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TX insurance > flash cards > Flashcards

flash cards

1
Q

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

A

Insurable interest and consent

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2
Q

When does an insurance policy go into effect?

A

When the policy is delivered and the premium is paid

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3
Q

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?

A

Unilateral

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4
Q

When would a misrepresentation be considered material?

A

When it may alter the underwriting decision

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5
Q

Who must have insurable interest in the insured?

A

The policyowner

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5
Q

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

A

The agent

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6
Q

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?

A

Contract of adhesion

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7
Q

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

A

The agent’s

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8
Q

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

A

The Fair Credit Reporting Act

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9
Q

Who is a field underwriter?

A

Agent/Producer

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9
Q

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

A

Standard, substandard and preferred

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9
Q

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

A

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

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10
Q

What are the four elements of an insurance contract

A

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

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10
Q

What is insurance underwriting?

A

The process of risk selection and classification

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11
Q

When must insurable interest exist in a life insurance policy?

A

At the time of application

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12
Q

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

A

Provide the applicant a Disclosure Authorization Notice

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13
Q

Insurance contracts are unilateral. What does that mean?

A

Only one party makes a legally enforceable promise.

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14
Q

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

A

Premium

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15
Q

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

A

Underwriting

16
Q

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

A

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

17
Q

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

A

The existence of insurable interest between the applicant and the insured

18
Q

What document describes the specific information about a policy?

A

Policy summary

19
Q

How may insurance policies be delivered to insureds?

A

They may be either personally delivered by an agent or mailed

20
Q

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

A

Investigative Consumer Report

21
Q

What entities make up the Medical Information Bureau?

A

INSURERS

22
Q

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

A

When the insurance application is submitted

23
Q

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

A

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

24
Q

What is a warranty in an insurance contract?

A

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

25
Q

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

A

When the insurer approves a prepaid application

26
Q

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

A

Send the application back to the applicant for signature

27
Q

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

A

Underwriting

28
Q

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

A

At the time of policy delivery

28
Q

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

A

Insurance

29
Q

what happens to a policy’s cash value under an extended term nonforfeiture option?

A

the cash value is converted to the same face amount as in the whole life

30
Q

Who has the right to cash value of a life insurance policy?

A

policyowner

31
Q

the applicant for life insurance misstated her age on the policy application. how will this affect the death benefit?

A

the death benefit will be adjusted to the amount the insured could obtain for her correct age

32
Q

with the interest only settlement option, what happens to the policys death benefit?

A

policy proceeds are retained by the insurance company; only the interest is paid to the beneficiary

33
Q

what provision in a life insurance policy extends coverage beyond the premium due date?

A

grace period

34
Q

what happens to the proceeds of a life insurance policy if there is no named beneficiary?

A

the proceeds are paid to the insured’s estate

35
Q

what is the purpose of the free look period?

A

to allow the insured to return the policy with a full refund

36
Q

what type of beneficiary can be changed at any point by the policymaker?

A

revocable

37
Q

under what nonforfeiture option does the company pay the policy’s surrender value and have no further obligations to the policyowner?

A

cash surrender

38
Q

what life policy rider allows the company to forgo collecting the premium if the insured becomes disabled?

A

waiver of premium

39
Q

with the reduction of premium dividend option, how is the dividend used?

A

the dividend is applied to the next years premium ( reduces the next years premium)

40
Q
A

TX insurance (3 decks)

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