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Life & Health practice questions

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Question 1Insurance Regulation and Licensing

Under the McCarran-Ferguson Act, which body has primary responsibility for regulating the business of insurance?

  1. A joint federal-state commission established by Congress
  2. The individual states, through their insurance departments Correct answer.
  3. The federal government, acting through the Securities and Exchange Commission
  4. The National Association of Insurance Commissioners, which issues binding rules

Explanation

The McCarran-Ferguson Act (1945) declared that continued state regulation of insurance is in the public interest and left the business of insurance to the states, exempting it from most federal regulation to the extent state law regulates it. The NAIC is a voluntary association of regulators that drafts model laws and has no authority to issue binding rules.

Question 2Insurance Regulation and Licensing

An individual sells life insurance for a licensed insurer but never obtained a producer license. Which statement best describes the consequence?

  1. Both the individual and the insurer may face penalties under state insurance law. Correct answer.
  2. No penalty applies if the individual passes the licensing exam within one year.
  3. The policy is automatically void, and all premiums must be refunded with interest.
  4. The sale is valid because the insurer holds a certificate of authority.

Explanation

Acting as a producer without a license violates state insurance law and exposes the individual to civil and criminal penalties, while an insurer that accepts business from or compensates an unlicensed person may also be sanctioned. Policies already issued generally remain in force for the insured, so the transaction is not automatically voided.

Question 3Insurance Regulation and Licensing

A producer collects an initial premium from an applicant. How must those funds be handled?

  1. They may be deposited in the producer's general business account if records are kept.
  2. They become the producer's own funds once a receipt is issued.
  3. They must be forwarded to the insurer within 30 days before any deposit is required.
  4. They must be held in trust and kept separate from personal funds. Correct answer.

Explanation

Premiums collected from applicants belong to the insurer or the applicant, and the producer holds them in a fiduciary capacity in a trust or premium account separate from personal and general operating funds. Commingling is prohibited and remittance must be prompt under state law and the agency agreement.

Question 4Insurance Regulation and Licensing

What does it mean when an insurer appoints a producer?

  1. The insurer authorizes the producer to act on its behalf as its agent. Correct answer.
  2. The producer receives an exclusive territory for all product lines.
  3. The producer becomes an employee of the insurer with full benefits.
  4. The state transfers regulatory authority over the insurer to the producer.

Explanation

An appointment is the insurer's authorization, filed with the state, that permits the producer to solicit and sell on that insurer's behalf. It creates an agency relationship rather than an employment relationship and does not shift any regulatory duty from the insurer to the producer.

Question 5Insurance Regulation and Licensing

Which statement describes a typical continuing education requirement for licensed producers?

  1. They may satisfy the requirement with any self-study course they choose.
  2. They must complete approved credit hours each renewal period, including ethics. Correct answer.
  3. They must retake the full prelicensing course before each renewal.
  4. They are exempt from continuing education after holding a license for five years.

Explanation

States require a specified number of continuing education credit hours per renewal cycle, generally including a required ethics component, and the courses must be approved by the state. Completing the requirement on time is a condition of renewal, and no automatic exemption arises from holding a license for a set number of years.

Question 6Insurance Regulation and Licensing

A producer licensed and residing in State A wants to sell insurance in State B. Which statement about nonresident licensing is correct?

  1. The producer must establish a residence and principal office in State B first.
  2. The producer must retake the prelicensing course and licensing exam in State B.
  3. A nonresident license is generally available without an office in State B. Correct answer.
  4. The producer may begin soliciting in State B as soon as the application is mailed.

Explanation

Through reciprocity, a producer holding a valid resident license in good standing usually can be licensed as a nonresident without satisfying State B's residency, office, education, or examination requirements. The license must actually be issued before any solicitation occurs.

Question 7Insurance Regulation and Licensing

A licensed producer wants to pay an unlicensed friend a share of the commission on a sale the friend referred. What is the rule?

  1. It is permitted, because a referral is not considered solicitation of insurance.
  2. It is generally prohibited and may expose both parties to penalties. Correct answer.
  3. It is permitted if the friend's share of the commission does not exceed 25 percent.
  4. It is permitted if the friend discloses the arrangement to the client in writing.

Explanation

Sharing commissions with an unlicensed person is a form of unlicensed activity that states prohibit, often classifying it as a criminal offense. Referral arrangements fall within this restriction when the person receiving compensation is not licensed.

