Chapter 5 - Post-Issue Policy Changes

Question 1

What is a guaranteed insurability rider?

Answer 1

It allows defined increments of additional insurance to be purchased at set future intervals w/o underwriting requirements

Question 2

What are examples of non-contractual post-issue changes that some companies allow?

Answer 2

Face amount increases, tobacco to non-tobacco changes, rate class improvements

Question 3

Recent IRS change that impacts older policies

Answer 3

Certain policy changes that are not a contractual right may not be permissible on older in-force policies that were priced using the 1980 CSO or 2017 CSO mortality tables. They must be priced using 2001 CSO table

Question 4

How does the amount at risk impact underwriter action?

Answer 4

If the policy change decreases the amount of risk, less underwriting evidence (if any) is required.

Question 5

Except for term policies, is it possible to increase face amount but decrease the net amt at risk?

Answer 5

Yes (example, someone converts their death benefit + cash value into a new higher face amt - the new face amt is basically paid up by the cash value)

Question 6

Definition of anti-selection

Answer 6

The adverse impact upon insurers that occurs when insureds select insurance coverage for only those risks that are likely to generate losses. Part of this is often the intent to withhold pertinent information from the insurer

Question 7

What post-issue changes are reviewed by underwriting?

Answer 7

Those that are subject to evidence of insurability

Question 8

What else do underwriters need to be aware of beyond risk selection?

Answer 8

They need to consider the bigger picture that includes the impact on the customer, the producer, and the company