Field and Home Office Underwriting and Policy Delivery Flashcards
What is the principal tool used in determining an individual’s eligibility for insurance coverage?
The application
True or False: The producer issues the insurance policy.
False.
Producers solicit appointments, complete applications, collect premiums, and submit applications for approval.
What are Representations?
Statements made by an applicant when answering questions on the application
An approval type conditional receipt, dated 6/15, is approved on 9/1 as applied for. When did coverage become effective?
On 9/1, the date the policy is approved
What is the rating method that increases premiums by increasing the age classification of the insured?
The step-up-in-age rating method
When should an agent review the possibility of various background checks such as credit, MIB, or HIV?
At time of original application
When must the applicant be notified that consumer/credit background checks will be performed?
Within three days following a request for information
Who is a substandard risk?
An individual with higher than average risk
What type of receipt provides coverage only on the date the application is approved?
An approval type conditional receipt
If proven untrue, may information obtained through a credit check be used to deny an application?
Untrue information obtained through a credit check may not be used to deny an application.
True or False: An agent may not make changes to a life insurance application.
True.
Technically, only the applicant may make changes, and only prior to the application being submitted.
What information may be found in Section 1 of a life insurance policy?
Name, address, date of birth, salary, and occupation of the applicant
Where would an agent record personal observations regarding the applicant?
In the agent report
What is the primary source of underwriting information?
The original application
Is signed authorization required from the applicant in order to test for the HIV virus?
Yes
Is coverage provided during the grace period?
Yes
Which would have a lower premium, a standard or substandard risk?
A standard risk would have a lower premium
What individual has better than average risk?
A preferred risk
An insurability type conditional receipt, dated 6/15, is approved as applied for on 9/1. When did coverage begin?
6/15. With conditional type receipt, coverage is effective on date of application if policy is issued as applied for.
A ____________ application requires no information other than what is provided by the applicant.
Nonmedical
Whenever a premium is paid by an applicant, the agent should provide a _________.
Receipt
What does the delivery of a policy to an insured constitute?
Policy issue and acceptance
What is the purpose of the MIB?
To compare collected health information in order to avoid adverse selection
An applicant’s health history is usually found in ____________ of a life insurance policy.
Section II
At policy delivery, what should the agent review with the insured?
Coverage, coverage effective date, provisions, beneficiaries, premium, exclusions, riders, and ownership rights
When should the agent review and collect signatures on a Notice Regarding Replacement form?
No later than time of application
Who is the field underwriting agent?
The agent who determines which risks are desirable and submits them to the underwriting department for approval
What methods are used to insure a substandard risk?
Higher premium, exclusion rider, lower benefit, and lower benefit time frame
When does the “Notice to the Applicant” regarding the Fair Credit Reporting Act need to be given?
At the time of application
The date listed on a receipt will always be a date that is _______ than the policy issue date.
Earlier
A _______ party contract requires three signatures.
Third
When may changes to an application be made?
Changes may only be made prior to application submission.
What tables predict the probability of death?
Mortality tables
Define the term warranty.
A statement made by an applicant that is guaranteed to be absolutely true
Identify the acronym: APS
Attending Physician’s Statement
If a conditional receipt requires the applicant to take a medical exam, when is the earliest date coverage may begin?
The date of the exam itself
What is the most common method used to ensure a substandard risk?
Charging higher premiums
When is a Trial Application used?
When an application is submitted to the insurer without an initial premium
In order to represent an insurer, an agent must be ___________ by that company.
Appointed
What provision begins on the date a policy is delivered to an insured?
The free-look provision
True or False: Women statistically live longer than men; therefore, they have lower life insurance premiums.
True
What is a binding receipt?
One that provides immediate or unconditional coverage on the date the premium is received
When does coverage begin if a policy has a conditional receipt based upon insurability?
Coverage begins on the receipt date provided the application is approved as applied for.
True or False: Anyone may gain access to MIB information.
False.
Access is only available to approved company representatives/underwriters.
Who pays for the cost of an applicant’s medical exams and lab fees?
The insurer underwriting the application
For applications submitted without premium, applicants must pay premium and complete a __________________________.
Statement Regarding Good Health.
If requested by an applicant, what credit information must be provided to the applicant?
The information report, the source of information, and how to challenge the information
List some approved policy delivery methods.
Certified registered mail, first class mail with signed receipt, and personal delivery
Name the receipt that provides coverage “as long as a specific condition has been met or performed.”
A conditional receipt
What is another name for an average or ordinary risk?
Standard risk
What is a declined risk?
An application for insurance that has been turned down
Name some items that affect policy premium.
Age, gender, health, occupation, hobbies, habits, family health, and travel outside of the country
When does coverage begin on a conditional receipt policy?
If the application is approved as applied for, coverage is immediately provided.
What are some of the negative results of submitting an incomplete application?
It’s unprofessional, creates issuance delays, and may result in business lost to competitors or lost commissions.
What are the primary duties of an underwriter?
Assess risks, approve or deny applications, determine premiums, and protect the insurer against adverse selection
What does the Fair Credit Reporting Act allow?
It gives a consumer or applicant the right to dispute credit reporting information
What is a morbidity table?
A table used to predict the probability of illness or disability
The MIB is an intercompany ______ bank that stores information collected from previous ______________.
The MIB is an intercompany DATA bank that stores the information collected from previous APPLICATIONS.
How does the Percentage of Normal Rate method work?
By simply increasing the premium by a percentage of the standard rate