Question 8Insurance Regulation and Licensing

Which practice is considered rebating?

  1. Giving an applicant part of the agent's commission to induce the purchase Correct answer.
  2. Charging a higher premium because the applicant uses tobacco products
  3. Declining an application because of the applicant's medical history
  4. Paying a commission to the producing agent after the policy is issued

Explanation

Rebating is offering anything of value not specified in the policy, including a portion of the commission, as an inducement to buy insurance, and it is prohibited in most states. Lawful rating classifications and commissions paid under the agency contract are not rebates.

Question 9Insurance Regulation and Licensing

An agent tells a policyholder that her current insurer is about to fail so that she will surrender her policy and buy a new one from the agent. This conduct is best described as:

  1. Coercion
  2. Twisting Correct answer.
  3. Defamation
  4. Rebating

Explanation

Twisting is a misrepresentation or incomplete comparison used to induce a policyholder to lapse, surrender, or replace coverage. Defamation involves false statements about an insurer's financial condition made to the public generally, and coercion requires unlawful pressure or threats.

Question 10Insurance Regulation and Licensing

When a life insurance sale involves replacing an existing policy, what is the producer generally required to do?

  1. Refund the entire first-year premium to the applicant after delivery.
  2. Obtain written approval from the state insurance department before delivery.
  3. Complete the replacement only after the old policy has lapsed for nonpayment.
  4. Give the applicant a replacement notice and notify the existing insurer. Correct answer.

Explanation

Replacement regulations require disclosure to the buyer, typically through a signed replacement notice, and notice to the existing insurer so it can contact its policyholder, often within a short window such as five business days. Individual sales do not require state pre-approval.

Question 11Insurance Regulation and Licensing

An insurer terminates a producer's appointment. Which requirement applies?

  1. The producer must surrender the license within ten days.
  2. The insurer must report the termination to the state and notify the producer. Correct answer.
  3. Termination becomes effective only after the insurance department approves it.
  4. The insurer must notify only the producer, because the appointment is a private contract.

Explanation

Termination of appointment must be reported to the state insurance department, and the producer is entitled to notice; many states also require the insurer to state the cause when the termination is for cause. The producer's license remains in effect unless the state separately acts against it.

Question 12Insurance Regulation and Licensing

Which statement about a producer's transaction records is correct?

  1. Records must be kept for the minimum period set by state law. Correct answer.
  2. Only records relating to declined applications must be retained.
  3. Records must be kept indefinitely, because state law never allows their destruction.
  4. Records may be discarded once the policy has been delivered to the owner.

Explanation

States require producers and insurers to retain records of transactions such as applications, receipts, and correspondence for a specified period, commonly three to five years, and to make them available to examiners. Destruction is permitted once that retention period has run.

Question 13Insurance Regulation and Licensing

How does a market conduct examination differ from a financial examination of an insurer?

  1. It focuses on consumer-facing practices such as sales and claims rather than solvency. Correct answer.
  2. It is requested by the insurer, while the financial examination is required by statute.
  3. It is triggered only by a policyholder complaint or a lawsuit against the insurer.
  4. It is conducted by a federal agency, while the financial examination is conducted by the state.

Explanation

Market conduct examinations review an insurer's treatment of consumers, including marketing, underwriting, rating, and claims handling, while financial examinations verify solvency, assets, and reserves. Both are conducted by or on behalf of state insurance regulators.

Question 14Insurance Regulation and Licensing

Before a state insurance department revokes a producer's license, what is required?

  1. The producer's insurer must consent to the revocation.
  2. The producer must be given notice and a hearing. Correct answer.
  3. A criminal conviction must first be obtained in court.
  4. The producer must first exhaust the continuing education requirement.

Explanation

License revocation is an administrative action that requires due process: notice of the allegations and an opportunity to be heard, with appeal rights afterward. A criminal conviction is not a prerequisite, although a conviction can be an independent ground for disciplinary action.

Question 15Insurance Regulation and Licensing

A producer is asked to place coverage with an insurer that is not licensed in the state. What is the producer's position?

  1. It is generally unlawful, except through surplus lines procedures with an eligible insurer. Correct answer.
  2. It is permitted whenever the admitted market declines the risk, with no further requirements.
  3. Any licensed producer may place it if the insured signs a waiver of state regulation.
  4. It is permitted if the producer pays the applicable premium tax to the state.

