Colorado Life & Health Insurance Exam Questions With Correct Answers

The term insurance transaction includes: - Answer 1) Solicitation; 2) Negotiation; 3) Sales; 4) Advertising Adverse Selection (insurance def) - Answer Insuring the risks that are more prone to losses than the average risk Agent/Producer - Answer a legal representative of an insurance company; the classification of producer usually includes agents and brokers; agents are the agents of the insurer Applicant or proposed insured - Answer a person applying for insurance Beneficiary - Answer A person who receives the benefits of an insurance policy Death Benefit - Answer the amount paid upon the death of the insured in a life insurance policy 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 owner Insurer (principal) - Answer the company who issues an insurance policy lapse - Answer policy termination due to nonpayment of premium Policyowner - Answer the person entitled to exercise the rights and privileges in the policy Agent Authority - Answer express, implied, apparent Express Authority - Answer authority declared in clear, direct, and definite terms Implied Authority - Answer Authority that is not expressed or written into the contract, but which the agent is assumed to have in order to transact the business of insurance for the principal. Apparent Authority - Answer The appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created. Elements of a Legal Contract - Answer Agreement (offer and acceptance), consideration, competent parties, and legal purpose Aleatory Contract - Answer The exchange of value is unequal. adhesion contract - Answer A take-it-or-leave-it offer made by a party who holds most of the power in a bargaining session Unilateral Contract - Answer promise in exchange for an act - a one-sided promise Conditional Contract - Answer a contract that becomes enforceable only on the happening or termination of a specified condition Application Statement - Warranty - Answer A absolutely true statement Application Statement - Representations - Answer True to the best of the applicants knowledge Fraud - Answer intentional misrepresentation of a material fact, made with the intention to deceive Concealment - Answer intentional failure of the applicant for insurance to reveal a material fact to the insurer Material Fact - Answer A fact that would lead to a different underwriting decision had the insurer known about it Utmost Good Faith - Answer An obligation to act in complete honesty and to disclose all relevant facts.