company discovers a mistake or incompletion, it usually returns the application to the producer.

Which of the following correctly explains the actions an agent should take if customer wants to apply for an insurance policy? A) Complete the application over the phone with the customer, sign the application for the customer, then send the application off to the insurance company B) Have the customer fill out the application and send it to his office for him to sign, then send it off to the insurance company C) Complete the application and review the information with the customer prior to obtaining the customer's signature, then send the application off to the insurance company D) Have the customer sign a blank application, then take the application back to his office to complete prior to sending it off to the insurance company

C) Complete the application and review the information with the customer prior to obtaining the customer's signature, then send the application off to the insurance company If a customer wants to apply for an insurance policy, the agent should complete the application and review the information with the customer prior to obtaining the customer's signature, then send the application off to the insurance company.

Which Federal law allows an insurer to obtain an inspection report on a potential insured? A) Medical Information Bureau Act B) Medical Information Act C) Fair Credit Reporting Act D) Freedom of Information Act

C) Fair Credit Reporting Act The Fair Credit Reporting Act of 1970, FCRA, established procedures for the collection and disclosure of information obtained on consumers through investigation and credit reports.

From what authority derives the requirement that an insurance application contains a disclosure stating that an investigative consumer report may be obtained on an applicant? A) Medical Information Bureau B) Life Insurance Buyer's Guide C) Fair Credit Reporting Act D) Part III of the application

C) Fair Credit Reporting Act The Fair Credit Reporting Act requires that an insurance application state that an investigative consumer report may be obtained on an applicant.

Information obtained from a phone conversation to the proposed insured can be found in which of these reports? A) Attending physician's report B) Agent's report C) Inspection report D) MIB report

C) Inspection report An inspection report may include information obtained by a telephone call to the proposed insured.

What is being delivered during a policy delivery? A) A binding receipt to the proposed insured B) Application and initial premium to the insurer C) Insurance contract to the proposed insured D) Policy summary sheet and disclosure material to the proposed insured

C) Insurance contract to the proposed insured Policy deliver refers to the delivery of the insurance contract to the applicant.

P completes an application for a $10,000 life policy, but does not give the producer the initial premium. P's coverage becomes effective when: A) the producer receives the policy B) P passes the medical examination C) P receives the policy and pays the premium D) the insurance company approves the policy

C) P receives the policy and pays the premium P's coverage becomes effective when P receives the policy and pays the premium.

Q applied for life insurance and submitted the initial premium on January 1. The policy was issued February 1, but it was not delivered by the agent until February 7. Q is dissatisfied and returns the policy February 13. How will the insurer handle this situation? A) Policy was not returned within the free-look period, premium will not be refunded B) Premium will be fully refunded minus a prorated amount for the period of February 7 - February 13 C) Policy was returned within the free-look period, premium will be fully refunded D) Premium will be fully refunded minus a surrender charge

C) Policy was returned within the free-look period, premium will be fully refunded The free-look period begins when the policy is delivered to policyowner.

P is a producer who notices 5 questions on a life application were not answered. What actions should P take? A) Mailing incomplete application to applicant to be completed and returned to the agent B) Submit the application as-is to the insurer C) Set up a meeting with the applicant to answer the remaining questions D) Call the applicant and complete application over the phone

C) Set up a meeting with the applicant to answer the remaining questions The producer should schedule another appointment with the applicant to complete the unanswered questions.

Which of the following statements is CORRECT about an agent who is taking an insurance application? A) The application may answer routine questions on the application for the applicant B) The agent may allow a member of the applicant's immediate family to sign the application if the applicant is not available C) The agent should have the applicant initial any changes made on the application D) the agent should avoid asking the applicant questions that may cause embarrassment

C) The agent should have the applicant initial any changes made on the application An agent who is taking an insurance application should have the applicant initial any changes made on the application.

K is an agent who takes an application for individual life insurance and accepts a check from the client. He submits the application and check to the insurance company, however the check was never signed by the applicant. If the application is approved, when will coverage be effective? A) The date the sales appointment was made B) The date the application was submitted to the insurance company C) The date the agent delivered the policy, collected the initial premium, and obtained a good health statement from the insured D) The date of application

C) The date the agent delivered the policy, collected the initial premium, and obtained a good health statement from the insured Coverage will go into effect the date the agent delivers the policy, collects the initial premium, and obtains a good health statement from the insured.

Why is an applicant's signature required on a life insurance application? A) To give Power of Attorney to the producer if needed B) To attest that all statements on the application are guaranteed to be true C) To attest that the statements on the application are accurate to the best of the applicant's knowledge D) To attest that the statements on the application are warranties

C) To attest that the statements on the application are accurate to the best of the applicant's knowledge An applicant's signature represents that the statements on the application are true to the best of the applicant's knowledge.

A statement by an insured in an insurance application that must be true to the best of one's knowledge and which becomes a part of the contract is known as: A) a warranty B) an insuring agreement C) a representation D) a mutual assent

C) a representation A representation is a statement made by an insured in an insurance application that must be true to the best of one's knowledge and which becomes a part of the contract.

What is the purpose of the U.S.A. Patriot Act? A) detect and deter fraud B) detect and deter alien insurance companies C) detect and deter terrorism D) detect and deter misrepresentations

C) detect and deter terrorism The purpose of the U.S.A. Patriot Act is to detect and deter terrorism.

