My Life and Health Insurance Study
Guide- ExamFX Practice Questions and
Answers 100% Pass
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? - ANSWER✔✔-Aleatory: an aleatory contract means
unequal amounts are exchanged between payments and benefits
What is the Federal Credit Reporting Act? - ANSWER✔✔-Establishes procedures that
consumer-reporting agencies must follow in order to ensure that records are
confidential, accurate, relevant, and properly used.
Also protects consumers against the circulation of inaccurate or obsolete personal or
financial information
What are consumer reports? - ANSWER✔✔-Written and/or oral information regarding
a consumer's credit, character, reputation, or habits collected by a reporting agency
from employment records, credit reports and other public sources
Copyright ©SOPHIABENNETT 2025 ACADEMIC YEARALL RIGHTS RESERVED. Page 1/48
,What is an investigative consumer report? - ANSWER✔✔-Also provide information on
the consumer's character, reputation, and habits, but obtained through an investigation
and interviews.
A reporting agency conducts an investigation and interviews associated, friends and
neighbors of the consumer. These reports can't be made unless the consumer is advised
within 3 days of the report request
What happens if someone knowingly and willfully obtains information on a consumer
from a consumer reporting agency under false pretenses? - ANSWER✔✔-They are not
complying with the Fair Credit Reporting Act and may be fined and/or imprisoned for
up to 2 years
What happens if someone unknowingly violates the Fair Credit Reporting Act? -
ANSWER✔✔-They become liable in the amount equal to the loss to the consumer as
well as any reasonable attorney fees incurred in the process
What happens when someone willfully violates the Act enough to constitute a general
pattern or business practice? - ANSWER✔✔-They are subject to a penalty of up to
$2,500
What rights does a consumer have if an insurance policy is declined or modified
because of information contained in either consumer report? - ANSWER✔✔-Must be
advised and provided with the name and address of the reporting agency
Copyright ©SOPHIABENNETT 2025 ACADEMIC YEARALL RIGHTS RESERVED. Page 2/48
,Has the right to know what was in the report
Has the right to know the identity of anyone who received a copy of the report during
the past year.
Has the right to challenge any information in the report and the agency is required to
reinvestigate and amend the report.
If the report is found to be wrong, it must be corrected and sent out to all parties that
have received a report in 2 years.
What is MIB? - ANSWER✔✔-The Medical Information Bureau (MIB)
A membership corportation owned by member insurance companies. It's a nonprofit
trade organization which receives medical information from insurance companies and
maintains confidential information on individuals.
It is only used as a way to compare the information you have with other insurance
companies and see where you need to look into more. A policy cannot be denied solely
because of these reports
What is HIPAA? - ANSWER✔✔-The Health Insurance Portability and Accountability
Act
A federal law that protects health information. Provide protection for the privacy of
certain individually identifiable health information
Copyright ©SOPHIABENNETT 2025 ACADEMIC YEARALL RIGHTS RESERVED. Page 3/48
, What are preferred risks? - ANSWER✔✔-A risk classification used when determining
how much risk a consumer is and how much their premium should be
Preferred risks are individuals who meet certain requirements and qualify for lower
premiums than the standard risk. They have superior physical condition, lifestyle, and
habits
What are standard risks? - ANSWER✔✔-A risk classification used when determining
how much risk a consumer is and how much their premium should be
Standard risks are entitled to insurance protection without extr rating or special
restrictions. They are representative of the majority of people their age and with similar
lifestyles, average risk.
What are substandard risks? - ANSWER✔✔-A risk classification used when
determining how much risk a consumer is and how much their premium should be
Substandard (high exposure) are not acceptable at standard rates because o physical
condition, personal or family history of disease, occupation, or dangerous habits
Also referred to as "rated" because they could be issued the premium "rated up", or
higher.
