ExamFX Life chapter 1 Questions With Complete Solutions

What are the four elements of an insurance contract? correct answer: Agreement (offer and acceptance), consideration, competent parties, and legal purpose If an applicant for a life insurance policy and the potential insured are two different people, what would be the underwriter's main concern? correct answer: The existence of insurable interest between the applicant and the insured What is adverse selection? correct answer: People who are more likely to submit insurance claims are seeking insurance more often than preferred risks. Health contracts are prepared by insurers and must be accepted by the insured on an 'as is' basis. This describes what aspect of a health insurance contract? correct answer: contract of adhesion When does an insurance policy go into effect? correct answer: When the policy is delivered and the premium is paid Whose responsibility is it to determine that all the questions an insurance application are answered? correct answer: The agents In insurance, when is the offer usually made on a contract? correct answer: When the application is submitted. When would a misrepresentation be considered material? correct answer: When it may alter the underwriting decision In forming an insurance contract, when does an acceptance usually occur? correct answer: When the insurer approves a prepaid application What is the name of the process that insurance companies use to determine whether or not an applicant is insurable? correct answer: Underwriting If an applicant does not receive his or her insurance policy, who would be held responsible? correct answer: The agent What report is used to assess risk associated with a health insurance applicant's lifestyle and character? correct answer: