01 Application

Question 1

We are not change needs to be made on the application for insurance, which is the best method for collecting the information?

Answer 1

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

Question 2

What is a warranty in an insurance contract?

Answer 2

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

Question 3

How can health insurance policies be delivered to the insured?

Answer 3

Personally delivered by the agent or mailed.

Question 4

What is policy replacement?

Answer 4

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

Question 5

How is the information obtained for an investigative consumer report?

Answer 5

Through interviews with the applicants associates, friends, and neighbors.

Question 6

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

Answer 6

Premium

Question 7

What entities make up the medical information bureau?

Answer 7

Insurers.

Question 8

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

Answer 8

The agent.

Question 9

What report is used to assess risk associated with health insurance applicants lifestyle and character?

Answer 9

Investigative consumer report.

Question 10

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

Answer 10

Standard, substandard, and preferred.

Question 11

In health 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 11

Unilateral.

Question 12

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

Answer 12

Insurable interest and consent.

Question 13

When would a misrepresentation on an insurance application be considered fraud?

Answer 13

When it is intentional and material.

Question 14

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

Answer 14

Underwriting.

Question 15

What risk classification would typically qualify for lower premiums?

Answer 15

Preferred risk.

Question 16

What document describes the specific information about a policy?

Answer 16

Policy summary.

Question 17

Health insurance contracts are Unilateral. What does that mean?

Answer 17

Only one party mix or legally enforceable promise.

Question 18

What is adverse selection?

Answer 18

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

Question 19

What is the purpose of the agents report during the application process?

Answer 19

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

Question 20

Health contracts are prepared by insurers and must be accepted by the insured on an as is basis. This describes what aspect of a health insurance contract?

Answer 20

Contract of adhesion.

Question 21

What is the main responsibility of a companies underwriting unit?

Answer 21

Risk selection.

Question 22

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 22

The existence of insurable interest between the applicant and the insured.

Question 23

What are the four elements of an insurance contract?

Answer 23

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

Question 24

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

Answer 24

Inspection report.

Question 25

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

Answer 25

When the insurer approves a prepared application.

Question 26

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

Answer 26

When the insurance application is submitted.

Question 27

When does an insurance policy go into effect?

Answer 27

When the policy is delivered and the premium is paid.

Question 28

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

Answer 28

The fair credit reporting act.

Question 29

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

Answer 29

Provide the applicant Disclosure Authorization Notice.

Question 30

Insurance is a contract that protects the insured from what?

Answer 30

Loss.

Question 31

What is insurance underwriting?

Answer 31

The process of risk selection and classification.

Question 32

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

Answer 32

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

Question 33

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

Answer 33

The agent’s.

Question 34

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

Answer 34

At the time of policy delivery.

Question 35

Who must have insurable interest in the insured?

Answer 35

The policy owner.

Question 36

When must insurable interest exist in a life insurance policy?

Answer 36

At the time of application.

Question 37

What is the best way to handle incomplete insurance applications?

Answer 37

Return the application to the applicant for completion.

Question 38

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

Answer 38

Insurance.

Question 39

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

Answer 39

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

Question 40

When would a misrepresentation be considered material?

Answer 40

When it may alter the underwriting decision.

Question 41

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

Answer 41

Send the application back to the applicant for signature.

Question 42

Who is a field underwriter?

Answer 42

Agent or producer.

Question 43

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

Answer 43

Underwriting.