Colorado Life & Health Insurance Exam With Complete Solution

Agent - Answer Agents are the agents of the insurer Producer - Answer Usually includes agents and brokers Applicant or proposed insured - Answer A person applying for insurance Consent - Answer permission to do something Insurable Interest - Answer The policy owner must face the possibility of losing money or something of value in the event of loss insurance policy - Answer a contract between a policyowner (and/or insured) and an insurance company which agrees to pay the insured or the beneficiary for loss caused by specific events Insured - Answer Person covered by the insurance policy, may or may not be the policy holder. Insurer (principal) - Answer the company who issues an insurance policy Policyowner - Answer the person entitled to exercise the rights and privileges in the policy Premium - Answer the money paid to the insurance company for the insurance policy Contracts to be legally binding: - Answer Agreement- Offer and acceptance Consideration Competent parties Legal Purpose Offer - Answer needs to be by one party and the other party accepts offer in exact terms. Applicant - Answer usually makes the offer when submitting the application. Acceptance - Answer takes place when an insurer's underwriter approves the application and issues a policy Consideration - Answer Is the value that each party gives each other. Insured - Answer person who makes payment of premium and rpresents made in the application Insurer - Answer Promise to pay in the event of a loss T/F Insurers considerations is the promise to pay for losses, insureds consideration is the premium and statements on the application - Answer True Parties to a contract - Answer Must be capable of entering into a contract in the eyes of the law. Both parties need to be legal age, mentally competent and not under the influence of drugs/alcohol. Legal - Answer Must have both insurable interest and consent. Insurable interest - Answer Proven by love and affection, economic or financial loss required at the time of policy insurance. Must experience financial loss due to an accident or sickness that befalls the insured. Warranty - Answer True statements of validity of the insurance policy depend. Breach of Warranty - Answer can be considered grounds for voiding policy or a return of premium. Representations - Answer statements believed to be true to the best of one's knowledge, but they are not guaranteed to be true Untrue statements - Answer statements on an application that are considered misrepresentations and could void contract. Material Misrepresentation - Answer Discovered after underwriting decision of the insurance company. If material misrepresentations are intentional - Answer They are considered fraud. Conditional Contract - Answer Requires that certain conditions must be met by the policyowner and the company in order for the contract to be executed, and before each party fulfills its obligations. Unilateral Contract - Answer only one of the parties to the contract is legally bound to do anything. Insured makes no legally binding promises, insurer is legally bound to pay losses covered by policy to force. No legal actions for cancellation - Answer When someone loses job, unemployment and premiums are current insure can't refuse to pay death benefit. Contract of adhesion - Answer prepared by one of the parties (insurer) and accepted or rejected by the other party (insured) Insurance policies are - Answer drawn up as take it or leave it Aleatory exchange - Answer unequal amounts or values and uneven exchange of values. Insurance contracts are? - Answer aleatory T/F If Jons paid $100 of his 100,000 life insurance policy and he dies his beneficiary will receive the total 100,000? - Answer True T/F if a mistake occurs on application have client draw line and initial the correct answer. - Answer True An application is. form completed by the agent as questions are asked of the applicant, responses are recorded. It then submitted to insurance company for approval or rejection. If policy is issued a copy of application will be stapled on the back of the policy. It then becomes apart of the? - Answer Entire contract Notice to applicant - Answer must be issued to all applicants for life or health insurance coverage. This notice informs the applicant that a report will be ordered concerning their past credit history and any other life or health insurance for which they have previously applied. The agent must leave this notice with the applicant along with the receipt. Application process - Answer Completeness and accuracy Signatures Changes in the application premiums with application submitting application to company for underwriting. Completness and accuracy - Answer Agent need to be accurate with interest of company and insured. Main source of under writing information. Agent responsible for application and correctly filled out. Changes in application requires - Answer Ink, if mistake occurs use new app, if not practical draw a line through the incorrect answer. Applicant needs to be informed. Premiums with the Application - Answer Agents attempt to collect the initial premium and submit to insurer. Collecting initial premium at the time of the application increases the chance that the applicant will accept the policy once issued. No initial premium with application - Answer in case where premiums didn't accompany the application upon delivery the agent must collect premium and obtain statement of good health before releasing the policy. Submitting Application to Company for Underwriting - Answer The agent is obligated to check the application to make certain that all questions have been answered and all necessary signatures have been collected. The agent then sends the application to the insurer. Medical Information Bureau (MIB) - Answer A nonprofit association that maintains medical data on applicants for life insurance. Used for underwriting proposes. Applicant must be aware of - Answer sources being used and how all the information is gathered up. Due to fair credit reporting act. Attending Physical report - Answer Under writer deems its necessary (APS) will be sent to applicant doctor to be completed. Best for accurate information on medical history. can explain what applicant was treated for treatment, recovery and outcome. Medical Information and consumer reports - Answer For policies with higher amounts of coverage or if the application raised additional questions concerning the prospective insured' health, the underwriter may require a medical examination of the insured. 2 reasons for medical examination - Answer Paramedical report or Attending physical statement (will require MIB report) Insurers can't - Answer refuse coverage solely on the basis of adverse information on a MIB report. Medical Exam Report - Answer Conducted by physicians or paramedics.Expense paid by insurance company. More common with life insurance and underwriting. Written consent form T/F Insurance companies must maintain strict confidential regarding HIV related test results - Answer True Fair Credit Reporting Act - Answer Regulate consumer reports. Act that protects privacy of background information and ensures that information supplied is accurate. Law used to protect consumers.