Ch 10 Underwriting Consequences in a Legal Setting Flashcards
summary judgment
litigation step in which judge decides the case as a matter of law, making it unnecessary to continue to trial
two year contestable clause
company can deny or contest a claim of death occurring w/in 2 years of issue date if it is subsequently discovered the applicant materially misrepresented information that would have caused the underwriter to either decline the application or issue at a rate class higher than applied for.
UW guidelines
-manuals should be updated as needed, changes documented w/ date of changes
-archival reference maintained
-accountable for use of manuals and procedures established and agreed upon at time of product pricing
-poor decisions and marked deviations from established guidelines can be treaty violations
file documentation and retention of information
document UW guidelines used, how arrived at final decision, requirements ordered or waived, why business decision was made
-phone calls, messages and emails all documented
conditional receipt
creates coverage if PI dies prior to policy issuance provided conditions stated were met
-completion of all medical requirements and PI’s insurability
temporary insurance agreement TIA
provides coverage until underwriter accepts or rejects risk (assuming no material misrepresentation)
-provides more immediate coverage
sins of omission
failure to investigate obvious facts, conditions, or situations
1. obtain addl details to unanswered questions
2. obtain addl details to answers on significant med hx
3. establish financial justification/economic loss
4. establish sufficient insurable interest
5. adhere to fac reinsurance single case, jumbo limits
6. resolve conflicting responses
7. document underwriting file
sins of commission
imprudent acts that have effect of ratifying unacceptable behavior
1. accepting altered applications
2. waiving age/amount requirements
3. waiving UW guideline requirements
4. making derogatory comments in UW file
5. accepting vague or inaccurate responses
6. delaying the underwriting process
waiver
intentional giving up of a known privilege or right, either expressed or implied
estoppel
equity principle applied to life insurance contract law if by your actions, words, or silence, another person has relied or taken action that he would not have otherwise taken to his detriment, your defense is waived and you are prohibited from later defending, denying or rescinding your original course of action
living rescission action
voiding of a contract for material representation w/in first 2 policy years while insured is still living
-can initiate w/ MIB follow-up hit
plan F code
code reported by another company who underwrote an app after date of underwriter’s initial MIB search
-if alert contains info deemed to be material and was not admitted on app, investigation must be initiated
-failure to investigate can create a waiver/estoppel condition
-follow-up code for significant impairment that predates policy places company on notice, should investigate as if it were a new application
material misrepresentation
false statement of fact of such significance that had the truth been known at time of underwriting, decision would have been different
-crucial info which influences risk classification made at time of policy issue
rescind on basis of misrepresentation must prove?
- app contained false statement or omission
- statement of omission was knowingly made
- false statement or omission materially affected risk insurer assumed
- insurer relied upon false statement or omission of fact to its detriment in assuming risk and issuing policy
punitive damages
damages intended to punish defendant and to deter a defendant and others from committing similar acts in future
-plaintiff has burden of proof
