Chapter 19 : Health Insurance Underwriting

Question 1

Hobbies

Answer 1

AVOCATIONS

Question 2

Rated Policy

Answer 2

AKA Rated Premium
Higher than average premium for a substandard contract

Question 3

Health insurance premium formula =

Answer 3

Morbidity - interest + expenses

Question 4

Expense Factor

Answer 4

AKA Load / Loading Charge / Loading Factor

Derived from operating expenses, or those funds the insurer “pays out”.

Agent commissions, wages, admin costs, overhead expenses, reserves

Question 5

Secondary Factors that influencer premiums

Answer 5

1. Benefits
2. Benefit period: 12, 24, 30 months
   5, 10, 20 to age 65 or for life.
3. Elimination period: functions like a deductible
4. Probationary period ( a one time event)

Question 6

Agent responsibilities

Answer 6

1. Proper solicitation
2. Completing the app properly
3. Obtaining signatures
4. Collecting premiums
5. Issuing the correct premium receipt
6. Disclosures +policy summary

**Producer does not issue the policy

Question 7

Underwriting information sources (10)

Answer 7

1. Application
2. Attending Physician Statement
3. Medical Report
4. Physical exam and lab tests
5. Motor vehicle report
6. Attending physicians statement
7. Medical Information Bureau
8. Special questionnaires
9. Inspection reports
10. Credit reports

Question 8

3 essential parts to a health insurance application

Answer 8

1. Part I : General Applicant Information
2. Part II: Medical and Health History
3. The agent’s report or statement

Question 9

Part 1 of app includes:

Answer 9

1. Type of policy
2. Amount of insurance
3. Name and relationship of beneficiary
4. Other insurance the proposed insured owns
5. Additional insurance apps the insured has pending
6. Additional insureds if the policy can be written to provide insurance for a spouse or other dependents

Question 10

Binding Receipts

Answer 10

AKA Temporary Insurance Agreements / Unconditional Receipts

Coverage is guaranteed until the insurer formally rejects the app.

Auto or homeowner’s insurance

Question 11

Temporary Insurance Agreement

Answer 11

This agreement extends coverage immediately (through underwriting)