Field Underwriting Procedures Flashcards
Agent/Producer
A legal representative of an insurance company; the classification of producer usually includes agents and brokers
Applicant or proposed insured
A person applying for insurance
Insurable Interest
The policyowner facing the possibility of losing something of value in the event of loss.
Insured
Person covered by the insurance Policy may or may not be the policy owner
Elements of a Contract
Agreement, Consideration, Competent Parties, Legal Purpose
Consideration
Something of value that each party gives to the other.
**Insurer’s consideration is the promise to pay for losses
**Insured’sconsideration is the payment of premium and statements on the application
Mentally Competent to enter a contract
Legal age, not under any form of influence by mind altering drugs/alcohol, and mentally competent
Warranty
An absolutely true statement upon which the validity of the insurance policy depends.
Breach of warranties can be considered grounds for voiding the policy or a return of premium
Representations
statements believed to be true to the best of one’s knowledge but they are not guaranteed to be true.
**Representations are statements believed to be true. Insured’s statements on the application are representations.
Material Misrepresentations
Statement that if discovered would alter the underwriting decision of the insurance company. (fraud if intentional)
Conditional Contract
Requires that certain conditions must be met by the policyowner and the company in order for the contract to be executed and before each party fulfills its obligations
Unilateral Contract
Only one of the parties to the contract is legally bound to do anything
“Take it or leave it” terms
Adhesion Contract
prepared by one of the parties (insurer) and accepted or rejected by the other party (insured).
No negotiations
Aleatory Contract
exchange of unequal amounts of values
(ex: John pays $100 per month for a premium for an insurance policy that is $100,00. John has only had the insurance policy for a couple of months when he dies. The insured would get the full $100,000 in that event.)
Notice to the applicant when applying
issued to all applicants for health insurance coverage. This notice informs the applicant that a credit report will be ordered.
Completeness and Accuracy of Application
**It is the agent’s responsibility to make sure that an application for insurance is complete and accurate to the best knowledge of the applicant (representations)
Signatures
Every health insurance application requires the signature of the proposed insured, the policyowner (if diff than insured), and the agent who solicits the insurance
Changes in the Application
Any changes on the application need to be initialed by the applicant.
Premiums with the Application
Usually a premium is sent over with the application, however the agents cannot bind coverage. (insurance is not covered until it is approved by the insurer)
With no premium with application the agent must collect he premium and obtain a statement of continued good health from the applicant before releasing the policy
Underwriting
The process of reviewing applications for insurance and the information on the application.
Fair Credit Reporting Act
Established procedures that consumer reporting agencies must follow in order to ensure that records are confidential, accurate, relevant and properly used
Used to check if they can pay their bills on time ect…
Medical Information Bureau (MIB)
Membership corporation owned by member insurance companies. It collects, maintains, and makes available to insurance companies important underwriting information on applicants for life and health insurance
**Insurers cannot refuse coverage solely on the basis of adverse information on an MIB report
Attending Physician Report (APS)
Used for higher amounts of coverage or if the application raised additional questions concerning the prospective insured’s health.
A statement from a medical practitioner who treated the applicant for prior medical problems.
Paramedical report
Used for higher amounts of coverage or if the application raised additional questions concerning the prospective insured’s health.
Statement from a paramedical or registered nurse
HIV test rules
-Underwriting for HIV is permitted as long as it is not unfairly discriminatory.
-Insurer obtains written consent from applicant.
-Insurance companies must maintain strict confidentiality
Consumer Reports
Include written and or oral information regarding a consumer’s credit, character, reputation or habits collected by a reporting agency from employment records, credit reports, and other public sources
Investigative Consumer Reports
Similar to consumer reports but also provide information on the consumer’s character, reputation and habits by talking with close friends, family, and neighbors.
Insurance applicants must be notified in writing whenever insurers request investigative consumer reports
3 days advised in writing of the date the report was requested
5 days for insurer to provider consumer with additional information if applicant asks.
Policy Delivery
Policy does not have to be handed to the insured in person
Once the delivery of the policy is made the FREE LOOK PERIOD BEGINS
Explaining policy and its provisions, riders, exclusions, and ratings
Agent is required to explain these all, especially if there are changes in the policy.
Replacement of a Policy
There cannot be any coverage gap between the existing coverage and replacement coverage
Pre existing Conditions
Health conditions covered under the current policy may not be covered under the new policy because of pre existing condition limitations or new waiting periods may be required in a new policy
