What action should a producer take if the initial premium is NOT submitted with the application?
answer
The correct answer is "Forward the application to the insurer without the initial premium". In this situation, the producer should submit the application to the insurance company without the premium. However, if a premium is not paid with the application, the policy will not become valid until the initial premium is collected.
question
When a policyowner cash surrenders a Universal Life insurance policy in it's early years, this may be considered a red flag for a(n)
answer
Anti-Money Laundering violation
When a policyowner cash surrenders a Universal Life insurance policy in it's early years, this may be considered a red flag for an Anti-Money Laundering violation.
question
From what authority derives the requirement that an insurance application contains a disclosure stating that an investigative consumer report may be obtained on an applicant?
answer
Fair Credit Reporting Act
The Fair Credit Reporting Act requires that an insurance application state that an investigative consumer report may be obtained on an applicant.
question
ABC Insurance Company has accepted a life insurance application which contains unanswered questions. The company then makes the application part of the life contract. In this situation, the insurer has
answer
The correct answer is "waived one of its legal rights". If an insurer accepts an application that contains unanswered questions and makes the application part of the life contract, the company has waived one of its legal rights.
question
On August 6, D submitted an application for a $50,000 Life Insurance policy and did not pay the initial premium. On August 18, D went to his doctor complaining of chest pains and some tests were given by the doctor. The life policy was delivered by the producer on August 20 and D explains what had recently taken place with the doctor. What action should the producer then take?
answer
Collect initial premium along with a signed health statement
question
An applicant's medical information received from the Medical Information Bureau (MIB) may be furnished to the
answer
The correct answer is "applicant's physician". Information received from the Medical Information Bureau about a proposed insured may be released to the proposed insured's physician.
question
Which of the following statements is CORRECT about an agent who is taking an insurance application?
answer
The agent should have the applicant initial any changes made on the application
question
K is an agent who takes an application for individual life insurance and accepts a check from the client. He submits the application and check to the insurance company, however the check was never signed by the applicant. If the application is approved, when will coverage be effective?
answer
The date the agent delivered the policy, collected the initial premium, and obtained a good health statement from the insured
question
All of these are considered sources of underwriting information about an applicant EXCEPT
answer
Rating Services
All of these are valid sources to obtain underwriting information about an applicant EXCEPT for a rating service (A.M. Best, Standard & Poor's).
question
On January 8, an applicant filled out an application for a life insurance policy but did not include the initial premium. The insurance company approved the application on January 14 and issued the policy January 15. The producer delivered the policy on January 26 and collected the first premium. When did the coverage become effective?
answer
January 26
In this situation, coverage became effective on the date the policy was delivered and first premium collected.
question
Information obtained from a phone conversation to the proposed insured can be found in which of these reports?
answer
The correct answer is "Inspection report". An inspection report may include information obtained by a telephone call to the proposed insured.
question
What is the purpose of the U.S.A. Patriot Act?
answer
detect and deter terrorism
question
What is the purpose of a Policy Summary?
answer
It highlights the critical parts of the policy issued
A Policy Summary highlights the critical parts of the policy issued and describes the coverages, riders, and exclusions.
question
P is a producer who notices 5 questions on a life application were not answered. What actions should P take?
answer
Set up a meeting with the applicant to answer the remaining questions
question
A life insurance application must be signed by all of these EXCEPT
answer
beneficiary
question
A statement made by an insured in an insurance application that must be true to the best of one's knowledge and which becomes a part of the contract is known as
answer
a representation
A representation is a statement made by an insured in an insurance application that must be true to the best of one's knowledge and which becomes a part of the contract.
question
Consumer reports requested by an underwriter during the application process of a life insurance policy can be used to determine
answer
probability of making timely premium payments
The purpose of these reports is to provide a picture of an applicant's general character and reputation, mode of living, finances, and any exposure to abnormal hazards.
question
An underwriter determines that an applicant's risk should be recategorized due to a health issue. This policy may be issued with a(n)
answer
exclusion for the medical condition
In this situation, the policy may be issued with an exclusion for the medical problem.
question
P completes an application for a $10,000 life policy, but does not give the producer the initial premium. P's coverage becomes effective when
answer
P receives the policy and pays the premium
question
A student pilot can pay regular premium costs for her life insurance policy with the addition of which of the following?
answer
Aviation exclusion
A student pilot can pay standard premium costs for her life insurance policy with the addition of an aviation exclusion.
question
Any changes made on an insurance application requires the initials of whom?
answer
Applicant
When an applicant makes a mistake in the information given to an agent in completing the application, the applicant can have the agent correct the information, but the applicant must initial the correction.
question
What is being delivered during a policy delivery?
answer
The correct answer is "Insurance contract to the proposed insured". Policy delivery refers to the delivery of the insurance contract to the applicant.
question
Which of these terms accurately defines an underwriter's assessment of information on a life insurance application?
answer
Risk classification
Underwriting, another term for risk selection, is the process of reviewing the many characteristics that make up the risk profile of an applicant to determine if the applicant is insurable and, if so, at standard or substandard rates.
question
An agent gives a conditional receipt to a client for an insurance policy after collecting the initial premium. When will the policy become effective?
