L07 Life Insurance Documentation MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on L07 Life Insurance Documentation, a fundamental topic in the field of IC38 Life Insurance Agent Exam. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our L07 Life Insurance Documentation MCQs are designed to help you grasp the core concepts and excel in solving problems.

In this section, you'll find a wide range of L07 Life Insurance Documentation mcq questions that explore various aspects of L07 Life Insurance Documentation problems. Each MCQ is crafted to challenge your understanding of L07 Life Insurance Documentation principles, enabling you to refine your problem-solving techniques. Whether you're a student aiming to ace IC38 Life Insurance Agent Exam tests, a job seeker preparing for interviews, or someone simply interested in sharpening their skills, our L07 Life Insurance Documentation MCQs are your pathway to success in mastering this essential IC38 Life Insurance Agent Exam topic.

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L07 Life Insurance Documentation MCQs | Page 3 of 11

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Q21.
What information should be mentioned in the Agent's Confidential Report for life insurance underwriting?

a.

Family vacation plans of the policyholder

b.

Details of the insured's favorite hobbies

c.

Material facts relevant to risk assessment

d.

The policy premium payment schedule

Discuss
Answer: (c).Material facts relevant to risk assessment Explanation:The Agent's Confidential Report should include material facts relevant to risk assessment, such as health, habits, occupation, income, and family details.
Q22.
What are insurance proposals that are underwritten and accepted without requiring a medical examination typically called?

a.

Medical cases

b.

Non-moral hazard cases

c.

Non-medical cases

d.

Special underwriting cases

Discuss
Answer: (c).Non-medical cases Explanation:Proposals that are underwritten and accepted for insurance without a medical examination are known as non-medical cases.
Q23.
When is a medical examiner's report typically required in the underwriting process of life insurance?

a.

For all insurance proposals

b.

When the proposer has a high sum assured

c.

When the proposer is of a young age

d.

When the proposer is a non-smoker

Discuss
Answer: (b).When the proposer has a high sum assured Explanation:A medical examiner's report is typically required when the sum proposed or the age of the proposed life is high or when certain characteristics revealed in the proposal call for examination and a report by a medical examiner.
Q24.
What is a Moral Hazard in the context of life insurance underwriting?How do life insurance companies address the concern of Moral Hazard when assessing risk?

a.

The risk associated with extreme sports activitiesBy requiring clients to engage in high-risk activities

b.

The chance of a client's behavior changing due to having life insuranceBy providing discounts on premiums

c.

The possibility of accidents caused by external factorsBy looking for factors suggesting increased risk

d.

The likelihood of sudden illness in the insured's familyBy encouraging policyholders to purchase multiple policies

Discuss
Answer: (b).The chance of a client's behavior changing due to having life insuranceBy looking for factors suggesting increased risk Explanation:Moral Hazard in life insurance underwriting refers to the likelihood that a client's behavior might change as a result of purchasing a life insurance policy, which could increase the chance of a loss.Life insurance companies address the concern of Moral Hazard by looking for factors that might suggest an increased risk associated with the insured's behavior or lifestyle.
Q25.
What is a Moral Hazard in the context of life insurance underwriting?

a.

The risk associated with extreme sports activities

b.

The chance of a client's behavior changing due to having life insurance

c.

The possibility of accidents caused by external factors

d.

The likelihood of sudden illness in the insured's family

Discuss
Answer: (b).The chance of a client's behavior changing due to having life insurance Explanation:Moral Hazard in life insurance underwriting refers to the likelihood that a client's behavior might change as a result of purchasing a life insurance policy, which could increase the chance of a loss.
Q26.
In what situation might a Moral Hazard Report be required by a life insurance company?

a.

When a policyholder travels frequently

b.

When a policyholder purchases multiple policies

c.

When a policyholder changes their occupation

d.

When a policyholder undertakes high-risk activities

Discuss
Answer: (d).When a policyholder undertakes high-risk activities Explanation:A Moral Hazard Report may be required when a policyholder undertakes high-risk activities, like the dangerous skiing expedition.
Q27.
In an absolute assignment, who has control over the policy's rights and benefits?

a.

The assignor

b.

The life assured

c.

The insurance company

d.

The assignee

Discuss
Answer: (d).The assignee Explanation:In an absolute assignment, the assignee has control over the policy's rights and benefits.
Q28.
What is the primary scenario where absolute assignment is commonly used?

a.

When the policyholder wants to change the nomination

b.

When the policy is mortgaged for a housing loan

c.

When the assignor wants to maintain some control over the policy

d.

When the assignee agrees to reversion

Discuss
Answer: (b).When the policy is mortgaged for a housing loan Explanation:Absolute assignment is more commonly seen when the policy is mortgaged against a debt assumed by the policyholder, such as a housing loan.
Q29.
What is one of the necessary conditions for a valid assignment?

a.

The assignment must be opposed to the law in force

b.

The assignee can do another assignment but cannot change the nomination

c.

The assignor must have an absolute right and title to the policy

d.

The assignor must be the life assured

Discuss
Answer: (c).The assignor must have an absolute right and title to the policy Explanation:One of the necessary conditions for a valid assignment is that the assignor must have an absolute right and title or assignable interest to the policy being assigned.
Q30.
Can the assignee change the nomination of the policy?

a.

Yes, the assignee can change the nomination at any time.

b.

No, the assignee cannot change the nomination because the assignee is not the life assured.

c.

The assignee can only change the nomination with the consent of the assignor.

d.

The nomination can never be changed after assignment.

Discuss
Answer: (b).No, the assignee cannot change the nomination because the assignee is not the life assured. Explanation:No, the assignee cannot change the nomination because the assignee is not the life assured.
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