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Life Insurance > Completing The Application, Underwriting And Delievering The Policy > Flashcards

Completing The Application, Underwriting And Delievering The Policy Flashcards

1
Q

What risk classification would typically qualify for lower premiums?

A

Preferred risks

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2
Q

In forming an insurance contract, when does an acceptance usually occur?

A

When the insurer approves a prepaid application

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3
Q

At what point does coverage begin when an agent issues a conditional receipt for a life insurance policy?

A

Either on the date of the application or the date of the medical exam (whichever occurs last)

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4
Q

What document describes the specific information about a policy?

A

Policy summary

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5
Q

When must the policy summary for a life insurance policy be delivered to the policy owner?

A

At the time of policy delivery

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6
Q

What is insurance underwriting?

A

The process of risk selection and classification

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7
Q

When a change needs to be made on the application for insurance, which is the best method for correcting the information?

A

Complete a new application or ask the applicant to initial the correction on the original application

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8
Q

When would misrepresentation on an insurance application be considered fraud

A

When it’s intentional and material

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9
Q

When must insurance interest exist in a life insurance policy?

A

At the time of application

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10
Q

If an agent fails to obtain the applicant’s signature on the insurance application, what must the insurer do?

A

Send the application back to the applicant for signature

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11
Q

How is the information obtained for an investigative consumer report?

A

Through interviews with the applicants associates, friends and neighbors

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12
Q

What term describes the fee of a person pays an insurance company to receive coverage?

A

Premium

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13
Q

What type of report provides information about the applicants hobbies, habits and financial status?

A

Investigative consumer report

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14
Q

If an insurer needs to obtain information about the applicant from investigators, what is the insurer required to do?

A

Provide the applicant a disclosure authorization notice

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15
Q

When would a misreporting be considered material?

A

When it may alter the underwriting decision

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16
Q

If an applicant for a life insurance policy and the potential insured are two different people, what would be the underwriter’s main concern?

A

The existence of insurable interest between the applicant and the insured

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17
Q

What are the four elements of an insurance contract?

A

Agreement (offer and acceptance), consideration, competent parties, and legal purpose

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18
Q

What law protects consumers from the circulation of inaccurate or obsolete information?

A

The Fair Credit Reporting Act

19
Q

Who is a field underwriter?

A

Agent/Producer

20
Q

Insurance is a contract that protects the insured from what?

A

Loss

21
Q

What is a warranty in an insurance contract?

A

An absolutely true statement upon which the validity of the insurance contract is based

22
Q

What do individuals use to transfer their risk of loss to a larger group?

A

Insurance

23
Q

An applicant does not receive a copy of the new insurance policy, who would be held responsible?

A

The agent

24
Q

What is the name of the process that insurance companies use to determine whether or not an applicant is insurable?

A

Underwriting

25
Q

What is adverse selection?

A

People who are more likely to submit insurance claims are seeking insurance more often than preferred risks.

26
Q

Who must have insurable interest in the insured?

A

The policyowner

27
Q

What entities make up the Medical Information Bureau?

A

Insurers

28
Q

Insurance contracts are unilateral. What does that mean?

A

Only one party makes a legally enforceable promise.

29
Q

During which stage in the insurance process do insurers evaluate information that identifies adverse selection risks?

A

Underwriting

30
Q

What are the three main instances when insurable interest exists in life insurance?

A

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

31
Q

What two elements are necessary for a life insurance contract to have a legal purpose?

A

Insurable interest and consent

32
Q

When does an insurance policy go into effect?

A

When the policy is delivered and the premium is paid

33
Q

What is the purpose of the agent’s report during the application process?

A

The agent’s report discusses the agent’s personal observations about the proposed insured that may help in the underwriting process.

34
Q

What is the best way to handle incomplete insurance applications?

A

Return the application to the applicant for completion

35
Q

What are the three types of risk rating classifications in life insurance?

A

Standard, substandard and preferred

36
Q

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?

A

Unilateral

37
Q

In insurance, when is the offer usually made on a contract?

A

When the insurance application is submitted

38
Q

Whose responsibility is it to determine that all the questions on an insurance application are answered?

A

The agent’s

39
Q

What is the main responsibility of a company’s underwriting unit?

A

Risk selection

40
Q

What type of report may be used to assess risks associated with an applicant’s lifestyle and character?

A

Investigative Consumer Report

41
Q

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?

A

Contract of adhesion

42
Q

How may insurance policies be delivered to insureds?

A

They may be either personally delivered by an agent or mailed.

43
Q

What is policy replacement?

A

A new policy is issued while an existing policy is terminated or reissued with a reduction in cash value

Life Insurance (5 decks)

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