Life Insurance Exam Snapshots

Front 1

What is insurance?

Back 1

Insurance transfers the risk of loss from an individual or business entity to an insurance company, which in turn spreads the costs of unexpected losses to many individuals.

Front 2

In a life insurance policy, when must insurable interest exist?

Back 2

Insurable interest must exist between the policyowner and the insured at the time of application.

Front 3

What is underwriting?

Back 3

Underwriting is the risk selection and classification process.

Front 4

What information is gathered in Parts 1 and 2 of the application?

Back 4

Part 1 of the application includes the general questiosn about the applicant, including name, age, address, birth date, gender, income, marital status, and occupation. Part 2 includes medical information about the prospective insured.

Front 5

What is the purpose of the agent's report?

Back 5

The agent's (producer's) report is used by the agent to discuss his or her personal observations concerning the proposed insured.

Front 6

Who is required to sign an application for life insurance?

Back 6

Both the agent and the proposed insured (usually the applicant) must sign the application.

Front 7

At what point does coverage begin when an agent issues a conditional receipt?

Back 7

The conditional receipt says that coverage will be effective either on the date of the application or the date of the medical exam, whichever occurs last.

Front 8

What does representation mean and how does it differ from a warranty?

Back 8

Representations are statements believed to be rue to the best of one's knowledge. A warranty is an absolutely true statement upon which the validity of the insurance policy depends.

Front 9

How can an insurance company use the information it obtains from the MIB?

Back 9

It can use MIB information to conduct further investigation into an applicant's current insurability.

Front 10

How does a substandard risk policy differ from a standard risk?

Back 10

Substandard risk applicants are not acceptable at standard rates because of physical condition, personal or family history of disease, occupation, or dangerous habits. These policies could be issued with the premium rated-up (higher than the standard risk).

Front 11

What is the purpose of the Fair Credit Reporting Act?

Back 11

The act established procedures that consumer-reporting agencies must follow in order to ensure thhat records are confidential, accurate, relevant, and properly used. It also protects consumers against the circulation of inaccurate or obsolete information.

Front 12

What is the difference between a consumer report and an investigative consumer report?

Back 12

Investigative consumer reports are similar to consumer reports in that they also provide information on the consumer's character, reputation, and habits. The primary difference is that the information is obtained through an investigation and interviews with associates, friends and neighbors of the consumer.

Front 13

When would an insured be required to sign a statement of good health?

Back 13

If the initial premium is not paid with the application, the agen may need to obtain the statement of good health at policy delivery.

Front 14

When does an insurance policy go into effect?

Back 14

The policy will go into effect when the first premium is paid and the policy ahs been delivered.

Front 15

When is a policy considered delivered?

Back 15

When the insurer relinquishes control of the policy by mailing it to the policyowner, legally the policy is considered delivered.