Underwriting, Issuance and Delivery

At what age may a minor purchase a life or health insurance contract? a. 15 b. 16 c. 18 d. 21

15

What type contract is said to be, if...then? a. Personal b. Unilateral c. Adhesion d. Conditional

Conditional

In order to be valid, a contract must have: a. Government purpose b. Private purpose c. Legal purpose d. Public purpose

Legal purpose

This employee of the insurer assigns risk categories to applicants: a. Broker b. Agent c. Underwriter d. Actuary

Underwriter

A life insurance application can usually be backdated for a maximum of how many months? a. 3 months b. 6 months c. 9 months d. 12 months

6 months

Telemarketers may call phone numbers not on the Do Not Call List from: Select one: a. 7am to 6pm b. 8am to 5pm c. 8am to 9pm d. 9am to 8pm

8am to 9pm

Which of the following does not demonstrate constructive delivery? a. The agent mails the policy to the insured b. The insurer mails the policy to the agent, who in turn, mails the policy to the insured c. A conditional receipt is issued to the applicant d. The insurer mails the policy to the insured

A conditional receipt is issued to the applicant

Which of the following is the primary source of information used in underwriting an insurance policy? a. Attending physician statement b. Application c. Agent report d. Medical Information Bureau

Application

All parties to a contract must be of a legal age, mentally capable of understanding the terms of the contract, and not influenced by drugs or alcohol. Which of the following elements of a legal contract is described? a. Competent parties b. Consideration c. Agreement d. Legal purpose

Competent parties

Why are life and health insurance contracts said to be contracts of adhesion? a. Because the insurer writes the contract, to which the insured must adhere b. Because only the insurer is bound to the promises made in the policy c. Because one party has the potential to receive more than the other d. Because certain conditions must be met by all parties of the contract in order for it to be a legally binding contract

Because the insurer writes the contract, to which the insured must adhere

The agent must provide the applicant which of the following disclosures that contains general information about the types of life insurance policies available, in language that can be understood by the average person? a. MIB b. Policy Summary c. Buyer's Guide d. Sales Broachure

Buyer's Guide

Insurable interest requires that an individual have a valid concern for the well being of the person insured. In a life policy insurable interest can be present in all of the following, EXCEPT: a. Business partners b. Second cousins c. Spouse or parent d. Creditors

Second cousins

Which of the following best describes a life insurance policy in which the proposed insured is not required to undergo a medical examination? a. Easy policy b. Simply-issued policy c. Simplified issue d. Standard coverage policy

Simplified issue

Insurers make a promise to pay benefits in the future in the case of death or sickness, what type contract is this? a. Personal b. Unilateral c. Conditional d. Adhesion

Conditional

Janice applies for a life insurance policy. She submits the application with the initial premium for $100,000 whole life. The agent returns the policy with a higher premium and hazardous occupation exclusion. What has the insurer made? a. Agreement b. Offer c. Invitation to offer d. Counter-offer

Counter-offer

Part II of the life insurance application includes: a. The agent's statement or report b. Medical Information c. General Information d. Inspection Statement

Medical Information

All of the following are involved in the collection of an applicant's medical history, EXCEPT: Select one: a. The application for the insurance policy b. The attending physician statement c. The agent report d. The consumer report

The consumer report

Gerald has a chronic medical condition. What will his risk classification be? How will his premium be affected? a. Gerald's risk classification will be preferred. His premium will be higher. b. Gerald's risk classification will be standard. His premium will be lower. c. Gerald's risk classification will be substandard. His premium will be higher. d. Gerald will be denied coverage.

Gerald's risk classification will be substandard. His premium will be higher.

Insurance contracts are conditional. Which of the following would be a characteristic of a conditional contract? a. If a loss occurs, then the insurance company will pay benefits. b. Only the insurance company makes legally enforceable promises in the contract. c. The contract is a "take it or leave it" contract. d. There is an unequal exchange of value with the contract.

If a loss occurs, then the insurance company will pay benefits.

All of the following statements are true regarding warranties, EXCEPT: a. Warranties are statements that are guaranteed to be true in every respect. b. Insurance companies are held to the principle of warranties. c. Insureds are held to the principle of warranties. d. Breach of warranty is grounds for voiding an insurance contract.

Insureds are held to the principle of warranties.

Which of the following is not required in a legal contract? Select one: a. Consideration b. Acceptance c. Invitation to offer d. Legal purpose

Invitation to offer

Which of the following statements about a temporary insurance agreement is CORRECT? a. Coverage begins when the application is signed and the premium is paid, assuming any required medical exam is scheduled within three days. b. It provides temporary coverage until an application is rejected or the policy is issued. c. It provides protection against death by accident, but not death from natural causes. d. It provides term insurance protection until the policy is converted to permanent insurance.