answer
When the conditions of the receipt are met
A conditional receipt indicates that certain conditions must be met in order for the insurance coverage to go into effect.
question
Which of these do NOT constitute policy delivery?
answer
Policy issued with a rating
question
When does a life insurance contract become effective if the initial premium is not collected during the application process?
answer
When producer delivers policy and collects initial premium
Insurance becomes effective on delivery of the policy to the insured and payment of the initial premium to the producer.
question
Before a life insurance policy is issued, which of these components of the contract is required?
answer
Applicant's signature on application
signature on an application is required before a life policy will be issued.
question
Agent J takes an application and initial premium from an applicant and sends the application and premium check to the insurance company. The insurance company returns the check back to J because the check is made out to J instead of the insurance company. What action should J take?
answer
Return to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company
question
K applies for a life insurance policy on herself and submits the initial premium with the application. She is given a receipt by the agent stating that coverage begins immediately if the application is approved. What kind of receipt was used?
answer
The correct answer is "Conditional". A conditional receipt indicates that certain conditions must be met in order for the insurance coverage to go into effect.
question
Which factors are taken into consideration when an insurance company determines the premium rate for a Whole Life policy on an applicant?
answer
Risk classification
To determine the premium rate on a Whole Life policy, an insurance company will consider the risk classification of the applicant.
question
T applies for a life insurance policy and is told by the producer that the insurer is bound to the coverage as of the date of the application or medical examination, whichever is later. Assuming that T is an acceptable risk, what item is given to T?
answer
The correct answer is "Conditional receipt". A conditional receipt binds the insurer to coverage as of the date of the application or medical exam, provided the proposed insured is determined to be an acceptable risk.
question
Which Federal law allows an insurer to obtain an inspection report on a potential insured?
answer
Fair Credit Reporting Act
The Fair Credit Reporting Act of 1970, or FCRA, established procedures for the collection and disclosure of information obtained on consumers through investigation and credit reports.
question
When an insurance application is taken by a producer, which of these statements is true?
answer
Any changes made on the application require the applicant's initials
question
Q applied for life insurance and submitted the initial premium on January 1. The policy was issued February 1, but it was not delivered by the agent until February 7. Q is dissatisfied and returns the policy February 13. How will the insurer handle this situation?
answer
Policy was returned within the free-look period, premium will be fully refunded.
The free-look period begins when the policy is delivered to policyowner.
question
Which of these factors do NOT play a role in the underwriting of a life insurance policy?
answer
Marital status.
Marital status does not affect the underwriting of a life insurance policy.
question
Which of these actions should a producer take when submitting an insurance application to an insurer?
answer
One of the actions a producer should take when submitting an application is to advise the insurer of any other relevant information not contained in the application.
question
M completes an application for life insurance but does not pay the initial premium. All of these actions must occur before M's policy goes into effect EXCEPT
answer
free-look period has expired
question
Which parts of a life insurance policy are guaranteed to be true?
answer
Warranty
Warranties are statements that are considered literally true. A warranty that is not literally true in every detail, even if made in error, is sufficient to render a policy void.
question
Upon delivery of a rated life insurance policy, the Producer must obtain each of the following EXCEPT
Signed HIPAA disclosure
Signed amendment
Signed statement of Good Health
The required premium
answer
Signed HIPAA disclosure
The HIPAA disclosure should be taken at the time of sale with the application.
question
What would the Medical Information Bureau (MIB) identify?
answer
The Medical Information Bureau (MIB) report will identify marijuana use determined by a previous screening.
question
On delivery of a policy, a signed statement of good health is typically requested if
answer
The application was submitted without the initial premium
question
Which of the following correctly explains the actions an agent should take if a customer wants to apply for an insurance policy?
answer
Complete the application and review the information with the customer prior to obtaining the customer's signature, then send the application off to the insurance company
question
An insurance company may NOT reject a prospective insured's life application on the basis of which of the following factors?
answer
Gender
question
Who is NOT required to sign a life insurance application?
answer
Beneficiary
question
At what time must a policyowner have insurable interest on the insured in order for the life policy to be valid?
answer
At the time of application
With life insurance, insurable interest must exist only at the policy inception.
question
The USA Patriot Act was enacted in
answer
The USA Patriot Act was enacted in 2001 to detect and deter terrorism.
question
A Medical Information Report (MIB) report may disclose which of the following
answer
Prior use of marjuana
A Medical Information Report (MIB) may disclose lifestyle habits such as drugs, drinking, overeating and smoking.
question
In order for coverage on a non-medical insurance application to take effect the same day, the producer must collect a signed application and
answer
the initial premium
Coverage begins on the day in which the producer collects the initial premium and has the applicant sign the life insurance contract.
question
Why is an applicant's signature required on a life insurance application?
answer
To attest that the statements on the application are accurate to the best of the applicant's knowledge
question
The underwriting process involves all of these EXCEPT for
answer
Policy loan
question
An incomplete life insurance application submitted to an insurer will result in which of these actions?
answer
Application will be returned to the writing agent
If the company discovers a mistake or incompletion, it usually returns the application to the producer.
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