Completing the Application, Underwriting, and Delivering the Policy
A policy is arranged so an unrelated investor can profit from a stranger's death. Which element of contract formation fails?
Answer and explanation
Answer: B. A contract must have a legal purpose, and an arrangement whose object is to profit from the death of someone in whom the buyer has no interest is a wager rather than insurance. Premium can be paid by another, an owner other than the insured is ordinary, and the investor's capacity to contract is not what fails.Source: Pearson VUE — Georgia Insurance Examination Content Outlines #121102 — Outline page S2, Legal purpose
More completing the application, underwriting, and delivering the policy questions
- An applicant applies for preferred rates and the insurer issues a standard-rated policy instead. In contract terms, what has the insurer done?
- An applicant applies without paying any premium. The insurer issues the policy exactly as requested. When is the contract formed?
- An applicant asks whether every answer on a life application is an absolute guarantee of literal accuracy. Which response is correct?
- An applicant attempts to purchase a single-premium $500,000 life policy using multiple cashier's checks under $10,000 from different banks. What action is the insurer required to take under AML rules?
- An applicant completes an application and pays the initial premium with it. In contract terms, what has the applicant done?
- An applicant gives an insurer a Social Security number and income information to obtain personal life coverage. How does the GLBA Privacy Rule generally classify that information?
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