flash cards
(45 cards)
What two elements are necessary for a life insurance contract to have a legal purpose?
Insurable interest and consent
When does an insurance policy go into effect?
When the policy is delivered and the premium is paid
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?
Unilateral
When would a misrepresentation be considered material?
When it may alter the underwriting decision
Who must have insurable interest in the insured?
The policyowner
If an applicant does not receive a copy of the new insurance policy, who would be held responsible?
The agent
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?
Contract of adhesion
Whose responsibility is it to determine that all the questions on an insurance application are answered?
The agent’s
What law protects consumers from the circulation of inaccurate or obsolete information?
The Fair Credit Reporting Act
Who is a field underwriter?
Agent/Producer
What are the three types of risk rating classifications in life insurance?
Standard, substandard and preferred
When a change needs to be made on the application for insurance, which is the best method for correcting the information?
Complete a new application or ask the applicant to initial the correction on the original application
What are the four elements of an insurance contract
Agreement (offer and acceptance), consideration, competent parties, and legal purpose
What is insurance underwriting?
The process of risk selection and classification
When must insurable interest exist in a life insurance policy?
At the time of application
If an insurer needs to obtain information about the applicant from investigators, what is the insurer required to do?
Provide the applicant a Disclosure Authorization Notice
Insurance contracts are unilateral. What does that mean?
Only one party makes a legally enforceable promise.
What term describes the fee a person pays an insurance company to receive coverage?
Premium
During which stage in the insurance process do insurers evaluate information that identifies adverse selection risks?
Underwriting
At what point does coverage begin when an agent issues a conditional receipt for a life insurance policy
Either on the date of the application or the date of the medical exam (whichever occurs last)
If an applicant for a life insurance policy and the potential insured are two different people, what would be the underwriter’s main concern?
The existence of insurable interest between the applicant and the insured
What document describes the specific information about a policy?
Policy summary
How may insurance policies be delivered to insureds?
They may be either personally delivered by an agent or mailed
What type of report may be used to assess risks associated with an applicant’s lifestyle and character?
Investigative Consumer Report
