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ExamFX > Completing the App, Underwriting , and Delivering Policy > Flashcards

Completing the App, Underwriting , and Delivering Policy Flashcards

1
Q

Insurance _____ the risk of loss from an individual or business entity to an insurance company, which in turn spreads the costs of unexpected losses to many individuals

A

transfers

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2
Q

The process of issuing a life insurance policy begins with

A

Solicitation

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3
Q

Solicitation of insurance means

A

an attempt to persuade a person to buy an insurance policy, can be done orally or in writing

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4
Q

Every application for a life insurance policy must be given a _______that provides basic information about the cost and coverage of the insured being solicited

A

written disclosure statement

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5
Q

Written disclosure statement must be given to the applicant no later than the time the application for insurance is

A

signed

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6
Q

______ will help the applicants to make more informed and educated decisions about their choice of insurance

A

Disclosure Statements

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7
Q

A _______ provides basic, generic information about life insurance policies that contains, and is limited to, language approved by the Department of Insurance. This document explains how a buyer should go about choosing the amount and type of insurance to buy, and how a buyer can save money by comparing the costs of similar policies.

A

Buyer’s Guide

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8
Q

Insurers must provide a buyer’s guide to all applicants prior to accepting their

A

initial premium

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9
Q

If the policy contains an unconditional refund provision of at least _____, a buyer’s guide can be delivered with the policy.

A

10 days(free look period)

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10
Q

A policy summary is a written statement describing the ______ and _____ of the policy being issued. It must include the name and address of the agent, the full name and home office or administrative office address of the insurer, and the generic name of the basic policy and each rider.

A

features and elements

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11
Q

A policy summary will also include premium, cash value, dividend, surrender value and _____ for specific policy years.

A

death benefit figures

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12
Q

Policy summary must be provided when the policy is

A

delivered

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13
Q

The term _____ means a presentation or depiction that includes nonguaranteed elements of a policy of individual or group life insurance over a period of years.

A

illustration

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14
Q

A life insurance illustration must do the following:

A

1) Distinguish between guaranteed and projected amounts
2) Clearly sate that an illustration is not a part of the contract
3) Identify those values that are not guaranteed as such

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15
Q

An agent may only use the illustrations of the insurer that have been ____, and may not change them in any way

A

approved

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16
Q

The agent is the company’s front line, and is referred to as a _______ because the agent is usually the one who has solicited the potential insured.

A

field underwriter

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17
Q

As a field underwriter, the agent has many important responsibilities during the underwriting process and beyond, including the following:

A

1) Proper solicitation of applicant
2) Helping prevent adverse selection
3) Completing the application
4) Obtaining the required signatures
5) Collecting the initial premium and issuing the receipt, if applicable
6) Delivering the policy

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18
Q

______ is the starting point and basic source of information used by the company in the risk selection process.

A

The Application

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19
Q

Although applications are not uniform and may vary from one insurer to another, they all have the same basic components:

A

Part 1- General Information

Part 2-Medical Information

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20
Q

General information of the application includes the general questions about the applicant, such as:

A

name, age, address, dob,

gender, income, marital status, occupation

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21
Q

Part 1 identified the type of policy applied for an the amount of coverage, and usually contains information concerning the

A

beneficiary

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22
Q

_______ of the application includes information on the prospective insured’s medical background, present health, any medical visits in recent years, medical status of living relatives, and causes of death of deceased relatives.

A

Medical Information

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23
Q

If the amount of insurance is relatively small, the agent and the proposed insured will complete all of the medical information.

A

That would be considered a nonmedical application

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24
Q

It is the agent’s _____ to make certain that the application is filled out completely, correctly, and to the best of the applicant’s knowledge.

A

responsibility

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25
Q

The agent’s (producer’s) ____ provides the agents personal observations concerning the proposed insured

A

report

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26
Q

The agent’s report does not become a part of the entire contract, although it is part of the

A

application process

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27
Q

Both the agent and the proposed insured must ___ the application

A

sign

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28
Q

When an answer to a question on the application needs to be corrected, agents have the option, depending on which insurer they represent, of correcting the information and have the applicant _______ or complete new app

A

initial the change

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29
Q

Before a policy is issued, all the questions on the application must be

A

answered

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30
Q

If a policy is issued with questions left unanswered, the contract will be interpreted as if the insurer ______ its right to have an answer to the question.

A

waived

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31
Q

The insurer will not have the right to deny coverage based on any information that the __________ might have contained

A

unanswered question

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32
Q

Whenever the agent collects premiums, the agent must issue a

A

premium receipt

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33
Q

The most common type of receipt is a _________, which is used only when the applicant submits a prepaid application

A

conditional receipt

34
Q

The conditional receipt says that coverage will be _____ either on the date of the application or the date of the medical exam, whichever occurs last

A

effective

35
Q

A ____ is an absolutely true statement upon which the validity of the insurance policy depends

A

warranty

36
Q

_____ are statements believed to be true to the best of one’s knowledge, but they are not guaranteed to be true

A

Representations

37
Q

Untrue statements on the application are considered ________ and could void the contract

A

misrepresentations

38
Q

A ________ is a statement that, if discovered would alter the underwriting decision of the insurance company.

A

material misrepresentation

39
Q

If material misrepresentations are intentional, they are considered

A

fraud

40
Q

___ is the risk selection process

A

Underwriting

41
Q

The underwriter’s responsibilities include selecting only those risks that are considered ______ and meet the insurer’s underwriting standards.