It provides temporary coverage until an application is rejected or the policy is issued.

In Ray's application for life insurance an applicant failed to complete one part regarding family history. In his statement, the agent described the family as long-lived and healthy. If an insurance company accepts the application in the incomplete form and the applicant for coverage dies young from a cardiac condition that had taken the lives of both his parents before age 50, will the company deny or accept the claim of the beneficiaries? a. It will deny the claim, based on misrepresentation. b. It will deny the claim, based on concealment. c. It will deny the claim, based on breach of warranty. d. It will pay the claim, because in accepting the application, it waived its right to the missing information.

It will pay the claim, because in accepting the application, it waived its right to the missing information.

Which of the following best describes the MIB? a. Nonprofit trade organization that supplies insurability information to member companies b. Government agency that collects information about individuals' life and health insurance policies c. State organization that catalogs individuals' life and health insurance claims d. Group of federally-appointed physicians that monitor the medical treatments received by individuals insured by private companies

Nonprofit trade organization that supplies insurability information to member companies

What are the basic elements of a legal contract? a. Offer, acceptance, consideration, competent parties and legal purpose b. Acceptance and consideration c. Policy face, insuring clause and adhesion d. Competent parties, acceptance and reasonable expectations

Offer, acceptance, consideration, competent parties and legal purpose

If required by the insurer, the statement of good health must be collected by the producer at the time of: a. Policy application b. Policy issuance c. Policy delivery d. None of the above

Policy delivery

All of the following statements are true regarding insurance application procedures, EXCEPT: a. The application is one of the key sources of information used by underwriters. b. The producer is responsible for making sure the applicant has filled out the application completely. c. In many states the application becomes part of the insurance contract. d. Producers can fill in any missing information they discover on the application.

Producers can fill in any missing information they discover on the application.

Field underwriting ________ adverse selection. a. Increases b. Reduces c. Encourages d. Eliminates

Reduces

Rates for insurance policies are based on: a. Marital status and age b. Sex, age and marital status c. Sex and age d. Sex only

Sex and age

Who administers the National Do Not Call Registry? a. The Social Security Administration b. The state insurance department c. The Federal Trade Commission d. The Department of Defense

The Federal Trade Commission

Of the following, who must explain the reason for premium increases to a life insurance applicant? a. The agent b. The insurer c. The underwriter d. None of the above

The agent

If a company issues a conditional receipt to an applicant who has paid an initial premium for a policy that does not require a medical examination: a. The company thereby divests itself of all risk. b. The applicant is immediately covered. c. The applicant must yet meet certain conditions before their application can be submitted to the company. d. The company thereby waives its right to refuse to issue a policy.

The applicant is immediately covered.

All of the following are part of the consideration element of an insurance contract, EXCEPT: a. The insurer's promise to pay a covered loss b. The applicant's statements on the application c. The initial premium paid by the applicant d. The applicant's promises

The applicant's promises

An individual signed an application for a $100,000 life insurance policy and paid the first premium on January 1. The agent issued an insurability receipt. A week later, the required medical examination proves the person insurable. If the person dies before the insurer approves the application: a. The coverage will be retroactively effective. b. The coverage will be retroactively effective, but the policy will only pay $50,000. c. No coverage will be provided. d. No coverage will be provided, but the premium will be refunded.

The coverage will be retroactively effective.

John purchases a life insurance policy for his wife Jean. Which of the following best describes who is legally bound to the policy's promise of benefits? a. The insurer, John and Jean b. The insurer and John c. The insurer and Jean d. The insurer

The insurer

Insurance agent Margaret receives life insurance applications from Tim and Tom, who are identical twins, and are each applying for the exact same type of policy with the same face amount. The insurance company issues the policies as applied for, but charges Tom a 15% higher premium. Which of the following best explains the higher premium charged to Tom? Select one: a. Longer free look period b. Insuring clause c. Tom had to undergo a medical examination d. Tom's risk classification

Tom's risk classification

Which of the following best describes the process used to select and classify risks? a. Rating b. Discrimination c. Risk classification d. Underwriting

Underwriting

Insurance contracts are one-sided. Which of the following terms best describes this? a. Aleatory contract b. Unilateral contract c. Conditional contract d. Personal contract

Unilateral contract

Coverage is effective: a. With collection of the initial premium, approval of the application, policy issuance and delivery b. Upon collection of the application only c. Upon collection of the initial premium only d. When the applicant makes an offer to the insurer

With collection of the initial premium, approval of the application, policy issuance and delivery