EXAMFX - LIFE AND HEALTH - CHAPTER 1 EXAM

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EXAMFX - LIFE AND HEALTH - CHAPTER 1 EXAM

QUESTIONS

Actual Qs and Ans - Expert-Verified Explanation -Guaranteed passing score -48 Questions and Answers

-Format: Multiple-choice / Flashcard

Question 1: When does acceptance typically occur in forming an insurance contract?

Answer:

When the insurer approves a prepaid application Question 2: When does coverage begin with a conditional receipt for a life insurance policy?

Answer:

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

Question 3: What is the purpose of a conditional receipt in life insurance?

Answer:

To provide temporary coverage while the application is being processed

Question 4: What is policy replacement?

Answer:

Issuing a new policy while terminating or reissuing an existing policy with reduced cash value

Question 5: What is the purpose of a policy illustration in life insurance?

Answer:

To provide a visual representation of how the policy works and its potential benefits

Question 6: Evaluation of adverse selection risks occurs during which stage in the insurance process?

Answer:

Underwriting

Question 7: Elements of an Insurance Contract

Answer:

Agreement, Consideration, Competent Parties, Legal Purpose Question 8: What is the role of the Medical Information Bureau (MIB) in life insurance underwriting?

Answer:

To provide insurers with information on an applicant's past insurance applications and medical history

Question 9: Risk Classification for Lower Premiums

Answer:

Preferred Risk Question 10: Describe the contract element in health insurance where the insured is not legally bound to any action but the insurer is obligated to pay for losses.

Answer:

Unilateral Question 11: What aspect of a health insurance contract involves insurers preparing contracts accepted by the insured as is?

Answer:

Contract of Adhesion

Question 12: What does it mean that health insurance contracts are unilateral?

Answer:

Only one party makes a legally enforceable promise

Question 13: Insurance Underwriting

Answer:

Process of selecting and classifying risks

Question 14: Delivery of Health Insurance Policies

Answer:

Personally Delivered by Agent or Mailed Question 15: What report assesses risk associated with a health insurance applicant's lifestyle and character?

Answer:

Investigative Consumer Report Question 16: What is the best method for correcting information on an insurance application?

Answer:

Complete a new application or have the applicant initial the correction on the original application

Question 17: Who is a field underwriter?

Answer:

Agent/Producer

Question 18: When must insurable interest exist in a life insurance policy?

Answer:

At the time of application

Question 19: What term describes the fee for insurance coverage?

Answer:

Premium

Question 20: Who is required to have insurable interest in the insured?

Answer:

The policyowner Question 21: When must the policy summary for a life insurance policy be provided to the policyowner?

Answer:

At the time of policy delivery

Question 22: When does an insurance policy become effective?

Answer:

When the policy is delivered and the premium is paid

Question 23: Legal Elements of Life Insurance Contract

Answer:

Insurable Interest, Consent Question 24: What is the process used by insurance companies to determine an applicant's insurability called?

Answer:

Underwriting

Question 25: When is a misrepresentation considered material?

Answer:

When it may alter the underwriting decision

Question 26: Define adverse selection.

Answer:

People more likely to submit claims seeking insurance more often than preferred risks Question 27: What is the underwriter's main concern if the applicant and potential insured are different individuals?

Answer:

Insurable interest between them Question 28: What must the insurer do if an agent fails to obtain the applicant's signature on the insurance application?

Answer:

Send the application back for signature Question 29: What law protects consumers from inaccurate or obsolete information circulation?

Answer:

The Fair Credit Reporting Act