Insurance MCQ

Which of the following is a source of underwriting information that specifically focuses on an applicant's medical history? A) Inspection report. B) MIB. C) Statement of Good Health. D) Part 3 of application. Answer: B) MIB.

An insurance applicant's character and reputation can be found in which of the following reports? A) Agent report. B) Inspection report. C) Credit report. D) Medical Information Bureau report. Answer: B) Inspection report.

Which of the following laws require an insurance company to notify an applicant in writing that an investigative consumer report may be made on him? A) Freedom of Information Act. B) Medical Information Bureau Disclosure Act. C) Fair Credit Reporting Act. D) Uniform Provision Law. Answer: C) Fair Credit Reporting Act.

The primary distinction between the insurability and approval types of conditional receipts is when? A) the coverage goes into effect. B) the medical exam is given. C) the applicant pays the initial premium. D) the applicant proves insurable. Answer: A) the coverage goes into effect.

All of the following acts constitute delivery of the policy in the eyes of the law EXCEPT? A) Mailing the policy to the applicant. B) Personally delivering the policy by the agent. C) Issuing a rated policy. D) Mailing the policy to the agent. Answer: C) Issuing a rated policy.

The agent's report is found where in the application? A) Part IV. B) Part II. C) Part I. D) Part III. Answer: D) Part III.

Which of the following is the purpose of backdating? A) Pay a lower premium. B) Have the issue date correspond to the date of the medical exam. C) Avoid the payment of premium with the application. D) Guarantee the insurability of the applicant. Answer: A) Pay a lower premium.

Generally, the party who delivers an insurance policy to the new policyowner is A) the sales agent. B) the underwriter. C) the state's chief financial officer. D) the insurance company's home office. Answer: A) the sales agent.

Elaine signs an application for a $50,000 nonmedical life policy, pays the first premium, and receives a conditional insurability receipt. If Elaine were killed in an auto accident two days later? A) the premium would be returned to Elaine's family because the policy had not been issued. B) the company could reject the death claim because the underwriting process was never completed. C) her beneficiary would receive $50,000, if Elaine qualified for the policy as applied for. D) the company could reject the application on the basis that death was accidental. Answer: C) her beneficiary would receive $50,000, if Elaine qualified for the policy as applied for.

Which of the following statements about the Fair Credit Reporting Act is CORRECT? A) It provides that consumers have the right to question reports made about them by investigative agencies. B) It prohibits insurance companies from obtaining reports on applicants from outside investigative agencies. C) It prohibits insurance companies from rejecting an application based on a credit report. D) It applies to reports about applicants that are made by insurance agents to their companies. Answer: A) It provides that consumers have the right to question reports made about them by investigative agencies.

All of the following statements about the classification of applicants are correct EXCEPT? A) applicants who are preferred risks have premium rates that are generally lower than standard rate risks. B) an individual can be rated as a substandard risk because of a dangerous occupation. C) a substandard applicant can never be rejected outright by the insurer. D) a standard applicant fits the insurer's guidelines for policy issue without special restrictions. Answer: C) a substandard applicant can never be rejected outright by the insurer.

Which of the following statements regarding the Fair Credit Reporting Act (FCRA) is CORRECT? A) Consumer reports are final in nature and cannot be disputed by an applicant. B) If requested to do so, the insurance company must provide the actual consumer report to the applicant. C) If an applicant for insurance is rejected based on a consumer report, the name of the reporting agency must be kept confidential. D) Applicants must be notified within a short period of time that their credit report has been requested. Answer: D) Applicants must be notified within a short period of time that their credit report has been requested.

What's the minimum age of eligibility to enter into a contract for insurance? A) 18. B) 15. C) 21. D) 13. Answer: B) 15.

Which of the following statements BEST defines a material fact? A) A misrepresentation of a fact about an applicant. B) A concealment of a known fact by the applicant. C) A false statement of a fact by the applicant. D) A fact that may affect an applicant being accepted or rejected. Answer: D) A fact that may affect an applicant being accepted or rejected.

Underwriting may be required in all of the following situations EXCEPT when? A) an applicant has a history of poor health. B) an applicant is married. C) an applicant has poor credit history. D) a face amount of insurance exceeds $100,000. Answer: B) an applicant is married.

The process by which an insurer "saves age" is known as? A) the assignment provision. B) policy rating. C) the grace period. D) back dating. Answer: D) back dating.

Which type of receipt is most commonly given when a person applies for insurance and pays the premium? A) Binding. B) Temporary. C) Preliminary. D) Conditional. Answer: D) Conditional.

The MIB (Medical Information Bureau) does NOT help to? A) detect misrepresentations. B) control the cost of insurance. C) identify fraudulent information. D) alert applicants of medical problems. Answer: D) alert applicants of medical problems.

Personally delivering a life policy is advantageous to the agent for all of the following reasons EXCEPT? A) Completing required replacement forms. B) Building client's trust and confidence in the agent's abilities. C) Reviewing the contract provisions, exclusions, and riders. D) Reinforcing the need of the life policy and preventing a potential lapse. Answer: A) Completing required replacement forms.

M receives from an agent a conditional insurability receipt for the premium deposit. M enters the hospital and is diagnosed as having a terminal illness BEFORE the medical exam is given. In this situation, the company would? A) request an updated medical report and make a decisionon on the applicant's insurability. B) issue the policy if M qualified at the time of the application. C) decline M's policy and return the premium. D) retain the premium and ask that a new application be submitted. Answer: B) issue the policy if M qualified at the time of the application.