Explanation

Only insurers holding a certificate of authority may transact insurance in a state, subject to limited exceptions such as the surplus lines market. There, a licensed surplus lines broker may place coverage with an eligible nonadmitted insurer after a diligent search of the admitted market.

Question 16Insurance Regulation and Licensing

An agency organized as a corporation wants to receive commissions on life insurance sales. What is required?

  1. The corporation must obtain a securities registration where it operates.
  2. Only the individual producers must be licensed; the corporation needs no license.
  3. The entity must hold an agency license with a designated responsible producer. Correct answer.
  4. The corporation must be licensed as an insurer in the state.

Explanation

States license business entities such as corporations, partnerships, and LLCs as agencies and require the entity to designate a licensed individual who is responsible for its insurance activities. The individual producers must also be licensed and appointed by the insurer.

Question 17General Insurance Concepts and Principles

Which risk management technique does purchasing an insurance policy represent?

  1. Reducing the severity of potential losses
  2. Retaining the risk and paying losses directly
  3. Avoiding the activity that creates the risk
  4. Transferring the risk to an insurer for a premium Correct answer.

Explanation

Insurance is a risk-transfer device: the policyholder pays a premium and the insurer assumes the financial consequences of covered losses. Avoidance eliminates exposure, retention keeps the exposure, and loss reduction lowers its severity.

Question 18General Insurance Concepts and Principles

For life insurance, when must insurable interest exist?

  1. At the time of the insured's death
  2. At the time the policy is applied for Correct answer.
  3. Continuously from application through death
  4. Only when a claim is filed

Explanation

For life insurance, insurable interest must exist at policy inception, meaning when the application is made. This requirement prevents wagering on a human life, and a validly issued policy remains enforceable even if the relationship later ends.

Question 19General Insurance Concepts and Principles

Which contract characteristic describes an insurance policy because the amount one party may receive can be far greater or less than the premium paid, depending on chance?

  1. Aleatory Correct answer.
  2. Unilateral
  3. Conditional
  4. Adhesion

Explanation

Aleatory means the dollar exchange between the parties is unequal and depends on an uncertain event. Unilateral refers to only one party making an enforceable promise, while adhesion refers to the insurer drafting the contract.

Question 20General Insurance Concepts and Principles

Which principle requires an insurance applicant to disclose all facts that are material to the risk being underwritten?

  1. Indemnity
  2. Utmost good faith Correct answer.
  3. Insurable interest
  4. Subrogation

Explanation

Utmost good faith imposes a duty on both parties to deal honestly and to disclose material facts. The insurer relies on the applicant's disclosure to assess and price the risk.

Question 21General Insurance Concepts and Principles

What is the primary purpose of underwriting in insurance?

  1. To eliminate the need for policy reserves
  2. To guarantee that the insurer earns a profit each year
  3. To set the premium rates required by state statute
  4. To guard against adverse selection by classifying risks Correct answer.

Explanation

Underwriting evaluates each applicant and assigns a risk class so that premiums reflect expected costs. This limits adverse selection, the tendency of poorer-than-average risks to seek coverage.

Question 22General Insurance Concepts and Principles

An applicant makes a false statement of material fact on a life insurance application. What is the insurer's usual remedy?

  1. Reduce the benefit by half
  2. Add a restrictive rider to the policy
  3. Pay the full death benefit as written
  4. Rescind the policy and refund the premium Correct answer.

Explanation

A material misrepresentation is one that would have affected the insurer's decision to issue or rate the policy, and it generally allows the insurer to rescind the contract and return the premium. Immaterial statements do not void coverage.

Question 23General Insurance Concepts and Principles

An insurer's agent accepts a late premium payment without objection. After the insured dies, the insurer denies the claim because the premium was late. Which concept most likely defeats the denial?

  1. Adhesion
  2. Waiver and estoppel Correct answer.
  3. Subrogation
  4. Coinsurance

Explanation

By knowingly accepting the late payment, the insurer waives the timeliness requirement, and estoppel prevents it from later asserting a right it has given up. The insured relied on the acceptance to their detriment.

Question 24General Insurance Concepts and Principles

When a person is covered by two group health plans, how does coordination of benefits typically work?