What are declined risks? - ANSWER✔✔-People who are rejected from life insurance
Copyright ©SOPHIABENNETT 2025 ACADEMIC YEARALL RIGHTS RESERVED. Page 4/48
Guide- ExamFX Practice Questions and
Answers 100% Pass
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? - ANSWER✔✔-Aleatory: an aleatory contract means
unequal amounts are exchanged between payments and benefits
What is the Federal Credit Reporting Act? - ANSWER✔✔-Establishes procedures that
consumer-reporting agencies must follow in order to ensure that records are
confidential, accurate, relevant, and properly used.
Also protects consumers against the circulation of inaccurate or obsolete personal or
financial information
What are consumer reports? - ANSWER✔✔-Written and/or oral information regarding
a consumer's credit, character, reputation, or habits collected by a reporting agency
from employment records, credit reports and other public sources
Copyright ©SOPHIABENNETT 2025 ACADEMIC YEARALL RIGHTS RESERVED. Page 1/48
,What is an investigative consumer report? - ANSWER✔✔-Also provide information on
the consumer's character, reputation, and habits, but obtained through an investigation
and interviews.
A reporting agency conducts an investigation and interviews associated, friends and
neighbors of the consumer. These reports can't be made unless the consumer is advised
within 3 days of the report request
What happens if someone knowingly and willfully obtains information on a consumer
from a consumer reporting agency under false pretenses? - ANSWER✔✔-They are not
complying with the Fair Credit Reporting Act and may be fined and/or imprisoned for
up to 2 years
What happens if someone unknowingly violates the Fair Credit Reporting Act? -
ANSWER✔✔-They become liable in the amount equal to the loss to the consumer as
well as any reasonable attorney fees incurred in the process
What happens when someone willfully violates the Act enough to constitute a general
pattern or business practice? - ANSWER✔✔-They are subject to a penalty of up to
$2,500
What rights does a consumer have if an insurance policy is declined or modified
because of information contained in either consumer report? - ANSWER✔✔-Must be
advised and provided with the name and address of the reporting agency
Copyright ©SOPHIABENNETT 2025 ACADEMIC YEARALL RIGHTS RESERVED. Page 2/48
,Has the right to know what was in the report
Has the right to know the identity of anyone who received a copy of the report during
the past year.
Has the right to challenge any information in the report and the agency is required to
reinvestigate and amend the report.
If the report is found to be wrong, it must be corrected and sent out to all parties that
have received a report in 2 years.
What is MIB? - ANSWER✔✔-The Medical Information Bureau (MIB)
A membership corportation owned by member insurance companies. It's a nonprofit
trade organization which receives medical information from insurance companies and
maintains confidential information on individuals.
It is only used as a way to compare the information you have with other insurance
companies and see where you need to look into more. A policy cannot be denied solely
because of these reports
What is HIPAA? - ANSWER✔✔-The Health Insurance Portability and Accountability
Act
A federal law that protects health information. Provide protection for the privacy of
certain individually identifiable health information
Copyright ©SOPHIABENNETT 2025 ACADEMIC YEARALL RIGHTS RESERVED. Page 3/48
, What are preferred risks? - ANSWER✔✔-A risk classification used when determining
how much risk a consumer is and how much their premium should be
Preferred risks are individuals who meet certain requirements and qualify for lower
premiums than the standard risk. They have superior physical condition, lifestyle, and
habits
What are standard risks? - ANSWER✔✔-A risk classification used when determining
how much risk a consumer is and how much their premium should be
Standard risks are entitled to insurance protection without extr rating or special
restrictions. They are representative of the majority of people their age and with similar
lifestyles, average risk.
What are substandard risks? - ANSWER✔✔-A risk classification used when
determining how much risk a consumer is and how much their premium should be
Substandard (high exposure) are not acceptable at standard rates because o physical
condition, personal or family history of disease, occupation, or dangerous habits
Also referred to as "rated" because they could be issued the premium "rated up", or
higher.
What are declined risks? - ANSWER✔✔-People who are rejected from life insurance
Copyright ©SOPHIABENNETT 2025 ACADEMIC YEARALL RIGHTS RESERVED. Page 4/48
