Chapter Three Quiz Flashcards

1
Q

In classifying a risk, the Home Office underwriting department will look at all of the following except?:

A

Applicant’s past income

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2
Q

All of the following are business uses of life insurance except:

A

Funding against company’s general financial loss

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3
Q

The agent is known as the field “field underwriter” because of the information the agent gathers for the insurer. This helps the insurer:

A

Pre-select applicants that would present the lowest risk of loss for the insurer

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4
Q

Which of the following is the best reason to purchase life insurance rather than an annuity?

A

To create an estate

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5
Q

If an applicant for a life insurance policy is found to be a substandard risk, the insurance company is most likely to:

A

Charge a higher premium

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6
Q

An applicant who receives a preferred risk classification qualifies for:

A

Lower premiums than a person who receives a standard risk

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7
Q

In regards to life insurance contracts, the temporary term is:

A

The period of time during which a binding receipt covers a policyholder

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8
Q

All of the following statements concerning the use of life insurance as an Executive Bonus are correct except:

A

The policy is owned by the company

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9
Q

An individual applied for an insurance policy and paid the initial premium. The insurer ussied a conditional reciept. 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?

A

The date of medical exam

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10
Q

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

A

Risk selection

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11
Q

When is the earliest a policy may go into effect?

A

When the application is signed and a check is given to the agent

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12
Q

The Federal Fair Credit Reporting Act:

A

Regulates consumer reports

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