FIELD AND HOME OFFICE UNDERWRITING AND POLICY ISSUANCE

Question 1

In order to represent an insurer, an agent must be _____ by that company.

Answer 1

appointed

Question 2

What does the fair credit reporting act allow?

Answer 2

It gives a consumer or applicant the right to dispute credit reporting information

Question 3

What methods are used to insure a substandard risk?

Answer 3

Higher premium, exclusion rider, lower benefit, and lower benefit time frame.

Question 4

Who pays for the cost of an applicant’s medical exams and lab fees?

Answer 4

the insurer underwriting the application

Question 5

What is the rating method that increases premiums by increasing the age classification of the insured?

Answer 5

the step up in age rating method

Question 6

The MIB is an intercompany ___ bank that stores information collected from previous ___

Answer 6

data bank, applications

Question 7

Whenever a premium is paid by an applicant, the agent should provide a _____.

Answer 7

receipt

Question 8

When must the applicant be notified that consumer/credit background checks will be performed?

Answer 8

within 3 days following a request for information

Question 9

T or F: women statistically live longer than men; therefore, they have lower life insurance premiums.

Answer 9

true

Question 10

Is coverage provided during the grace period?

Answer 10

yes

Question 11

What individual has better than average risk?

Answer 11

A preferred risk

Question 12

What are some of the negative results of submitting an incomplete application?

Answer 12

It’s unprofessional, creates issuance delays, and may result in business lost to competitors or in lost commissions.

Question 13

When is a trial application used?

Answer 13

When an application is submitted to the insurer without an initial premium

Question 14

If requested by an applicant, what credit information must be provided to the applicant?

Answer 14

The information report, the source of information, and how to challenge the information.

Question 15

When does coverage begin if a policy has conditional receipt based upon insurability?

Answer 15

Coverage begins on the receipt date provided the application is approved as applied for.

Question 16

What tables predict the probability of death?

Answer 16

mortality tables

Question 17

If a conditional receipt requires the applicant to take a medical exam, when is the earliest date coverage may begin?

Answer 17

The date of the exam itself.

Question 18

When does the “notice to the applicant” regarding the fair credit reporting act need to be given?

Answer 18

at the time of application

Question 19

what methods are used to insure a substandard risk?

Answer 19

higher premium, exclusion rider, lower benefit, and lower benefit time frame.

Question 20

What provision begins on the date a policy is delivered to an insured?

Answer 20

The free-look provision

Question 21

When may changes to an application be made?

Answer 21

changes may only be made prior to application submission

Question 22

what information may be found in section 1 of a life insurance policy?

Answer 22

name, address, date of birth, salary, and occupation of the applicant (basic information)

Question 23

A ____ party contract requires three signatures.

Answer 23

third

Question 24

when should an agent review the possibility of various background checks such as credit, MIB, or HIV?

Answer 24

at time of original application

Question 25

In order to represent an insurer, an agent must be ___ by that company

Answer 25

appointed

Question 26

what is the most common method used to insure a substandard risk?

Answer 26

charging higher premiums

Question 27

list some approved policy delivery methods.

Answer 27

certified registered mail, first class mail with signed receipt, personal delivery.

Question 28

name the receipt that provides coverage “as long as a specific condition has been met or performed.”

Answer 28

a conditional receipt

Question 29

for applications submitted without premium, applicants must pay premium and complete a ____.

Answer 29

statement regarding good health

Question 30

if proven untrue, may information obtained through a credit check be used to deny an application?

Answer 30

no

Question 31

an insurability type of conditional receipt, dated 6/15 is approved as applied for on 9/1. when did coverage begin?

Answer 31

6/15 - with conditional type receipt, coverage is effective on date of application if policy is issued as applied for.

Question 32

what is a binding receipt?

Answer 32

one that provides on the date the premium is received.

Question 33

what is a declined risk?

Answer 33

an application for insurance that has been turned down

Question 34

what is a morbidity table?

Answer 34

a table used to predict the probability of illness for disability

Question 35

APS stands for:

Answer 35

Attending physician’s statement

Question 36

an approval type conditional receipt dated 6/15 is approved on 9/1 as applied for. when did the coverage become effective?

Answer 36

9/1 - the date the policy is approved

Question 37

who is the field underwriting agent?

Answer 37

the agent who determines which risks are desirable and submits them to the underwriting department for approval

Question 38

which would have a lower premium, a standard or substandard risk?

Answer 38

a standard risk would have a lower premium

Question 39

T or F: anyone may gain access to MIB information

Answer 39

False, access is only available to approved company representatives/underwriters.

Question 40

an applicant’s health history is usually found in ____ of a life insurance policy.

Answer 40

section ll

Question 41

What are the primary duties of an underwriter?

Answer 41

assess risks, approve or deny applications, determine premiums, and protect the insurer against adverse selection

Question 42

What is the principal tool used in determining an individual’s eligibility for insurance coverage?

Answer 42

the application

Question 43

when does coverage begin on a conditional receipt policy?

Answer 43

if the application is approved as applied for, coverage is immediately provided.

Question 44

name some items that effect policy premium.

Answer 44

age, gender, health, occupation, hobbies, habits, family health, travel outside of country

Question 45

at policy delivery, what should the agent review with the insured?

Answer 45

coverage, coverage effective date, provisions, beneficiaries, premium, exclusions, riders, and ownership rights

Question 46

what are representations?

Answer 46

statements made by an applicant when answering questions on the application

Question 47

A _____ application requires no information other than what is provided by the applicant

Answer 47

nonmedical

Question 48

define the term warranty

Answer 48

a statement made by an applicant that is guaranteed to be absolutely true

Question 49

T or F: the producer issues the insurance policy

Answer 49

False. Producers solicit appointments, complete applications, collect premiums, and submit applications for approval.

Question 50

What is the primary source of underwriting information?

Answer 50

the original application

Question 51

the date listed on a receipt will always be a date that is ___ than the policy issue date.

Answer 51

earlier

Question 52

What is another name for an average or ordinary risk?

Answer 52

standark risk

Question 53

what type of receipt provides coverage only on the date the application is approved?

Answer 53

an approval type conditional receipt

Question 54

how does the percentage of normal rate method work?

Answer 54

by simply increasing the premium by a percentage of the standard rate

Question 55

what does the delivery of a policy to an insured constitute?

Answer 55

policy issue and acceptance

Question 56

is signed authorization required from the application in order to test for the HIV virus?

Answer 56

yes

Question 57

when should the agent review and collect signatures on a notice regarding replacement form?

Answer 57

no later than time of application

Question 58

who is a substandard risk?

Answer 58

an individual with higher than average risk

Question 59

T or F: An agent may not make changes to a life insurance application

Answer 59

True - technically, only the applicant may make changes, and only prior to the application being submitted.

Question 60

What is the purpose of the MIB?

Answer 60

To compare collected health information in order to avoid adverse selection

Question 61

what does the fair credit reporting act allow?

Answer 61

It gives a consumer or applicatnt the right to dispute credit reporting information

Question 62

where would an agent record personal observations regarding the applicant

Answer 62

in the agent report