1. According to the required provisions, what MUST the Insured do if the Insurer does NOT furnish forms to provide proof of loss to the Insured within 15 days after the Insured gives notice of loss?
A. Contact the Insurer to request such forms.
B. File written proof of loss. Correct
C. Refile notice of loss within 20 days.
D. No action is required.
Explanation
If the insurer does not provide claim forms within 15 days of notice of loss, the insured is relieved of the requirement to submit proof on the insurer's forms and may submit written proof of loss in another format (e.g., a letter detailing the loss).
2. An applicant states that they have never had any major surgeries, but during underwriting it is discovered they had a heart surgery five years ago. How would this situation be handled?
A. Adjust the premium
B. Void the policy
C. Ignore the discrepancy
D. Investigate further Correct
Explanation
A discovered discrepancy between the application and facts requires investigation to determine if it was an innocent misrepresentation or material to the risk before deciding on underwriting actions like rating or rescission.
3. In a whole life policy, the amount of pure insurance protection is the policy’s face value minus the cash value. When the cash value increases, what happens to the pure insurance protection and the face value?
A. The pure insurance protection and face value remain the same.
B. The pure insurance protection and face value increase.
C. The pure insurance protection decreases but face value increases.
D. The pure insurance protection decreases but face value remains the same. Correct
Explanation
In whole life, the face value (death benefit) is constant. The net amount at risk (pure protection) is Face Amount minus Cash Value. As cash value grows over time, the net amount at risk (pure protection) decreases.
4. During the policy delivery process, a producer discovers the policy issued has a higher premium than initially quoted due to a rating adjustment. How should the producer proceed at the time of delivery?
A. Disregard the premium change
B. Explain the rating adjustment Correct
C. Recommend cancelling the policy
D. Deliver without explanation
Explanation
At delivery, the producer must explain all policy terms, including any premium differences from the initial quote. This ensures the applicant understands the contract before accepting it.
5. When can a policy no longer be cancelled for material misstatements after its date of issue?
A. 1 year
B. 2 years Correct
C. 5 years
D. At any time
Explanation
The incontestability clause states that, except for non-payment of premium, a life insurance policy cannot be contested (voided for misrepresentation) after it has been in force for two years during the insured's lifetime.