Insurance MCQ

In New Jersey, the public is protected by a notice of discontinuance when a policy is discontinued for nonpayment of premiums. When a policy is discontinued, all of the following are required EXCEPT A. Refund of premiums. B. Written notice to the policyholder. C. A reminder of the date of discontinuance. D. Ceasing to collect premium payments from group participants unless the group policyholder remains fully responsible for the benefits. Answer: A. Refund of premiums

An insurance company and insured are settling a lawsuit involving a life insurance policy. The insurer believes that the application would help to establish material facts in the case. Which of the following is true? A. Once the policy is issued, it is permissible to use the application in litigation, provided that the insured is notified. B. If less than 2 years have passed since the policy issue date, it is acceptable for the application to be considered as evidence. C. State law prohibits applications from being used in litigation. D. Applications can only be used in court cases if they are attached to or endorsed upon the issued policy. Answer: D. Applications can only be used in court cases if they are attached to or endorsed upon the issued policy.

A life insurance policy insures again 5 different perils. If the policyowner wants to cancel the coverage of one of those perils, can he do that? A. Yes, at any time. B. No, the policyowner does not have the right to modify the policy. C. Only with the insurer's written consent. D. Only if the policy specifies that a separate premium for that peril coverage is separately cancelable. Answer: D. Only if the policy specifies that a separate premium for that peril coverage is separately cancelable.

A group of 15 skydivers met at a seminar and began talking about life insurance during a break. Because it was expensive to get individual life insurance, they decided to band together to form a small group so that they could qualify for group life insurance. After they applied for group life insurance, they were rejected. Why? A. The purpose of the group was to purchase life insurance. B. Their profession poses too high of a risk for the insurer. C. There are not enough people in the group to qualify for group life insurance. D. The group has not been established for long enough. Answer: A. The purpose of the group was to purchase life insurance.

Which of the following scenarios would NOT be covered by insurance? A. Client E purchases an annuity to provide for her retirement needs as she reaches her mid-50s, so that she can travel and take care of her grandchildren. B. Client M purchases life insurance on herself prior to committing suicide. C. Client P purchases an annuity as a savings vehicle for retirement. D. Client F buys a life insurance policy on her husband who is the sole provider for her family so that she is taken care of if he dies. Answer: B. Client M purchases life insurance on herself prior to committing suicide.

All of the following actions can be describes as twisting EXCEPT A. Explaining to a client the advantages of permanent insurance over term and suggesting changing policies B. Misrepresenting the terms and conditions of the existing policy to make the new one more attractive C. Embellishing the terms of the proposed policy in order to convince the insured to switch D. Making an incomplete comparison between the existing and proposed policies Answer: A. Explaining to a client the advantages of permanent insurance over term and suggesting changing policies

Which of the following is NOT allowed in credit life insurance? A. Creditor requiring that a debtor buys insurance from a certain creditor B. Creditor having a collateral assignment on the policy C. Creditor requiring that a debtor has a life insurance D. Creditor becoming a policy beneficiary Answer: A. Creditor requiring that a debtor buys insurance from a certain insurer