ILHI - Indiana Life and Health Insurance Exam

Question 21: Under the Fair Credit Reporting Act, an insurer that orders a report on a life insurance applicant must give that applicant a Notice to Applicant. The statute fixes an outer limit measured from the day the report was requested. Which limit governs?

No later than five days

No later than three days

No later than ten days

No later than thirty days

Question 22: A life insurance application has been fully completed at the kitchen table. Before it goes to the home office, signatures must be collected from the proposed insured, the applicant or owner if different, and one other person. Who is that?

The named beneficiary

The company underwriter

The producer taking the application

A witness from the applicant's household

Question 23: An applicant is a lifelong non-smoker with clean medical records, a low-risk occupation and no family history of early heart disease. The underwriter finds her mortality risk falls below the level assumed in the company's rate tables. Which classification fits her?

Preferred

Standard

Substandard

Declined

Question 24: An applicant for a two million dollar life policy is told a paramedical examination with blood work will be required before the underwriter can act. She asks who will be billed for the examination and the laboratory testing. Which answer is correct?

The applicant, at her own expense

The producer who took the application

The Medical Information Bureau

The insurer requesting the examination

Question 25: A seventeen-year-old walks into a producer's office and asks to sign a life application in her own name, with no parent involved. The producer explains that one of the four elements of a valid contract is missing here. Which element is that?

Consideration

Offer and acceptance

Competent parties

Legal purpose

Question 26: At the delivery appointment the producer sits down with the new policyowner and goes through the contract page by page, covering the riders attached, the exclusions listed and the rating applied. Which purpose does this walkthrough chiefly serve for the client?

Replacing the underwriter's risk classification decision

Starting a new contestable period

Satisfying the insurer's medical exam requirement

Making sure the policyowner understands the coverage

Question 27: An insurer wants background on an applicant that goes beyond paperwork, so it hires a firm to interview the applicant's neighbors, friends and business associates about character, reputation and lifestyle. In the insurance industry this document carries a second familiar name. Which name applies?

A producer's report

An attending physician statement

An inspection report

A statement of good health

Question 28: During the application interview an applicant deliberately says nothing about a heart attack he suffered three years earlier, hoping the insurer will never find out. His silence about a known fact has a specific name. Which one is it?

Adverse selection

Concealment

Estoppel

Rescission

Question 29: After reading a Notice to Applicant, a consumer sends the reporting agency a written request asking for the nature and scope of the investigation behind the report. Under the Fair Credit Reporting Act, how must the agency respond to that request?

Orally within three business days

In writing within thirty days

Only after a court order issues

In writing within five days

Question 30: Two applicants of the same age apply on the same day. One requests fifty thousand dollars of coverage and is underwritten from the application answers alone; the other requests three million and must attend an examination. Which factor drives that difference?

The amount of death benefit applied for

The producer's personal recommendation

The applicant's place of residence

The number of beneficiaries named

Question 31: In the law of agency one party is authorized to represent and act for another, and contracts made by the first are treated as contracts of the second. Applying that framework to insurance sales, who is the principal in the relationship?

The producer

The applicant

The state insurance commissioner

The insurance company

Question 32: When an application involves dropping or changing coverage the applicant already owns, the producer takes on specific procedural obligations at the point of sale. Which of the following correctly describes the producer's handling of the required replacement notice in that situation?

Mail it after the policy issues

Present it, obtain signatures, leave a copy

File it only with the state

Keep it in the producer's own file

Question 33: An applicant paid a standard premium with her application and held a conditional receipt. Underwriting rated her substandard, and the insurer issued the policy at a higher premium. She accepts and pays the additional amount at delivery. When did coverage begin?

On the policy delivery date

On the original application date

On the medical examination date

On the date underwriting rated the file

Question 34: A producer's written agency agreement states that he may write life policies up to one hundred thousand dollars of death benefit. He submits an application for one hundred five thousand dollars instead. Which type of authority did he exceed?

Implied authority

Express authority

Apparent authority

Fiduciary authority

Question 35: An applicant paid the first premium, received a conditional receipt, then died during underwriting. Records later show he would have been rated substandard rather than standard had he lived. How should the insurer handle the claim and the premium?

Deny the claim and refund the premium

Pay the full benefit as applied for

Pay a reduced substandard death benefit

Hold the premium pending a court ruling

Question 36: A producer deposits client premium checks into his own personal checking account, intending to write one company check at the end of the month. The balance is drawn down for groceries in the meantime. Which fiduciary violation has this producer committed?

Rebating premium to the client

Exceeding his express authority

Breaching the confidentiality duty

Commingling funds held in trust

Question 37: One kind of receipt issued with an application provides coverage for thirty to sixty days from the application date even if the applicant later proves uninsurable, and the insurer may issue a policy or cancel before that period ends. Which document is described?

A binding receipt

A conditional receipt

A statement of good health

A delivery receipt

Question 38: Before a client signs paperwork that will end an old policy and start a new one, the producer prepares a side-by-side document listing the premiums, benefits and values of both contracts. Which purpose does that document serve for the client?

It guarantees the new policy is cheaper

It waives the new contestable period

It transfers cash value between insurers

It lets the client compare both contracts

Question 39: A producer submits a completed life application to the home office without collecting any money from the applicant. Two weeks later, before the policy is issued, the proposed insured dies in a car accident. What will the insurer pay?

The full death benefit applied for

A prorated share of the benefit

Nothing, because no coverage was in force

The benefit minus the unpaid premium

Question 40: A producer persuades a longtime client to use the accumulated cash values in her existing policy with his own company to fund a brand-new policy issued by that same company, generating fresh commission. Which improper practice does this describe?

Twisting

Rebating

Misappropriation of premium funds

Churning

ILHI Indiana Life and Health Insurance Exam - Set 3 - Part 2