FIELD AND HOME OFFICE UNDERWRITING AND POLICY ISSUANCE Flashcards
In order to represent an insurer, an agent must be _____ by that company.
appointed
What does the fair credit reporting act allow?
It gives a consumer or applicant the right to dispute credit reporting information
What methods are used to insure a substandard risk?
Higher premium, exclusion rider, lower benefit, and lower benefit time frame.
Who pays for the cost of an applicant’s medical exams and lab fees?
the insurer underwriting the application
What is the rating method that increases premiums by increasing the age classification of the insured?
the step up in age rating method
The MIB is an intercompany ___ bank that stores information collected from previous ___
data bank, applications
Whenever a premium is paid by an applicant, the agent should provide a _____.
receipt
When must the applicant be notified that consumer/credit background checks will be performed?
within 3 days following a request for information
T or F: women statistically live longer than men; therefore, they have lower life insurance premiums.
true
Is coverage provided during the grace period?
yes
What individual has better than average risk?
A preferred risk
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 in lost commissions.
When is a trial application used?
When an application is submitted to the insurer without an initial premium
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.
When does coverage begin if a policy has conditional receipt based upon insurability?
Coverage begins on the receipt date provided the application is approved as applied for.
What tables predict the probability of death?
mortality tables
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.
When does the “notice to the applicant” regarding the fair credit reporting act need to be given?
at the time of application
what methods are used to insure a substandard risk?
higher premium, exclusion rider, lower benefit, and lower benefit time frame.
What provision begins on the date a policy is delivered to an insured?
The free-look provision
When may changes to an application be made?
changes may only be made prior to application submission
what information may be found in section 1 of a life insurance policy?
name, address, date of birth, salary, and occupation of the applicant (basic information)
A ____ party contract requires three signatures.
third
when should an agent review the possibility of various background checks such as credit, MIB, or HIV?
at time of original application
In order to represent an insurer, an agent must be ___ by that company
appointed
what is the most common method used to insure a substandard risk?
charging higher premiums
list some approved policy delivery methods.
certified registered mail, first class mail with signed receipt, personal delivery.
name the receipt that provides coverage “as long as a specific condition has been met or performed.”
a conditional receipt
for applications submitted without premium, applicants must pay premium and complete a ____.
statement regarding good health
if proven untrue, may information obtained through a credit check be used to deny an application?
no
an insurability type of 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.
what is a binding receipt?
one that provides on the date the premium is received.
what is a declined risk?
an application for insurance that has been turned down
what is a morbidity table?
a table used to predict the probability of illness for disability
APS stands for:
Attending physician’s statement
an approval type conditional receipt dated 6/15 is approved on 9/1 as applied for. when did the coverage become effective?
9/1 - the date the policy is approved
who is the field underwriting agent?
the agent who determines which risks are desirable and submits them to the underwriting department for approval
which would have a lower premium, a standard or substandard risk?
a standard risk would have a lower premium
T or F: anyone may gain access to MIB information
False, access is only available to approved company representatives/underwriters.
an applicant’s health history is usually found in ____ of a life insurance policy.
section ll
What are the primary duties of an underwriter?
assess risks, approve or deny applications, determine premiums, and protect the insurer against adverse selection
What is the principal tool used in determining an individual’s eligibility for insurance coverage?
the application
when does coverage begin on a conditional receipt policy?
if the application is approved as applied for, coverage is immediately provided.
name some items that effect policy premium.
age, gender, health, occupation, hobbies, habits, family health, travel outside of country
at policy delivery, what should the agent review with the insured?
coverage, coverage effective date, provisions, beneficiaries, premium, exclusions, riders, and ownership rights
what are representations?
statements made by an applicant when answering questions on the application
A _____ application requires no information other than what is provided by the applicant
nonmedical
define the term warranty
a statement made by an applicant that is guaranteed to be absolutely true
T or F: the producer issues the insurance policy
False. Producers solicit appointments, complete applications, collect premiums, and submit applications for approval.
What is the primary source of underwriting information?
the original application
the date listed on a receipt will always be a date that is ___ than the policy issue date.
earlier
What is another name for an average or ordinary risk?
standark risk
what type of receipt provides coverage only on the date the application is approved?
an approval type conditional receipt
how does the percentage of normal rate method work?
by simply increasing the premium by a percentage of the standard rate
what does the delivery of a policy to an insured constitute?
policy issue and acceptance
is signed authorization required from the application in order to test for the HIV virus?
yes
when should the agent review and collect signatures on a notice regarding replacement form?
no later than time of application
who is a substandard risk?
an individual with higher than average risk
T or F: 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 is the purpose of the MIB?
To compare collected health information in order to avoid adverse selection
what does the fair credit reporting act allow?
It gives a consumer or applicatnt the right to dispute credit reporting information
where would an agent record personal observations regarding the applicant
in the agent report
