TEXAS LIFE INSURANCE CH1 EXAM QUESTIONS

PDF Download

TEXAS LIFE INSURANCE CH1 EXAM QUESTIONS

Actual Qs and Ans - Expert-Verified Explanation -Guaranteed passing score -18 Questions and Answers

-Format: Multiple-choice / Flashcard

Question 1: When is the earliest a policy may go into effect?

AWhen the insurer approves the application BAfter the underwriter reviews the policy CWhen the application is signed and a check is given to the agent DWhen the first premium is paid and the policy has been delivered

Answer:

C.)The policy can be effective as early as the date of the application, if the premium is submitted with the application and the policy is issued as applied for.

Question 2: Which of the following best describes the MIB?

AIt is a member organization that protects insured against insolvent insurers.BIt is a rating organization for health insurance.CIt is a nonprofit organization that maintains underwriting information on applicants for life and health insurance.DIt is a government agency that collects medical information on the insured from the insurance companies.

Answer:

C.)The Medical Information Bureau (MIB) is a nonprofit trade organization which receives adverse medical information from insurance companies and maintains confidential medical impairment information on individuals.

Question 3: Which of the following individuals must have insurable interest in the insured?A.)Beneficiary B.)Underwriter C.)Producer D.)Policyowner

Answer:

D.)The policyowner must have an insurable interest in the insured (his/her own life if the policyowner and the insured is the same person), or in the life of a family member or a business partner.

Question 4: What is a material misrepresentation?

AAny misstatement made by an applicant for insurance BAny misstatement by the producer CConcealment DA statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company

Answer:

D.)A material misrepresentation is a statement that, if discovered, would alter the underwriting decision of the insurance company.Question 5: An insurance contract requires that both the insured and the insurer meet certain conditions in order for the contract to be enforceable. What contract characteristic does this describe?AContingent BAleatory CUnilateral DConditional

Answer:

D.)A conditional contract requires both the insurer and policyowner to meet certain conditions before the contract can be executed, unlike other types of policies which put the burden of condition on either the insurer or the policyowner.Question 6: Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. What contract characteristic does this describe?APersonal BAdhesion CUnilateral DConditional

Answer:

B.)A contract of adhesion is prepared by only the insurer; the insured's only option is to accept or reject the policy as it is written.

Question 7: In classifying a risk, the Home Office underwriting department will look at all of the following EXCEPT AApplicant's present occupation.BApplicant's past income.CApplicant's past medical history.DApplicant's present physical condition.

Answer:

B.)In classifying a risk, the Home Office underwriting department will look at the applicant's past medical history, present physical condition, occupation, habits and morals.Question 8: If an applicant for a life insurance policy is found to be a substandard risk, the insurance company is most likely to ARequire a yearly medical examination.BLower its insurability standards.CRefuse to issue the policy.DCharge a higher premium.

Answer:

D.)The premium rate will be adjusted to reflect the insurer's increased risk.Question 9: Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process?APolicy Summary BIllustrations CBuyer's Guide DInsurance Index

Answer:

C.)The Buyer's Guide is a consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process. It is a generic guide that does not address the specific policy of the insurer, instead explaining life insurance in a way that the average consumer can understand.Question 10: If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?A5 days B7 days C10 days D3 days

Answer:

A.)Consumers must be advised that they have a right to request additional information concerning investigative consumer reports, and the insurer or reporting agency has 5 days to provide the consumer with the additional information.

Question 11: An insurer receives a report regarding a potential insured that includes the insured's financial status, hobbies and habits. What type of a report is that?AInspection Report BMedical Information Bureau's report CAgent's Report DUnderwriter's Report

Answer:

A.)Inspection reports cover moral and financial information regarding a potential insured, usually supplied by private investigators and credit agencies. Companies that use inspection reports are subject to the rules outlined in the Fair Credit Reporting Act.Question 12: Part 2 of the application for life insurance provides questions regarding all of the following EXCEPT AOther insurance coverages.BFamily health history.CAlcohol and tobacco consumption.DRecent surgeries.

Answer:

A.)Part 2 of the application contains questions regarding the applicants' health history. Part I of the application includes questions regarding current coverage being applied for as well as any other insurance coverage with the same or other insurers.

Question 13: In insurance, an offer is usually made when

A.) an applicant submits an application to the insurer B.) The insurer approves the application and receives the initial premium C.)The agent hand the policy to the policy owner D.)An agent explains a policy to a potential applicant

Answer:

A (In insurance, the offer is usually made by the applicant in the form of the application. Acceptance takes place when an insurer's underwriter approves the application and issues a policy.) Question 14: An underwriter may obtain information on an applicant's hobbies, financial status, and habits by ordering a(n) AMedical examination.BAttending Physician Statement.CInspection report.DMedical Information Bureau report.

Answer:

C.)An inspection report may be ordered about an applicant from an independent investigating firm or credit agency. It is a general report of the applicant's finances, character, work, hobbies, and habits.