Iowa Life Chapter 1: Completing the
Application, Underwriting, and
Delivering the Policy
At what point does coverage begin when an agent issues a conditional receipt for a life
insurance policy? - ANS - Either on the date of the application or the date of the medical exam
(whichever occurs last)
\During which stage in the insurance process do insurers evaluate information that identifies
adverse selection risks? - ANS - Underwriting
\If an applicant for a life insurance policy and the potential insured are two different people, what
would be the underwriter's main concern? - ANS - The existence of insurable interest between
the applicant and the insured
\If an insurer needs to obtain information about the applicant from investigators, what is the
insurer required to do? - ANS - Provide the applicant a Disclosure Authorization Notice
\In insurance contracts, the insured is not legally bound to any particular action; however, the
insurer is obligated to pay for losses covered by the policy. What contract element does this
describe? - ANS - Unilateral
\Insurance contracts are prepared by insurers and must be accepted by the insured on an as-is
basis. This describes what characteristics of an insurance contract? - ANS - Contract of
adhesion
\Insurance contracts are unilateral. What does that mean? - ANS - Only one party makes a
legally enforceable promise.
\What are the four elements of an insurance contract? - ANS - Agreement (offer and
acceptance), consideration, competent parties, and legal purpose
\What are the three types of risk rating classifications in life insurance? - ANS - Standard,
substandard and preferred
\What is adverse selection? - ANS - People who are more likely to submit insurance claims are
seeking insurance more often than preferred risks.
\What is policy replacement? - ANS - A new policy is issued while an existing policy is
terminated or reissued with a reduction in cash value
\What is the main responsibility of a company's underwriting unit? - ANS - Risk selection
\What is the purpose of the agent's report during the application process? - ANS - The agent's
report discusses the agent's personal observations about the proposed insured that may help in
the underwriting process.
\What type of report may be used to assess risks associated with an applicant's lifestyle and
character? - ANS - Investigative Consumer Report
\What type of report provides information about the applicant's hobbies, habits and financial
status? - ANS - Investigative consumer report
Application, Underwriting, and
Delivering the Policy
At what point does coverage begin when an agent issues a conditional receipt for a life
insurance policy? - ANS - Either on the date of the application or the date of the medical exam
(whichever occurs last)
\During which stage in the insurance process do insurers evaluate information that identifies
adverse selection risks? - ANS - Underwriting
\If an applicant for a life insurance policy and the potential insured are two different people, what
would be the underwriter's main concern? - ANS - The existence of insurable interest between
the applicant and the insured
\If an insurer needs to obtain information about the applicant from investigators, what is the
insurer required to do? - ANS - Provide the applicant a Disclosure Authorization Notice
\In insurance contracts, the insured is not legally bound to any particular action; however, the
insurer is obligated to pay for losses covered by the policy. What contract element does this
describe? - ANS - Unilateral
\Insurance contracts are prepared by insurers and must be accepted by the insured on an as-is
basis. This describes what characteristics of an insurance contract? - ANS - Contract of
adhesion
\Insurance contracts are unilateral. What does that mean? - ANS - Only one party makes a
legally enforceable promise.
\What are the four elements of an insurance contract? - ANS - Agreement (offer and
acceptance), consideration, competent parties, and legal purpose
\What are the three types of risk rating classifications in life insurance? - ANS - Standard,
substandard and preferred
\What is adverse selection? - ANS - People who are more likely to submit insurance claims are
seeking insurance more often than preferred risks.
\What is policy replacement? - ANS - A new policy is issued while an existing policy is
terminated or reissued with a reduction in cash value
\What is the main responsibility of a company's underwriting unit? - ANS - Risk selection
\What is the purpose of the agent's report during the application process? - ANS - The agent's
report discusses the agent's personal observations about the proposed insured that may help in
the underwriting process.
\What type of report may be used to assess risks associated with an applicant's lifestyle and
character? - ANS - Investigative Consumer Report
\What type of report provides information about the applicant's hobbies, habits and financial
status? - ANS - Investigative consumer report
