Unit 9

Question 0

Underwriting is a process of:

(A) selection and issue of policies
(B) evaluation and classification of risks
(C) selection, reporting, and rejection of risks
(D) selection, classification, and rating of risks

Answer 0

(D) selection, classification, and rating of risks

Question 1

Which of the following statements pertaining to a life insurance policy application is CORRECT?

(A) The names of both the insured and the beneficiary are indicated on the application.
(B) If an applicant’s age is shown erroneously on a life insurance application as 28 instead of 29, the result may be premium quote that is higher than it should be.
(C) The size of the policy being applied for does not affect the underwriting process.
(D) The agent’s report in the application must be signed by the agent and the applicant.

Answer 1

(A) The names of both the insured and the beneficiary are indicated on the application.

Question 2

If a medical report is required on an applicant, it is completed by:

(A) a home office underwriter
(B) a paramedic or examining physician
(C) the agent
(D) the home office medical director

Answer 2

(B) a paramedic or examining physician

Question 3

Which of the following statements pertaining to the Medical Information Bureau (MIB) is CORRECT?

(A) The MIB is operated by a national network of hospitals.
(B) Information obtained by the MIB is available to all physicians.
(C) The MIB provides assistance in the underwriting of life insurance.
(D) Applicants may request that MIB reports be attached to their policies.

Answer 3

(C) The MIB provides assistance in the underwriting of life insurance.

Question 4

Which of the following statements regarding the Fair Credit Reporting Act (FCRA) is CORRECT?

(A) Applicants must be notified within a short period of time that their credit report has been requested.
(B) If an applicant for insurance is rejected based on a consumer report, the name of the reporting agency must be kept confidential.
(C) If requested to do so, the insurance company must provide the actual consumer report to the applicant.
(D) Consumer reports are final in nature and cannot be disputed by an applicant.

Answer 4

(A) Applicants must be notified within a short period of time that their credit report has been requested.

Question 5

All of the following statements about the classification of applicants are correct EXCEPT:

(A) a substandard applicant can never be rejected outright by the insurer
(B) applicants who are preferred risks have premium rates that are generally lower than standard rate risks
(C) an individual can be rated as a substandard risk because of a dangerous occupation
(D) a standard applicant fits the insurer’s guidelines for policy issue without special restrictions

Answer 5

(A) a substandard applicant can never be rejected outright by the insurer

Question 6

Which of the following statements about the Fair Credit Reporting Act is CORRECT?

(A) It prohibits insurance companies from obtaining reports on applicants from outside investigative agencies
(B) It provides that consumers have the right question reports made about them by investigative agencies
(C) It applies to reports about applicants that are made by insurance agents to their companies
(D) It prohibits insurance companies from rejecting an application based on a credit report

Answer 6

(B) It provides that consumers have the right question reports made about them by investigative agencies

Question 7

Elaine signs an application for a $50,000 nonmedical life policy, pays the first premium, and receives a conditional insurability receipt. If Elaine were killed in an auto accident two days later.

(A) the company could reject the application on the basis that death was accidental
(B) her beneficiary would receive $50,000, if Elaine qualified for the policy as applied for
(C) the premium would be returned to Elaine’s family because the policy had not been issued
(D) the company could reject the death claim because the underwriting process was never completed

Answer 7

(B) her beneficiary would receive $50,000, if Elaine qualified for the policy as applied for

Question 8

Generally, the party who delivers an insurance policy to the new policyowner is:

(A) the insurance company’s home office
(B) the sales agent
(C) the state’s chief financial officer
(D) the underwriter

Answer 8

(B) the sales agent

Question 9

The primary distinction between the insurability and approval types of conditional receipts is when:

(A) the applicant pays the initial premium
(B) the coverage goes into effect
(C) the medical exam is given
(D) the applicant proves insurable

Answer 9

(B) the coverage goes into effect