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

Which document, delivered to the policy owner, includes information about premium amounts, cash values surrender values, and death benefits for specific policy years?

A policy summary ... usually includes all the listed information, and must be delivered along with a new policy.

Identify a nonmedical insurance application.

An application on which the medical information is completed by the applicant and the agent only. ... An application on which all of the questions, including medical history questions, do not need to be completed by medical professionals, and may be completed by the applicant and the agent.

Representations are written or oral statements made by the applicant that are...

Considered true to the best of the applicant's knowledge. ... Representations are statements made by an applicant that they believe to be true.

An insured stated on her application for life insurance that she had never had a heart attack, when in fact she had a series of minor heart attacks last year for which​ she sought medical attention. Why will the death benefit claim be denied?

Material misrepresentation ... will affect whether or not a policy is issued. If the insured had been truthful, it is very likely that the policy would not be issued.

Define: Unilateral contract

One-sided; only one part makes an enforceable promise ... An insurance contract is unilateral in that only one of the parties to the contract is legally bound to do anything.

Why should the producer personally deliver the policy when the first premium has already been paid?

To help the insured understand all aspects of the contract. ... It is the producer's responsibility to make sure that the policy is understood by the insured and all of their questions are satisfied, and the delivery receipt is signed.

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?

Unilateral ... the insured is not legally bound to do anything. The insurer, however, must pay losses covered by the policy.

An insurance contract requires that both the insured and the insurer meet certain conditions in order for the contract to be enforceable. What contract characteristic does this describe?

Conditional A conditional contract requires both the insurer and policy owner to meet certain conditions before the contract can be executed, unlike other types of policies, which put the burden of condition on either the insurer or the policy owner.

An underwriter may obtain information on an applicant's hobbies, financial status, and habits by ordering a(n)

Inspection report An inspection report may be ordered about an applicant from an independent investigating firm or credit agency. It is a general report of the applicant's finances, character, work, hobbies, and habits.

Who makes up the Medical Information Bureau?

Insurers ... The Medical Information Bureau is made up of insurers so the companies can compare the information they have collected on a potential insured with information other insurers may have discovered.

An applicant signs an application for a $25,000 life insurance policy, pays the initial premium, and receives the initial premium, and receives a conditional receipt. If the applicant is killed in an automobile accident the next day,

The beneficiary would reveive $25,000 if it was determined that the insured qualified for the policy applied for ... The conditional receipt provides that when the applicant pays

An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days 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 ... If the company acknowledges receipt of the premium with a conditional receipt, the policy is in effect on the date of the application or the date of the medical exam (whichever is later), provided that the applicant is found insurable at the rate applied for.

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?

As of the application date ... If the full premium was submitted with the application and the policy was issued as requested, the policy coverage effective date would generally coincide with the date of application.

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

Premium amounts and surrender values ... A policy summary must be delivered along with the policy and will provide the producer's name and address, the insurance company's home office address, the generic name of the policy issued, and premium, cash value, surrender value and death benefit figures for specific policy years.

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

Contracts of adhesion ... Insurance policies are written by the insurer and submitted to the insured on a "take it or leave it" basis. The insured does not have any input to the contract, but simply adheres to the contract.