FREE INSURANCE AND STUDY GAMES ABOUT A.U.D. EXAM

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FREE INSURANCE AND STUDY GAMES ABOUT A.U.D. EXAM

QUESTIONS

Actual Qs and Ans Expert-Verified Explanation

This Exam contains:

-Guarantee passing score -37 Questions and Answers -format set of multiple-choice -Expert-Verified Explanation

Question 1: Replacement

Answer:

Any transaction in which a new policy is purchased and the old policy is either lapsed, forfeited, or surrendered for its face amount or cash values are diminished.

Question 2: Preferred Risk

Answer:

These applicants have a superior lifestyle, physical condition, and habits: they pays the lowest premium (lowest risk)

Question 3: Substandard Risk

Answer:

These applicants are not insurable at standard rates because of some health issue, medical history, occupation, or dangerous habits; also known as "rated" and pay the highest premium (highest risk)

Question 4: Premium Receipt

Answer:

A receipt is usually given to the applicant at the time the application is completed and the initial premium is paid.

Question 5: Delivering the Policy

Answer:

Agent explains the the policy and discuss provisions, riders, exclusions, any ratings, and any amendments and have the policy owner to sign a receipt

Question 6: Investigative Consumer Report

Answer:

Similar to a consumer report except that it includes interviews with associates, friends, and neighbors of the consumer

Question 7: Conditional (Unique Characteristic)

Answer:

Certain conditions must be met for the contract to be executed; the insured must pay the premiums and provide proof of loss for the death benefit to be paid

Question 8: Buyer's Guide

Answer:

Contains generic information about life policies and must be provided at the time of application, or upon requested

Question 9: Declined Risk

Answer:

If the risk is too great, the underwriter will decline the application

Question 10: Medical Information Bureau (MIB)

Answer:

A nonprofit member funded trade organization that collects and shares adverse medical information from insurance companies. An application cannot be refused because of information discovered through the MIB

Question 11: Conditional Receipt

Answer:

States that coverage will be effective either on the date of the application or on the date of the medical exam, whichever is later, as long as the policy is issued as applied for; issued if the initial premium is paid at the time of application.

Question 12: Required Signatures

Answer:

Proposed insured, policy owner (if not the insured) and the agent

Question 13: Fair Credit Reporting Act

Answer:

Established as a way to protect consumer privacy by creating procedures to ensure that records are confidential, accurate, relevant and properly used. It protects against the circulation of inaccurate information

Question 14: Underwriting

Answer:

Risk selection and classification

Question 15: Changes in the Application

Answer:

Changes made to an application after it is completed must be initialed by the applicant; no whiteout is allowed

Question 16: Policy Summary

Answer:

Describes the features and benefits of the policy being issued and must be provided no later than policy delivery, or upon requested

Question 17: USA Patriot Act

Answer:

Passed in 2001 (9/11 attack) to strengthen measures to protect against terrorism. Requires insurer to establish Anti-Money Laundering, report suspicious activity, verify the identity of customers and report transactions in excess of $10,000 in currency

Question 18: HIPAA (Health Insurance Portability and Accountability Act)

Answer:

A federal law that protects the privacy of certain individual health information. All medical information must remain confidential during underwriting. Commissioner must approve a company's consent form prior to use.

Question 19: Stranger-originated life insurance (STOLI)/Investor-originated life insurance (IOLI)

Answer:

Violates the principle of insurable interest since the purchaser of the policy has no interest in the life of the insured; investors (strangers) persuade policy owners to take out new life insurance with the investors named as the beneficiaries.

Question 20: Contract of Adhesion (Unique Characteristic)

Answer:

The contract is prepared by one party and accepted or rejected by the other; a "take-it-or-leave-it" contract offered by the insurer with no negotiation

Question 21: Money Laundering Steps

Answer:

? Placement: getting the money into the financial system

? Layering: carrying out financial transactions to separate the illicit proceeds from its source

? Integration: making the money derived from illicit proceeds appear legitimate

Question 22: Consideration (Element of a Contract)

Answer:

Something of value that each party gives to the other; the insured pays the premiums and the insurer promises to pay the benefit in the event of loss

Question 23: Consequences of Incomplete Applications

Answer:

The insurance company will return it to the agent to be completed which will delay the underwriting process

Question 24: Contract

Answer:

An agreement between two or more parties enforceable by law. Insurance contracts are unique and the law of contracts had to be modified to meet insurance needs