Completing The Application, Underwriting And Delievering The Policy Flashcards
What risk classification would typically qualify for lower premiums?
Preferred risks
In forming an insurance contract, when does an acceptance usually occur?
When the insurer approves a prepaid application
At what point does coverage begin when an agent issues a conditional receipt for a life insurance policy?
Either on the date of the application or the date of the medical exam (whichever occurs last)
What document describes the specific information about a policy?
Policy summary
When must the policy summary for a life insurance policy be delivered to the policy owner?
At the time of policy delivery
What is insurance underwriting?
The process of risk selection and classification
When a change needs to be made on the application for insurance, which is the best method for correcting the information?
Complete a new application or ask the applicant to initial the correction on the original application
When would misrepresentation on an insurance application be considered fraud
When it’s intentional and material
When must insurance interest exist in a life insurance policy?
At the time of application
If an agent fails to obtain the applicant’s signature on the insurance application, what must the insurer do?
Send the application back to the applicant for signature
How is the information obtained for an investigative consumer report?
Through interviews with the applicants associates, friends and neighbors
What term describes the fee of a person pays an insurance company to receive coverage?
Premium
What type of report provides information about the applicants hobbies, habits and financial status?
Investigative consumer report
If an insurer needs to obtain information about the applicant from investigators, what is the insurer required to do?
Provide the applicant a disclosure authorization notice
When would a misreporting be considered material?
When it may alter the underwriting decision
If an applicant for a life insurance policy and the potential insured are two different people, what would be the underwriter’s main concern?
The existence of insurable interest between the applicant and the insured
What are the four elements of an insurance contract?
Agreement (offer and acceptance), consideration, competent parties, and legal purpose
What law protects consumers from the circulation of inaccurate or obsolete information?
The Fair Credit Reporting Act
Who is a field underwriter?
Agent/Producer
Insurance is a contract that protects the insured from what?
Loss
What is a warranty in an insurance contract?
An absolutely true statement upon which the validity of the insurance contract is based
What do individuals use to transfer their risk of loss to a larger group?
Insurance
An applicant does not receive a copy of the new insurance policy, who would be held responsible?
The agent
What is the name of the process that insurance companies use to determine whether or not an applicant is insurable?
Underwriting
What is adverse selection?
People who are more likely to submit insurance claims are seeking insurance more often than preferred risks.
Who must have insurable interest in the insured?
The policyowner
What entities make up the Medical Information Bureau?
Insurers
Insurance contracts are unilateral. What does that mean?
Only one party makes a legally enforceable promise.
During which stage in the insurance process do insurers evaluate information that identifies adverse selection risks?
Underwriting
What are the three main instances when insurable interest exists in life insurance?
Insuring your own life, the life of a family member, or the life of a business partners or someone who has a financial obligation to the policyowner
What two elements are necessary for a life insurance contract to have a legal purpose?
Insurable interest and consent
When does an insurance policy go into effect?
When the policy is delivered and the premium is paid
What is the purpose of the agent’s report during the application process?
The agent’s report discusses the agent’s personal observations about the proposed insured that may help in the underwriting process.
What is the best way to handle incomplete insurance applications?
Return the application to the applicant for completion
What are the three types of risk rating classifications in life insurance?
Standard, substandard and preferred
In insurance contracts, the insured is not legally bound to any particular action; however, the insurer is obligated to pay for losses covered by the policy. What contract element does this describe?
Unilateral
In insurance, when is the offer usually made on a contract?
When the insurance application is submitted
Whose responsibility is it to determine that all the questions on an insurance application are answered?
The agent’s
What is the main responsibility of a company’s underwriting unit?
Risk selection
What type of report may be used to assess risks associated with an applicant’s lifestyle and character?
Investigative Consumer Report
Insurance contracts are prepared by insurers and must be accepted by the insured on an as-is basis. This describes what characteristic of an insurance contract?
Contract of adhesion
How may insurance policies be delivered to insureds?
They may be either personally delivered by an agent or mailed.
What is policy replacement?
A new policy is issued while an existing policy is terminated or reissued with a reduction in cash value
