Ch. 1: Completing the Application, Underwriting and Delivering

An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will coverage begin?

• When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health

• On the designated effective date

• On the application date

• When the agent submits the application to the company and the company issues a conditional receipt

An applicant signs an application for a $25,000 life insurance policy, pays the initial premium, and receives a conditional receipt. If the applicant is killed in an automobile accident the next day,

• The beneficiary would receive 25,000 if it was determined that the insured qualified for the policy applied for.

• The premium would be returned to the insured's estate because the policy was not issued.

• The company could reject the death claim because the underwriting process was never completed.

• The company could reject the application on the basis that the insured's death was not caused by an ongoing medical problem.

If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?

• 7 days

• 10 days

• 3 days

• 5 days

An insurer has made all of the decisions regarding the provisions included in the insured's policy. The insured finds an objectionable provision and wants to negotiate it with the insurer but is not allowed to do so. Her only options are to reject the policy or accept it as is. Which contract feature does this describe?

• Conditional

• Personal

• Adhesion

• Unilateral

An insured pays a $100 premium every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered loss. What characteristic of an insurance contract does this describe?

• Good health

• Adhesion

• Conditional

• Aleatory

If an applicant for a life insurance policy and person to be insured by the policy are two different people, the underwriter would be concerned about

• Whether an insurable interest exists between the individuals.

• The gender of the applicant.

• The type of policy requested.

• Which individual will pay the premium.

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?

• Insurance index

• Policy Summary

• Illustrations

• Buyer's Guide

In insurance, an offer is usually made when

• The agent hands the policy to the policy owner.

• An agent explains a policy to a potential applicant.

• The completed application is submitted.

• The insurer approves the application and receives the initial premium.

A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will

• Automatically pay the policy proceeds.

• Pay the policy proceeds only if it would have issued the policy.

• Pay the policy proceeds up to an established limit.

• Not pay the policy proceeds under any circumstances.

When is the earliest a policy may go into effect?

• When the insurer approves the application

• After the underwriter reviews the policy

• When the application is signed and a check is given to the agent

• When the first premium is paid and the policy has been delivered