  1. The primary plan pays first; the secondary plan then considers the balance Correct answer.
  2. The plan with the higher premium is always primary
  3. The secondary plan pays before the primary plan
  4. Both plans pay the full amount, producing a profit for the insured

Explanation

Coordination of benefits prevents duplicate recovery: the primary plan pays its normal benefits, and the secondary plan pays toward the remaining allowable expenses up to its limit. The insured may not profit from overlapping coverage.

Question 25General Insurance Concepts and Principles

In reinsurance, what is the role of the ceding insurer?

  1. It guarantees payment through a state guaranty fund
  2. It transfers part of its risk to a reinsurer Correct answer.
  3. It assumes all of another insurer's risk
  4. It sells a second policy directly to the insured

Explanation

The ceding insurer is the original insurer that passes a portion of its risk to a reinsurer in exchange for a reinsurance premium. This improves capacity and protects surplus.

Question 26General Insurance Concepts and Principles

After paying a covered claim, what right does an insurer generally acquire through subrogation?

  1. The right to cancel the policy without notice
  2. The right to collect twice for the same loss
  3. The right to require the insured to repay all benefits
  4. The right to recover claim costs from the responsible third party Correct answer.

Explanation

Subrogation lets the insurer stand in the insured's shoes and pursue the party that caused the loss, preventing double recovery by the insured. Any recovery is limited to the amount the insurer paid.

Question 27General Insurance Concepts and Principles

Which three factors are most commonly used to determine the basic premium for a life insurance policy?

  1. Mortality, interest, and expense Correct answer.
  2. Morbidity, inflation, and commissions
  3. Mortality, taxes, and dividends
  4. Claims, reserves, and policy loans

Explanation

Life insurance premiums are based on expected mortality, the interest rate earned on invested reserves, and the insurer's operating expenses. Morbidity is a health insurance factor, and dividends are a distribution of surplus rather than an input to the basic rate.

Question 28General Insurance Concepts and Principles

A group of investors with no family or business relationship to a person buys a life policy on that person's life and names the investors as beneficiaries. How is this arrangement best characterized?

  1. It is fully enforceable because the insured consented in writing
  2. It may be void because the buyer lacked insurable interest at inception Correct answer.
  3. It is valid if the insured survives the contestability period
  4. It is treated as a standard group life policy

Explanation

A stranger-originated life insurance arrangement lacks insurable interest at policy inception, making it a wager on a human life and generally void. Consent alone does not create insurable interest.

Question 29General Insurance Concepts and Principles

Under a conditional receipt, when does coverage begin?

  1. On the date of application if the applicant is insurable Correct answer.
  2. Only after the policy is delivered and the first premium is paid
  3. Immediately upon signing, regardless of health status
  4. After the free-look period expires

Explanation

A conditional receipt provides interim coverage effective as of the application or medical exam date, but only if the proposed insured meets the insurer's underwriting standards. Delivery-and-payment is a different approach to when coverage begins.

Question 30General Insurance Concepts and Principles

A life insurance policy is drafted by the insurer and offered to the applicant on a take-it-or-leave-it basis. How are ambiguous policy terms generally interpreted?

  1. Strictly against the beneficiary
  2. In favor of the insurer
  3. By the state insurance department
  4. In favor of the insured Correct answer.

Explanation

Insurance is a contract of adhesion because the insurer writes the terms and the applicant has little bargaining power. Courts therefore construe ambiguities against the drafter and in favor of the insured.

Question 31Life Insurance Basics

Insurable interest in a life insurance transaction must exist

  1. Only when a death claim is filed
  2. Continuously throughout the policy's life
  3. When the policy is applied for Correct answer.
  4. Whenever the beneficiary is changed

Explanation

Insurable interest must exist at the time the application is made and the policy is issued. Once the contract is in force, the owner may keep it even if the relationship that created the interest later ends. A policy issued without insurable interest is generally void.

Question 32Life Insurance Basics

Spreading the cost of claims across a large group of policyholders who face similar risks is called

  1. Reinsurance
  2. Risk pooling Correct answer.
  3. Adverse selection
  4. Subrogation

Explanation

Risk pooling combines many similar exposure units so that the losses of the few are shared by the whole group, making costs more predictable. The larger and more homogeneous the pool, the more stable the projected loss experience.

