Podcast
Questions and Answers
Which of the following best describes insurance?
Which of the following best describes insurance?
What is the term for something of value that each party gives to the other under an insurance contract?
What is the term for something of value that each party gives to the other under an insurance contract?
Consideration
What is the basic source of information used by the company in the risk selection process?
What is the basic source of information used by the company in the risk selection process?
Application
How long is the grace period in individual life insurance policies?
How long is the grace period in individual life insurance policies?
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Who must have insurable interest in the insured?
Who must have insurable interest in the insured?
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Who receives the death benefit from a life insurance policy?
Who receives the death benefit from a life insurance policy?
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Insurance transfers what?
Insurance transfers what?
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What is the effective date of a policy if an applicant applied for insurance, paid the initial premium, and was given a conditional receipt?
What is the effective date of a policy if an applicant applied for insurance, paid the initial premium, and was given a conditional receipt?
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Why should the producer personally deliver the policy?
Why should the producer personally deliver the policy?
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Contracts prepared by one party and submitted on a take-it-or-leave-it basis are classified as what?
Contracts prepared by one party and submitted on a take-it-or-leave-it basis are classified as what?
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Another name for a substandard risk classification is what?
Another name for a substandard risk classification is what?
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What happens if an applicant who has received a conditional receipt dies the next day?
What happens if an applicant who has received a conditional receipt dies the next day?
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What details the underwriting process for life insurance?
What details the underwriting process for life insurance?
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If an insurer issues a policy based on an application with unanswered questions, what is true?
If an insurer issues a policy based on an application with unanswered questions, what is true?
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What contract characteristic does it describe that insurance policies are not drawn up through negotiations?
What contract characteristic does it describe that insurance policies are not drawn up through negotiations?
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What is a generic consumer publication that explains life insurance?
What is a generic consumer publication that explains life insurance?
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What should an agent issue when collecting the initial premium?
What should an agent issue when collecting the initial premium?
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When does policy coverage become effective if the full premium was submitted with the application?
When does policy coverage become effective if the full premium was submitted with the application?
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In classifying a risk, what is excluded from the underwriting department's considerations?
In classifying a risk, what is excluded from the underwriting department's considerations?
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If an applicant receives a preferred risk classification, what do they qualify for?
If an applicant receives a preferred risk classification, what do they qualify for?
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Study Notes
Insurance Overview
- Insurance is the transfer of risk from individuals or entities to an insurance company, which manages costs associated with unexpected losses across a larger pool of insured parties.
Consideration in Insurance Contracts
- Consideration refers to something of value exchanged between the insured and insurer; the insured's consideration is the premium payment, while the insurer's consideration is the promise to pay in case of loss.
Risk Selection Process
- The application serves as the primary source of information used by insurers for assessing risks during the selection process.
Grace Period in Policies
- Individual life insurance policies typically have a grace period of 30 to 31 days for premium payment after the due date, allowing coverage to remain intact.
Insurable Interest Requirement
- The policyowner must have an insurable interest in the insured's life, applicable to personal relationships or business partnerships.
Beneficiary Definition
- A beneficiary is an individual or entity designated to receive the death benefit from a life insurance policy upon the insured's passing.
Risk Transfer
- Insurance effectively transfers financial responsibility for potential losses, also referred to as risk, to the insurance company.
Effective Date of Coverage
- Coverage begins on the application date or the date of a medical exam, whichever occurs later, provided the applicant is deemed insurable.
Role of Producers
- Producers must personally deliver policies to ensure clarity and satisfaction for the insured regarding policy details, alongside obtaining a signed delivery receipt.
Contracts of Adhesion
- Insurance policies are classified as contracts of adhesion, where terms are dictated by the insurer, limiting the insured's ability to negotiate provisions.
Substandard Risk Classification
- A substandard risk classification is also termed "rated," as it typically results in higher premiums due to increased risk factors associated with the insured.
Conditional Receipt and Coverage
- If a policy is issued with a conditional receipt and the applicant dies shortly after, the beneficiary will receive benefits if the applicant is determined to have qualified for coverage.
Underwriting Process Steps
- Underwriting involves selection, classification, and rating of risks, informed by applicant information against insurer standards and guidelines.
Waiving of Answers
- If a policy is issued despite unanswered application questions, the insurer waives the right to those answers and cannot deny claims based on them later.
Buyer's Guide
- A buyer's guide is a basic consumer publication that simplifies the understanding of life insurance for applicants, aiding in their decision-making without addressing specific policies.
Premium Receipt Issuance
- Agents are responsible for issuing a premium receipt when collecting the initial premium to confirm the transaction's validity.
Policy Coverage Effective Date
- If a life insurance application includes full premium payment and the policy is issued as requested, coverage is effective from the application date.
Underwriting Department's Focus
- Risk classification reviews focus on the applicant's medical history, physical condition, occupation, and habits, but not on past income.
Conditional Receipt after Application
- When an applicant with a conditional receipt dies before policy issuance but is later found insurable, the insurance company must issue the policy and pay the beneficiary.
Preferred Risk Classification Benefits
- Applicants classified as preferred risks enjoy lower premiums compared to standard risks due to superior health and lifestyle factors.
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Description
Test your knowledge on life insurance concepts with this sample quiz covering key terms and definitions. Understand the basics of risk transfer and the fundamentals of insurance contracts. Perfect for those preparing for the Florida life insurance exam.
