NLHI - Nevada Life and Health Insurance Exam

Question 1: A producer completes a life application, entering the applicant's name, address, age, occupation, and beneficiary in one part, and the applicant's health history in another part. The two parts of the application are commonly known by what names?

Part one medical and part two general

The binding and conditional parts

Part one general and part two medical

The primary and contingent parts

Question 2: At the point of sale, a producer prepares a life application where the proposed insured is an adult different from the person paying for and owning the policy. Whose signatures are generally required on the completed application before submission?

The applicant, the insured, and the producer

Only the applicant who pays

Only the producer who solicits

The beneficiary and the insured

Question 3: While reviewing a completed application with the client, the producer notices a wrong birth date was written in one field. The client wants it corrected on the spot. Under common practice, how should an error on a life application be handled?

Erase the entry and write over it

Use correction fluid to hide the error

Leave it and fix it after issue

Line out and initial the entry

Question 4: An applicant submitted a life application without paying the first premium, so no interim coverage began. When the producer delivers the issued policy and collects the premium, the insurer requires confirmation that the applicant's health is unchanged. What is this document called?

A conditional receipt

A statement of good health

An investigative consumer report

A reinstatement application

Question 5: An applicant pays the first premium and receives a receipt providing coverage that starts immediately and remains in force for a set period even if the applicant later turns out to be uninsurable. Which type of receipt provides this unconditional interim coverage?

A binding receipt

A conditional receipt

A statement of good health

An inspection receipt

Question 6: An insurer issues a policy and mails it to its producer for unconditional delivery to the applicant. Before the producer physically hands it over, a coverage dispute arises. Under the concept of constructive delivery, when is a policy considered legally delivered?

Only when the insured holds it physically

Only after the free-look period ends

When the insurer relinquishes control of it

When the first claim is submitted

Question 7: A producer proposes that a client surrender an existing life policy and buy a new one from a different insurer. Replacement regulations impose a duty to protect the consumer in this transaction. What must the producer generally provide to the applicant?

A signed waiver of all rights

A binding receipt for the old policy

A statement of good health only

A notice regarding replacement and comparison

Question 8: As part of the application packet, the producer submits confidential written observations about the applicant's apparent financial condition and character to help the home office evaluate the risk. This document is not shown to the applicant. What is it called?

The producer's report

The attending physician statement

The consumer report

The policy summary

Question 9: Two applicants submit identical life applications. One pays the initial premium with the application and receives a receipt; the other pays nothing until delivery. How does paying the premium at application affect when coverage can begin for the first applicant?

It delays coverage until delivery

It can start interim coverage via receipt

It has no effect on coverage timing

It voids the need for underwriting

Question 10: A new policyowner receives a life policy and, after reading it at home, decides within the allowed period to return it for a full refund. This right to examine the policy and return it for a refund begins at what point?

When the application is first signed

When the first claim is filed

When the policy is delivered

When the agent submits the application

Question 11: An underwriter orders two kinds of background information: one compiling factual data such as credit and employment from records, and another based on personal interviews with the applicant's neighbors and associates about character and reputation. What is the second, interview-based report called?

A regular consumer report

An attending physician statement

A medical information bureau report

An investigative consumer report

Question 12: An insurer declines an application after reviewing information in a consumer report. Under the Fair Credit Reporting Act, the insurer owes the applicant a specific duty because the adverse decision was based on that report. What must the insurer do?

Notify applicant and name the agency

Pay the applicant a statutory penalty

Delete the report from all files

Offer a guaranteed-issue policy instead

Question 13: An insurer observes that people who expect to file claims are more eager to buy and keep coverage than average risks are. Underwriting exists partly to control this tendency. What is this tendency of poorer-than-average risks to seek insurance called?

The law of large numbers

Reinsurance

Adverse selection

Coinsurance

Question 14: An actuary explains that insurers can price coverage because losses become more predictable as more similar risks are pooled. A small group behaves erratically, but a very large group's loss rate closely approaches the expected rate. Which principle describes this?

The principle of indemnity

The law of large numbers

Adverse selection

The law of agency

Question 15: An applicant buys life insurance on a business partner. Years later the partnership dissolves, but the policy remains. A dispute asks when insurable interest had to exist for the life policy to be valid. In life insurance, insurable interest must exist at what time?

At the time of the insured's death

Continuously throughout the policy

Only when a claim is contested

At the time of application

Question 16: An investor recruits an elderly person to apply for a large life policy that will quickly be assigned to the investor, who has no family or business tie to the insured. Regulators condemn this arrangement. What is this prohibited practice called?

Stranger-originated life insurance

A viatical settlement

A reciprocal exchange

A modified endowment contract

Question 17: A producer completes training on federal rules requiring insurers to detect and report activity that may involve laundering illicit funds through insurance products, including monitoring for suspicious transactions. Producers must know the source of these rules. Which federal framework imposes these anti-money-laundering duties?

The Fair Credit Reporting Act

The Affordable Care Act

The USA PATRIOT Act

The Employee Retirement Income Security Act

Question 18: During a claim review, an insurer distinguishes a deliberate lie told to obtain coverage from an honest but mistaken statement on the application. The deliberate lie made with intent to deceive and induce the insurer to act is best described as what?

Innocent misrepresentation

A warranty

Waiver

Fraud

Question 19: An instructor separates risks that offer only the chance of loss or no loss from those that also carry a chance of gain, such as gambling or investing. Insurers will cover only one of these. Which kind of risk is insurable?

Speculative risk

Pure risk

Financial risk of investing

The chance of business profit

Question 20: In a homeowners scenario used to teach terminology, a fire that burns a house is the direct cause of the loss, while a can of gasoline stored near the furnace increases the chance a fire will occur. What is the direct cause of loss called?

A peril

A hazard

A morale risk

An exposure unit

NLHI Nevada Life and Health Insurance Exam - Set 5 - Part 1