Chapter 10 - Underwriting Consequences in a Legal Setting

Question 1

Summary Judgement

Answer 1

A litigation step where the judge decides the case as a matter of law, making it unnecessary to continue to trail.

Question 2

Conditional receipt

Answer 2

Creates coverage If the proposed insured dies prior to the policy issuance provided the conditions stated in the receipt were first met. These conditions usually include - completion of all medical requirements and the proposed insured' insurability (being accepted at a rate class applied for).
Material misrep will void this.

Question 3

Temporary insurance agreement (TIA)

Answer 3

Generally provides coverage (Assuming no material mis rep) until the underwriter either accepts or rejects the risk. It provides more immediate coverage because it is not conditional on completion of medical requirements.

Question 4

Time Delays

Answer 4

Can cause liability when there is failure to underwrite the application in a timely manner when the proposed insured dies or his health changes during the underwriting process.
The idea it could have been in force at the time of death OR they could have sought coverage elsewhere if declined.

Question 5

Sin of Omission - Failures to investigate obvious facts, conditions, or situations, examples include:

Answer 5

1. Obtain additional details to unanswered questions
2. Obtain additional details to answers on significant medical histories.
3. Establish financial justification/economic loss
4. Establish sufficient insurable interest
5. Adhere to FAC reinsurance single case and jumbo limits
6. Resolve conflicting responses
7. Document the underwriting file.

Question 6

Sins of Commission - imprudent acts that have the effect of ratifying unacceptable behavior, examples include:

Answer 6

1. Accepting altered applications
2. Waiving A&A
3. Waiting underwriting g/l req’ts
4. Making derogatory comments in the underwriting file
5. Accepting vague or inaccurate responses
6. Delaying the underwriting process.

Question 7

Two principles of law regarding omission and commission:

Answer 7

1. Waiver -> is the intentional giving up of a known privilege or right, either expressed or implied/
2. Estoppel -> is an 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 (‘estopped’) from later defending, denying, or rescinding your original course of action.
   (i. e., not f/uping on an MIB f/up, or not going back for unanswered questions).

Question 8

In order for a life insurer to rescind a life insurance policy on the basis of misrepresentation in the application the insurer must show all of the following:

Answer 8

1. The application contained a false statement or an omission
2. The statement or omission was knowingly made
3. The false statement or omission materially affected the risk of the insurer assumed.
4. The insurer relied upon the false statement or omission of fact, to its detriment, in assuming the risk and issuing the policy.

Question 9

MIB 035

Answer 9

This code is generated solely by the MIB and is defined as life insurance activity in four or more of the last 7 years

Question 10

Rules for Deposition Witnesses

Answer 10

1. Tell the Trust
2. Think before you speak (wait 2 full seconds)
3. Answer the question (only entitled to the answer for that question)
4. Do not volunteer information that is not asked.
5. Do not answer a question that you do not understand
6. Speak in full, complete sentence (beware double negatives)
7. Questions are often phrased “do you know” (you only know what you have seen or heard)
8. Do not guess
9. Be as specific or as vague as your memory allows
10. Do not explain your thought process as to how you reached the answer to the question
11. Make it clear you are paraphrasing or quoting directly.
12. Summarize complicated events when possible
13. Never characterize your own testimony.
14. Avoid all adjectives and superlatives “I never/always”
15. Do not testify as to what other people know unless you are asked specifically for such a statement
16. Do not testify as to your state of mind unless you are specifically asked.
17. Ask to see a document on exhibit, unless you are sure of your answer
18. If the document is not on exhibit answer to the best of your knowledge and do not tip off that the document exists.
19. Do not let the examiner put words in your mouth.
20. Do not answer a compound question unless you are certain you have all the parts
21. Pay additional to introductory clauses - leading questions are often preceded by statement that are either half-true or contain facts you do not know to be true.
22. Use all recesses to follow counsel to a place where you can confer in private
23. If interrupted, let the lawyer finish, then note you were interrupted
24. If you are caught in an inconsistency, do not collapse.
25. Do not adopt the examiner’s summary of your prior testimony.
26. If you are finished with an answer and the answer is complete and truthful, remain quiet and do not expand upon it.
27. Do not agree to supply any information or documents requested by the examiner.
28. Never express anger, try to outthink or outmaneuver the examiner.
29. Do not expect to testify without the other side scoring points.
30. Avoid any attempt at levity.
31. Avoid even the mildest obscenity and avoid absolutely any slurs or references to the opposing party the could be considered personally insulting.
32. A flash of insight or recollection - hold this until you have the opportunity to go over it with counsel.
    33 If you have made a mistake, let counsel know privately.