Question 33Life Insurance Basics

A life insurance policy is described as aleatory because

  1. The insurer may cancel at any time without notice
  2. The amounts exchanged by the parties may be unequal Correct answer.
  3. Both parties exchange promises of equal value
  4. The owner must perform before the insurer owes anything

Explanation

An aleatory contract depends on an uncertain event, so the value one party receives may differ greatly from what it pays in. A policyowner may pay a few premiums and receive a large death benefit, or pay for years with no claim.

Question 34Life Insurance Basics

A policyowner who returns a newly delivered policy and receives a full premium refund is exercising the

  1. Grace period
  2. Incontestability right
  3. Free-look right Correct answer.
  4. Reinstatement right

Explanation

The free-look provision lets the owner return a delivered policy within a stated number of days, commonly 10 to 30, for a full refund of premium. It gives the buyer a chance to review the contract after purchase.

Question 35Life Insurance Basics

Which premium payment mode usually costs the policyowner the most in total each year?

  1. Annual
  2. Semiannual
  3. Quarterly
  4. Monthly Correct answer.

Explanation

Insurers add charges or interest to split premium payments, so more frequent modes cost more in total. The annual mode carries no such charges and is the least expensive way to pay over a year.

Question 36Life Insurance Basics

Which of these rights belongs to the owner of an individual life insurance policy?

  1. Setting the policy's premium rate
  2. Approving the insurer's annual financial report
  3. Receiving the death benefit at the insured's death
  4. Changing the beneficiary designation Correct answer.

Explanation

Ownership rights include naming and changing the beneficiary, surrendering the policy, taking policy loans, and assigning the contract. The owner controls the contract even when someone else is the insured.

Question 37Life Insurance Basics

After a life insurance policy has been in force for two years, the insurer generally may no longer

  1. Rescind the policy over an innocent application error Correct answer.
  2. Cancel the policy for nonpayment after the grace period expires
  3. Reduce the death benefit when the insured changes jobs
  4. Increase the premium each year the policy stays in force

Explanation

Under the incontestability provision, after the contestable period the insurer cannot void the contract because of a misstatement on the application. The insurer may still enforce other policy terms, such as lapse for unpaid premium.

Question 38Life Insurance Basics

To reinstate a lapsed life insurance policy, the policyowner generally must

  1. Pay overdue premiums with interest and show insurability Correct answer.
  2. Complete a new application and serve a fresh contestability period
  3. Wait five years before any coverage takes effect again
  4. Pay only the next scheduled premium, with nothing owed for the lapse

Explanation

Reinstatement requires evidence of insurability plus payment of all overdue premiums with interest, and often repayment of any policy loan. The insurer may also require a new contestable period limited to statements in the reinstatement application.

Question 39Life Insurance Basics

An insurer discovers after the insured's death that age was understated on the application. The insurer will most likely

  1. Pay what the premium would have bought at the true age Correct answer.
  2. Deny the claim because the application was inaccurate
  3. Return the premiums paid with interest and void the policy
  4. Pay the full face amount and bill the estate for the difference

Explanation

Under the misstatement of age provision, the insurer adjusts the benefit to the amount the premium actually paid would have purchased at the correct age. The policy is not voided and the claim is not denied.

Question 40Life Insurance Basics

Under a typical two-year suicide clause, if the insured dies by suicide during the exclusion period, the insurer will

  1. Keep the premiums and pay nothing
  2. Refund premiums paid, less any outstanding policy debt Correct answer.
  3. Pay the full face amount to the beneficiary
  4. Pay double the face amount as a penalty

Explanation

During the suicide exclusion period the insurer's liability is limited to a return of premiums paid, often reduced by any policy debt or loan. After the exclusion period expires, suicide is treated as any other cause of death.

Question 41Life Insurance Basics

A policyowner borrows against the cash value of a whole life policy and dies without repaying the loan. The insurer will

  1. Pay the full face amount and bill the estate for the debt
  2. Pay the full face amount and forgive the loan
  3. Deny the claim because the cash value was pledged
  4. Subtract the loan and accrued interest from the benefit Correct answer.

Explanation

A policy loan is an advance against the contract's own values, so any unpaid balance and accrued interest reduce the amount paid at death. The claim is still payable; it is simply reduced.

