chapter 1 snapshots

Question 1

what is insurance?

Answer 1

when a company agrees to protect client from threats (loss, damage, liability)

Question 2

in a life insurance policy, when must insurable interest exist

Answer 2

at the time of the application

Question 3

what does insurance solicitation mean?

Answer 3

when a potential client is persuaded to buy life insurance via talking or writing

Question 4

what info does a buyer’s guide provide?

Answer 4

generic info about life insurance approved by the department of insurance that insurers MUST provide towards ALL potential buyers

Question 5

policy summery is and includes

Answer 5

is a written statement with features and elements of policy and includes
- name and address of agent
- name and address of insurer
- policy name and each rider
- prepiums, cash value, dividend, surrender value and death benefit figures

Question 6

what is underwriting?

Answer 6

decision to approve/deny applicant
factors include health, hobbies, lifestyle, job
depending on these answers will determine the rate of insurance

Question 7

what information is gathered in part 1 and 2 of the application?

Answer 7

part 1 - general information; applicant info (name, address), and type of policy & beneficiary
part 2 - medical information; current, past and family history

Question 8

what is the purpose of an agent’s report?

Answer 8

to report agents’ personal observations of the protentional applicant

Question 9

who is required to sign the application for the life insurance

Answer 9

agent and proposed insured (applicant)

Question 10

when does insurance go into effect

Answer 10

?

Question 11

what does representation mean and how does it differ from a warrenty?

Answer 11

a representation maybe true but there is no full guarantee however a warranty is 100 true (validity)

Question 12

how can insurance carriers use MIB

Answer 12

? compares info MIB has collected in insuring info for client

Question 13

substandard risk policy vs standard risk policy

Answer 13

substandard - applicants have high risks and are rated at a premium rate-up (more expensive)
standard - applicants meet underwriting standards and rates are not raised, considered average risk

Question 14

what are the three factors that determine the premium for a particular policy?

Answer 14

1. risk (aka mortality)
2. interest
3. expense

Question 15

when would an insured be required to sign a statement of good health?

Answer 15

when the initial premium is not paid with application