ABC Insurance Company has accepted a life insurance application which contains unanswered questions. The company then makes the application part of the life contract. In this situation, the insurer has: A) committed an act of fraud B) assigned the risk to a reinsurer C) waived one of its legal rights D) issued a voidable policy

C) waived one of its legal rights If an insurer accepts an application that contains unanswered questions and makes the application part of the life contract, the company has waived one its legal rights.

On August 6, D submitted an application for a $50,000 Life Insurance policy and did not pay the initial premium. On August 18, D went to his doctor complaining of chest pains and some tests were given by the doctor. The life policy was delivered by the producer on August 20 and D explains what had recently taken place with the doctor. What action should the producer then take? A) Explain to the applicant the policy is no longer in effect due to change in health condtion B) Collect initial premium C) Collect initial premium and leave a binding receipt D) Collect initial premium along with a singed health statement

Collect initial premium along with a singed health statement The producer should deliver the policy and obtain the premium payment along with a signed health statement.

When a policyowner cash surrenders a Universal Life insurance policy in it's early years, this may be considered a red flag for a(n): A) Title 18 Fraud violation B) Federal Fair Credit Act Violation C) Unfair Trade Practice violation D) Anti-Money Laundering violation

D) Anti-Money Laundering violation When a policyowner cash surrenders a Universal Life insurance policy in it's early years, this may be considered a red flag for an Anti-Money Laundering violation.

At what time must a policyowner have insurable interest on the insured in order for the life policy to be valid? A) When the insured dies B) After the Contestable period C) When the policy proceeds are paid D) At the time of application

D) At the time of application With life insurance, insurable interest must exist only at the policy inception.

On January 8, an applicant filled out an application for a life insurance policy but did not include the initial premium. The insurance company approved the application on January 14 and issued the policy January 15. The producer delivered the policy on January 26 and collected the first premium. When did the coverage become effective? A) January 15 B) January 14 C) January 8 D) January 26

D) January 26 Coverage became effective on the date the policy was delivered and first premium collected.

Which of these do NOT constitute policy delivery? A) Policy mailed to applicant B) Policy mailed to agent C) Policy delivered to the applicant by the agent D) Policy issued with a rating

D) Policy issued with a rating All of these constitute delivery of the policy EXCEPT issuing a rated policy.

A Medical Information Report (MIB) report may disclose which of the following: A) Prior lapsing of policy B) Prior preferred rating C) Prior bankruptcy judgement D) Prior use of marijuana

D) Prior use of marijuana A Medical Information Report (MIB) may disclose lifestyle habits such as drugs, drinking, overeating, and smoking.

All of these are considered sources of underwriting information about an applicant, EXCEPT: A) Inspection Report B) Credit Report C) Medical Information Bureau D) Rating Services

D) Rating Services All of these are valid sources to obtain underwriting information about an applicant EXCEPT for a rating service (A.M. Best, Standard & Poor's).

Agent J takes an application and initial premium from an applicant and sends the application and premium check to the insurance company. The insurance company returns the check back to J because the check is made out to J instead of the insurance company. What action should J take? A) Cross off his name on the "pay to" portion of the check, write the name of the insurance company, and send the check back to the insurance company B) Deposit the check in to his personal account, use the funds to purchase a cashiers check, and send the new cashiers check back to the insurance company C) Deposit the applicant's check into his account and make a personal check out to the insurance company from his personal account D) Return to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company

D) Return to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company If an agent receives a check made out to them instead of the insurance company, they should return the check to the customer and collect a new check properly made out to the insurance company.

What would the Medical Information Bureau (MIB) identify? A) Existing life insurance coverage with other carriers B) Primary physician C) Credit scores D) Testing positive for marijuana use from a previous screening

D) Testing positive for marijuana use from a previous screening The Medical Information Bureau (MIB) report will identify marijuana use determined by a previous screening.

When does a life insurance contract become effective if the initial premium is not collected during the application process? A) After medical and personal information has been evaluated B) When insurer receives initial premium from the producer C) After application has been approved by the underwriters D) When producer delivers policy and collects initial premium

D) When producer delivers policy and collects initial premium Insurance becomes effective on delivery of the policy to the insured and payment of the initial premium to the producer.

An agent gives a conditional receipt to a client for an insurance policy after collecting the initial premium. When will the policy become effective? A) The date of policy delivery B) The date the sales appointment was set C) When the policy is issued D) When the conditions of the receipt are met

D) When the conditions of the receipt are met A conditional receipt indicates that certain conditions must be met in order for the insurance coverage to go into effect.

An applicant's medical information received from the Medical Information Bureau (MIB) may be furnished to the: A) agent B) applicant's spouse C) National Association of Insurance Commissioners (NAIC) D) applicant's physician

D) applicant's physician Information received from the Medical Information Bureau about a proposed insured may be released to the proposed insured's physician.

A life insurance application must be signed by all of these, EXCEPT: A) the insured (if an adult) B) the agent C) the policyowner D) beneficiary

D) beneficiary Beneficiaries are not required to sign an insurance application.

Consumer reports requested by an underwriter during the application process of a life insurance policy can be used to determine: A) overall health of the applicant B) if applicant is a tobacco user C) driving history D) probability of making timely premium payments

D) probability of making timely premium payments A) The purpose of these reports is to provide a picture of an applicant's general character and reputation, mode of living, finances, and any exposure to abnormal hazards.