Test Your Knowledge Exam
Scenario
Walter Nick completes an application for a $1 million dollar whole life policy and gives the application along with a cheque for the first premium to Louis Gaspens, an old friend and agent for Iron Solid Insurance Co (Iron Solid). When Louis returns to his office, he discovers that Walter has inadvertently neglected to sign the application. Louis, desperate for the commission on the policy, signs Walter's name on the application and forwards it to Iron Solid.
Iron Solid issued a standard rated policy, and while Louis is delivering it, Walter mentions that he is taking his 16 year old grandson, Matthew, to Florida for a month, and would like to take out a small $25,000 term policy (including guaranteed insurability and accidental death benefit riders) on Matthew's life, naming himself (Walter) as beneficiary. Walter worries that he has left applying for the policy too late: can the policy be issued before he and Matthew leave? Louis responds to Walter's question by saying, "Don't worry about it. It's a small policy, he's covered." Walter completes the application and provides Louis with a cheque for the initial premium; Louis issues a Temporary Insurance Agreement (TIA) and forwards the application and cheque to Iron Solid but the policy is not issued or delivered to Walter before he and Matthew leave for Florida. While in Florida, both Walter and Matthew are drowned in a boating accident.