Completing The Application, Underwriting And Delievering The Policy

Question 1

What risk classification would typically qualify for lower premiums?

Answer 1

Preferred risks

Question 2

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

Answer 2

When the insurer approves a prepaid application

Question 3

At what point does coverage begin when an agent issues a conditional receipt for a life insurance policy?

Answer 3

Either on the date of the application or the date of the medical exam (whichever occurs last)

Question 4

What document describes the specific information about a policy?

Answer 4

Policy summary

Question 5

When must the policy summary for a life insurance policy be delivered to the policy owner?

Answer 5

At the time of policy delivery

Question 6

What is insurance underwriting?

Answer 6

The process of risk selection and classification

Question 7

When a change needs to be made on the application for insurance, which is the best method for correcting the information?

Answer 7

Complete a new application or ask the applicant to initial the correction on the original application

Question 8

When would misrepresentation on an insurance application be considered fraud

Answer 8

When it’s intentional and material

Question 9

When must insurance interest exist in a life insurance policy?

Answer 9

At the time of application

Question 10

If an agent fails to obtain the applicant’s signature on the insurance application, what must the insurer do?

Answer 10

Send the application back to the applicant for signature

Question 11

How is the information obtained for an investigative consumer report?

Answer 11

Through interviews with the applicants associates, friends and neighbors

Question 12

What term describes the fee of a person pays an insurance company to receive coverage?

Answer 12

Premium

Question 13

What type of report provides information about the applicants hobbies, habits and financial status?

Answer 13

Investigative consumer report

Question 14

If an insurer needs to obtain information about the applicant from investigators, what is the insurer required to do?

Answer 14

Provide the applicant a disclosure authorization notice

Question 15

When would a misreporting be considered material?

Answer 15

When it may alter the underwriting decision

Question 16

If an applicant for a life insurance policy and the potential insured are two different people, what would be the underwriter’s main concern?

Answer 16

The existence of insurable interest between the applicant and the insured

Question 17

What are the four elements of an insurance contract?

Answer 17

Agreement (offer and acceptance), consideration, competent parties, and legal purpose

Question 18

What law protects consumers from the circulation of inaccurate or obsolete information?

Answer 18

The Fair Credit Reporting Act

Question 19

Who is a field underwriter?

Answer 19

Agent/Producer

Question 20

Insurance is a contract that protects the insured from what?

Answer 20

Loss

Question 21

What is a warranty in an insurance contract?

Answer 21

An absolutely true statement upon which the validity of the insurance contract is based

Question 22

What do individuals use to transfer their risk of loss to a larger group?

Answer 22

Insurance

Question 23

An applicant does not receive a copy of the new insurance policy, who would be held responsible?

Answer 23

The agent

Question 24

What is the name of the process that insurance companies use to determine whether or not an applicant is insurable?

Answer 24

Underwriting

Question 25

What is adverse selection?

Answer 25

People who are more likely to submit insurance claims are seeking insurance more often than preferred risks.

Question 26

Who must have insurable interest in the insured?

Answer 26

The policyowner

Question 27

What entities make up the Medical Information Bureau?

Answer 27

Insurers

Question 28

Insurance contracts are unilateral. What does that mean?

Answer 28

Only one party makes a legally enforceable promise.

Question 29

During which stage in the insurance process do insurers evaluate information that identifies adverse selection risks?

Answer 29

Underwriting

Question 30

What are the three main instances when insurable interest exists in life insurance?

Answer 30

Insuring your own life, the life of a family member, or the life of a business partners or someone who has a financial obligation to the policyowner

Question 31

What two elements are necessary for a life insurance contract to have a legal purpose?

Answer 31

Insurable interest and consent

Question 32

When does an insurance policy go into effect?

Answer 32

When the policy is delivered and the premium is paid

Question 33

What is the purpose of the agent's report during the application process?

Answer 33

The agent's report discusses the agent's personal observations about the proposed insured that may help in the underwriting process.

Question 34

What is the best way to handle incomplete insurance applications?

Answer 34

Return the application to the applicant for completion

Question 35

What are the three types of risk rating classifications in life insurance?

Answer 35

Standard, substandard and preferred

Question 36

In insurance contracts, the insured is not legally bound to any particular action; however, the insurer is obligated to pay for losses covered by the policy. What contract element does this describe?

Answer 36

Unilateral

Question 37

In insurance, when is the offer usually made on a contract?

Answer 37

When the insurance application is submitted

Question 38

Whose responsibility is it to determine that all the questions on an insurance application are answered?

Answer 38

The agent's

Question 39

What is the main responsibility of a company's underwriting unit?

Answer 39

Risk selection

Question 40

What type of report may be used to assess risks associated with an applicant's lifestyle and character?

Answer 40

Investigative Consumer Report

Question 41

Insurance contracts are prepared by insurers and must be accepted by the insured on an as-is basis. This describes what characteristic of an insurance contract?

Answer 41

Contract of adhesion

Question 42

How may insurance policies be delivered to insureds?

Answer 42

They may be either personally delivered by an agent or mailed.

Question 43

What is policy replacement?

Answer 43

A new policy is issued while an existing policy is terminated or reissued with a reduction in cash value