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life insurance exam flash cards > completing the application, underwriting and delivering the policy > Flashcards

completing the application, underwriting and delivering the policy Flashcards

1
Q

definition of insurance

A

is the transfer or risk of loss from one individual to an insurer

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2
Q

insurable interest

A

policyowner must face the possibility of loosing money or something in the event of loss

note: must exist between the policyowner & insured at the time of application

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3
Q

what are the elements of a contract?

A
  1. offer and acceptance (agreement)
  2. consideration
  3. competent parties
  4. legal purpose
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4
Q

what is consideration in a insurance contract?

A

the binding force, something of value that each party gives to the other

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5
Q

what is an aleatory contract?

A

the exchange of unequl amounts/values

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5
Q

what is a contract of adhesion?

A

“take it or leave it”, prepared by one party and accepted/rejected by the other

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6
Q

what is conditional, when referring to an insurance policy?

A

certain conditions must be met, insured must pay prem. and provide proof of loss in order for the insurer to cover a claim

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6
Q

what is an unilateral contract?

A

one party is legally bound to do anything

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7
Q

define warranty

A

an absolute true statement

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8
Q

what re representations?

A

statements believed to be true to the best of ones knowledge

note: questions answered on insurance application or representations

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9
Q

what is a buyers guide?

A

provides basic, generic info about life ins policies, explains amount & type of ins. to buy and how to compare the cost of similar policies.

note: must be given to applicant prior to accepting prem

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10
Q

what is a policy summary?

A

a written statement describing the features and elements of the policy being issued, must be given to insured when policy delivered

must contain the following: prem, cash value, dividend, surrender value, death benefit figure and specific policy years, name & address of agent, full name & office of insurer, generic name of basic policy, and each rider

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11
Q

fair credit reporting act

A

federal law that established procedures that consumer reporting agencies must follow to ensure records are confidential, relevant, & properly used. protects consumers from inaccurate circulation of info.

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12
Q

consumer report

A

fall under fair credit reporting act, contains info on consumers credit, character, reputation, or habits, collected by a reporting agency from employment records, credit reports, & other public sources

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13
Q

investigative consumer reports

A

falls under fair credit reporting act, similar to consumer reports, but info obtained through investigation and interviews with associates, friends, and neighbors.
note: consumer advised within 3 days report is requested, insurer/reporting agency has 5 days to provide additional info to consumer

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14
Q

if fair credit reporting act is violated unknowingly…

A

they are liable to the amount lost to the consumer as well as attorney fees incurred in the process

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15
Q

willfully violates fair credit reporting act…

A

fined a penalty up to $2,500

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16
Q

HIPAA - what does it stand for?

A

stands for health insurance and portability and accountability act

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17
Q

what is HIPPA?

A

a federal law that protects health information. patients have the right to view their medical info & know who has access to those records over the previous 6 years

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18
Q

what are the risk classifications and meaning of each?

A

preferred - better than average risk, low prem
standard - average risk, majority of insured’s
substandard - poorer than average risk, raised prem
declined - not insurable

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19
Q

what are the primary factors in premium determination?

A

risk, interest, expenses

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20
Q

premium payment modes, what are they?

A

4 modes: annual, semi annual, quarterly, monthly

21
Q

who is the field underwriter?

A

the agent who solicits sale, completes application process, meets with client, delivers policy

22
Q

what is the application and its parts?

A

basic source of info used in risk selection process

part I: general info
part II: medical info
agent’s (producers) report

23
Q

what are the required signatures on the application?

A

agent = field underwriter
proposed insured = applicant
policy owner = if different from proposed insured

24
Q

premiums with application - conditional receipt

A

used when applicant submits prem with application, states that coverage will be effective on the date of application or the date of medical exam, whichever is last

25
Q

underwriting definition:

A

risk selection and classification process

26
Q

what is the main source of info for the company underwriters?

A

application

27
Q

what is an agents report?

A

agent communicates with underwriter and provides info that may assist in the underwriting process

28
Q

medical exam is needed for?

A

policies with higher coverage or additional health concerns

29
Q

paramedical report :

A

medical exam completed by paramedic or rn

30
Q

what is a attending physicians statement?

A

(aps) - completed by applicants physician

31
Q

medical information bureau (MIB)

A

non profit organization that collects medical info from insurers, applicant cannot be refused based on the info from MIB

32
Q

investigative consumer report

A

inspection, general reports on applicants finances, character, work, hobbies, and habits, collected by an investigating firm or credit agency. - this is subject to the rules of the Fair credit reporting act

33
Q

policy delivery what are the steps?

A
  1. explain the policy personally
  2. effective date of coverage
    3.replacement - terminating or allowing an existing policy to lapse and obtaining a new one (has special steps)
34
Q

USA Patriot act

A

aka anti money laundering act, in response to 9/11 attack , patriot act was passed to fight and prevent terrorist activities. anti money laundering standards for banks and financial institutions

35
Q

what is the Gramm Leach Bliley act privacy?

A

aka GLBA, stipulates that an ins company cannot disclose personal info with a 3rd party

if so ,

it requires 2 disclosures
1. when relationship is est
2. before disclosing info

36
Q

who must sign the application?

A

Agent and policy owner

37
Q

statement believed to be true to the best of one’s knowledge?

A

Representations

38
Q

If an agent accepts a completed application without the first premium when does coverage become active?

A

when the last outstanding medical requirement is completed

39
Q

The practice of terminating an existing policy or letting it lapse and getting a new one?

A

Replacement

40
Q

the term that refers to an unequal exchange of values given between 2 parties in a contract?

A

A aleatory

41
Q

which element of contract law requires that contracts must not go against public policy, must have insurable interest, and must have the acceptance of the insured?

A

d. legal purpose

42
Q

The name of the federal law governing the collection, dissemination, and use of consumer info is the?

A

c. Fair credit reporting act

43
Q

The MIB is all of the following except?

A

d, Investigating insurance firm

44
Q

Which of the following options are the least expensive method of maying life insurance premiums?

A

a. annually

45
Q

The process of taking financial proceeds from illegal activities and financial systems to disguise their origins?

A

b. money laundering

46
Q

what is the risk classification for those who are insurable, but have average risk?

A

c. substandard

47
Q

in the formation of a legal contract, each party must give something of value. under contract law this is referred to as as

A

b. consideration

48
Q

a legal contract in which only party makes a legally binding promise is a ….

A

a. unilateral

49
Q

when must insurable interest exist?

A

d. when the agent helps the application complete

50
Q

changes to a written life insurance application must be?

A

c. initialed by applicant

51
Q
A

life insurance exam flash cards (1 decks)

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