A

insurable

42
Q

The purpose of underwriting is to protect the insurer against ______

A

adverse selection

43
Q

The primary criteria an underwriter will use in assessing the desirability of particular candidate for life insurance includes the applicant’s

A

Health
Occupation
lifestyle
Hobbies and Habits

44
Q

Underwriter will use many different sources of information in determining the insurability of the

A

individual risk

45
Q

To purchase insurance, the policyowner must face the possibility of losing money or something of value in the event of loss. This is called

A

insurable interest

46
Q

In life insurance, insurable interest must exist between the policyowner and the insured

A

at the time of the application

47
Q

A valid insurable interest may exist between the policyowner and the insured when the policy is insuring any of the following:

A

1) Policyowner’s own life
2) The life of a family member
3) the life of a business partner, key employee, or someone who has financial obligation to the policyowner

48
Q

Insurable interest is not required of

A

beneficiaries

49
Q

Insurable interest must exist

A

at the time of application

50
Q

An insurance application is the ______ underwriters use for information about the applicant

A

key source

51
Q

To supplement the information on the application, the underwriter may order an inspection report on the applicant from an independent investigating firm or

A

credit agency

52
Q

Companies that use inspection reports are subject to the rules and regulations outlines in the

A

Fair Credit Reporting Act

53
Q

Insurer may only request a _____ which is completed by a paramedic or a registered nurse

A

paramedical report

54
Q

Underwriter may require an _________ from a medical practitioner who treated the applicant for a prior medical problem

A

Attending Physician’s Statement (APS)

55
Q

In addition to an attending physicians report, the underwriter will usually request a

A

Medical Information Bureau

56
Q

MIB is a membership corp. owned by member insurance companies. It is a _________ which receives adverse medical information from insurance companies and maintains confidential medical impairment information on individuals

A

nonprofit trade organization

57
Q

MIB can be used only as an aid in helping insurers know what areas of impairment they might need to investigate further. An applicant cannot be _____ simple because of some adverse information discovered

A

refused

58
Q

If an insurer request a medical examination, the ______ is responsible for the costs of the exam

A

insurer

59
Q

Following laws and regulations for insurers requiring an applicant to submit to an HIV test

A

1) The insurer must disclose the use of testing to the applicant and obtain written consent from the applicant
2) The insurer must establish written policies and procedures for the internal dissemination of test results among its producers and employees to ensure confidentiality.

60
Q

______ is a federal law that protects health information

A

Health Insurance Portability and Accountability Act (HIPAA)

61
Q

HIPAA regulations provide protection for the privacy of certain individually identifiable health information (such as demographic data that relates to physical or mental health condition) referred to as

A

protected health information

62
Q

Under the ______, patients have the right to view their own medical records, as well as the right to know who has accessed those records over the previous 6 years

A

Privacy Rule

63
Q

The _______, however allows disclosures without individual authorization to public health authorities authorized by law to collect or receive the information for the purpose of preventing or controlling disease

A

Privacy Rule

64
Q

The _________ establishes procedures that consumer-reporting agencies must follow in order to ensure that records are confidential, accurate, relevant, and properly used

A

Fair Credit Reporting Act

65
Q

Fair Credit Reporting Act also __________ against the circulation of inaccurate or obsolete personal and financial information

A

protects consumers

66
Q

An individual who _____ violates the Fair Credit Reporting Act is liable in the amount equal to the loss to the consumer, as well as any reasonable attorney fees incurred in the process

A

unkowingly

67
Q

An individual who ______ violates this Act enough to constitute a general pattern or business practice will be subject to a penalty of up to $2500

A

willfully

68
Q

A prospective insured may be rates as one of the 3 classifications:

A

1) standard
2) substandard
3) preferred

69
Q

______ are those individuals who meet certain requirements and qualify for lower premiums than the standard risk. These applicants have superior physical condition, lifestyle and habits

A

Preferred risks

70
Q

__________ are persons who, according to a company’s underwriting standards are entitled to insurance protection without extra rating or special restrictions.

A

Standard risk

71
Q

________ applicants are not acceptable at standard rates because of physical condition, personal or family history of disease, occupation, or dangerous habits

A

Substandard (High Exposure) risk

72
Q

Applicant who are rejected are considered _____. Risks that the underwriters assess as not insurable are declined.

A

Declined risk

73
Q

If the initial premium is not paid with the application, the agent will be required to collect the premium

A

at the time of policy delivery

74
Q

_____ is a practice of terminating an existing policy or letting it lapse and obtaining a new one

A

Replacement

75
Q

To keep in compliance with the Do Not Call rules, organizations must consult the registry every _____

A

31 days

76
Q

Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?

A

3 days

77
Q

The Federal Fair Credit Reporting Act

A

Regulates consumer reports

78
Q

Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report

A

Must be informed of the source of the report

79
Q

Standard risk is _______ of the majority of people

A

representative

80
Q

_______ include written and/or oral information regarding a consumer’s credit, character, reputation,, or habits collected by a reporting agency from employment records, credit reports, and other public sources

A

Consumer reports

81
Q

Investigative Consumer reports cannot be made unless the consumer is advised in writing about the report within ______ of the date the report was requested

A

3 days

82
Q

Premiums are paid in

A

advance

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