Question 42Life Insurance Basics

A whole life policyowner who stops paying premiums and surrenders the policy may elect

  1. Reduced paid-up insurance, extended term, or cash Correct answer.
  2. A complete refund of every premium paid since issue
  3. The cash value plus all dividends ever credited
  4. The full face amount of the policy in a single lump sum

Explanation

Nonforfeiture options preserve the value built up in a permanent policy when premiums stop. The owner may take the cash surrender value, convert to a smaller paid-up policy, or buy term coverage for a limited period.

Question 43Life Insurance Basics

Dividends paid on a participating whole life policy are generally

  1. Taxable as ordinary income in the year received
  2. Tax-free until they exceed premiums paid Correct answer.
  3. Taxable as capital gains when credited
  4. Never taxable under any circumstance

Explanation

Policy dividends are treated as a return of premium rather than income, so they are not taxed until cumulative dividends exceed the total premiums paid. Amounts above that basis are then taxable.

Question 44Life Insurance Basics

An owner pledges a life insurance policy to a bank as security for a loan. This arrangement is

  1. A collateral assignment limited to the debt Correct answer.
  2. A viatical settlement of the policy
  3. A change of insured on the policy
  4. An absolute assignment of all rights

Explanation

A collateral assignment gives the lender a limited claim on policy proceeds only to the extent of the outstanding debt. All remaining ownership rights stay with the policyowner, who may recover them once the loan is repaid.

Question 45Life Insurance Basics

A policyowner misses a premium payment. Coverage normally continues

  1. Until the grace period ends, typically 30 or 31 days Correct answer.
  2. Only if the owner requests an extension in writing
  3. For one full year, after which the policy lapses
  4. For 60 days in every state by statute

Explanation

The grace period gives the owner a stated number of days, commonly 30 or 31, to pay an overdue premium while coverage stays in force. If death occurs during that time, the unpaid premium is deducted from the proceeds.

Question 46Life Insurance Basics

Two children are named primary beneficiaries under a per stirpes designation. One child dies before the insured, leaving two children of her own. At the insured's death the proceeds are paid

  1. Equally among the surviving child and the two grandchildren
  2. Entirely to the surviving child, who takes both shares
  3. Half to the surviving child and half to the grandchildren Correct answer.
  4. To the insured's estate, since one beneficiary predeceased

Explanation

Per stirpes means by branch: a deceased beneficiary's share passes to that beneficiary's own descendants. The surviving child keeps one half, and the deceased child's half is divided between her two children.

Question 47Life Insurance Basics

Which statement correctly distinguishes a stock life insurer from a mutual life insurer?

  1. Only stock insurers may issue participating policies
  2. Stock insurers are owned by policyowners; mutual insurers by shareholders
  3. Stock insurers are owned by shareholders; mutual insurers by policyowners Correct answer.
  4. Only mutual insurers may buy reinsurance

Explanation

A stock insurer is a corporation owned by shareholders, while a mutual insurer is owned by its policyowners. Mutual companies generally issue participating policies, though stock insurers may also offer them.

Question 48Life Insurance Basics

An agent assists a client in replacing an existing life insurance policy. Under replacement regulations the agent must

  1. Wait 90 days before submitting the new application
  2. Give the applicant a replacement notice of the effects Correct answer.
  3. Cut the new face amount by the old policy's cash value
  4. Obtain the old insurer's written consent to the replacement

Explanation

Replacement rules require the agent to present and deliver a notice explaining the consequences of replacing existing coverage. The notice and any required forms go to the applicant and, in many states, to the existing insurer.

Question 49Life Insurance Basics

Which statement about the Medical Information Bureau is correct?

  1. It mails applicants free copies of their lab results
  2. It stores complete hospital records for member insurers
  3. It keeps coded information used to detect applicant omissions Correct answer.
  4. It issues underwriting decisions that member insurers must follow

Explanation

The MIB is a membership organization that maintains coded information reported by member insurers, used to flag inconsistencies in applications. It does not make underwriting decisions or hold medical records.

Question 50Life Insurance Basics

The entire contract provision means that

  1. The policy, application, and riders form one contract Correct answer.
  2. Oral promises made by the agent are part of the contract
  3. The insurer may amend the policy unilaterally when rates change
  4. The policy and the application are separate contracts

Explanation

The entire contract clause states that the policy, the attached copy of the application, and any riders together constitute the whole agreement. No outside document or statement can add to or change its terms.