WA State Health and Disability Insurance Exam
Questions & Complete Solutions!!
4 requirements for a contract to be legal and enforceable under legal system -
ANSWER 1. Offer and acceptance
2. consideration (premium for coverage)
3. Competent Parties (Sane and of Legal Age)
4. Be for a legal purpose
Insurable Interest (II) - ANSWER must be a legitimate financial reason to own policy
on the life or health of another person. II must exist only at the "inception" of the
policy.
Conditional - ANSWER Both parties must perform. (company will perform if the
insured paid premium)
Unilateral - ANSWER only one of the parties to the contract is bound to do
something
Adhesion - ANSWER "take it or leave it" concept of an insurance contract; there is
no give and take, therefore any contractual ambiguities are resolved in favor of the
insured in a court of law.
Application required signatures - ANSWER applicant
producer
insured (if not the applicant)
Changes later to application - ANSWER never "white" over anything
all parties should initial any changes
or write new app if too many mistakes
consequences of incomplete app - ANSWER delays app and coverage
company may lose contract rights through waiver
Warranties - ANSWER absolutely true statement
representations - ANSWER true statement to the best knowledge and belief of the
maker
company can void coverage if there was a material fact misstated or fraud by
applicant
initial consideration - ANSWER initial payment plus completed and signed app
conditional receipt - ANSWER receipt issued
Effect of the app without money - ANSWER -policy must be delivered
, -first premium payment must be paid
-applicant signs a statement that health of proposed insured has not changed since
app signed
Replacement - ANSWER buy new policy only if in best interest of applicant
disclosure forms must be signed
make sure there is never a gap in coverage
explain waiting period
disclosures at point of sale - ANSWER buyers guide
HIV test revealed
underwriting - ANSWER process by company to determine selection and assess risk
of applicants
medical info - ANSWER company can do paramedical exam, APS and consult MIB
to assess risk
consumer reports - ANSWER if used, insurer are bound to regulations detailed in fair
credit reporting act
common use is "inspection report" assesses applicants lifestyles, morals, finances,
hobbies, employment
Fair credit reporting act - ANSWER reporting agency and users must be within law to
use info, must advice applicants that it will be used
law protects consumers from use of old or obsolete info
willful violations as a practice = $2500 fine
consumers entitled to know what is on report and can correct bad info
3 days advance notice required to applicant for investigative report
risk classification - ANSWER standard - normal/average
preferred - cheaper than standard
rated - more expensive than standard
Delivering and explaining policy - ANSWER Producer reviews policy, riders,
exclusions, and any ratings
buyers guide and policy sum must be provided
producer must tell owner the "issue date" or when coverage begins
Medical expense Basic Plan - ANSWER cover for a limited amount and/or specified
time for hospital, medical or surgical expense.
Questions & Complete Solutions!!
4 requirements for a contract to be legal and enforceable under legal system -
ANSWER 1. Offer and acceptance
2. consideration (premium for coverage)
3. Competent Parties (Sane and of Legal Age)
4. Be for a legal purpose
Insurable Interest (II) - ANSWER must be a legitimate financial reason to own policy
on the life or health of another person. II must exist only at the "inception" of the
policy.
Conditional - ANSWER Both parties must perform. (company will perform if the
insured paid premium)
Unilateral - ANSWER only one of the parties to the contract is bound to do
something
Adhesion - ANSWER "take it or leave it" concept of an insurance contract; there is
no give and take, therefore any contractual ambiguities are resolved in favor of the
insured in a court of law.
Application required signatures - ANSWER applicant
producer
insured (if not the applicant)
Changes later to application - ANSWER never "white" over anything
all parties should initial any changes
or write new app if too many mistakes
consequences of incomplete app - ANSWER delays app and coverage
company may lose contract rights through waiver
Warranties - ANSWER absolutely true statement
representations - ANSWER true statement to the best knowledge and belief of the
maker
company can void coverage if there was a material fact misstated or fraud by
applicant
initial consideration - ANSWER initial payment plus completed and signed app
conditional receipt - ANSWER receipt issued
Effect of the app without money - ANSWER -policy must be delivered
, -first premium payment must be paid
-applicant signs a statement that health of proposed insured has not changed since
app signed
Replacement - ANSWER buy new policy only if in best interest of applicant
disclosure forms must be signed
make sure there is never a gap in coverage
explain waiting period
disclosures at point of sale - ANSWER buyers guide
HIV test revealed
underwriting - ANSWER process by company to determine selection and assess risk
of applicants
medical info - ANSWER company can do paramedical exam, APS and consult MIB
to assess risk
consumer reports - ANSWER if used, insurer are bound to regulations detailed in fair
credit reporting act
common use is "inspection report" assesses applicants lifestyles, morals, finances,
hobbies, employment
Fair credit reporting act - ANSWER reporting agency and users must be within law to
use info, must advice applicants that it will be used
law protects consumers from use of old or obsolete info
willful violations as a practice = $2500 fine
consumers entitled to know what is on report and can correct bad info
3 days advance notice required to applicant for investigative report
risk classification - ANSWER standard - normal/average
preferred - cheaper than standard
rated - more expensive than standard
Delivering and explaining policy - ANSWER Producer reviews policy, riders,
exclusions, and any ratings
buyers guide and policy sum must be provided
producer must tell owner the "issue date" or when coverage begins
Medical expense Basic Plan - ANSWER cover for a limited amount and/or specified
time for hospital, medical or surgical expense.
