Insurance1

Question 1

Changes in the application

Answer 1

Must be initialed by the applicant

Question 2

Backdating

Answer 2

Usually no more then 6 months

Question 3

Required signatures

Answer 3

Insured, Producer/Agent and Applicant (If not the insured)

Question 4

Producers Report

Answer 4

Completed by the producer/agent
Not attached to policy if issued

Question 5

Conditional Report

Answer 5

Premium paid with application
Insurance effective
Date application completed and signed
Medical exam if required
Must be a standard or preferred risk
Can be determined after death

Question 6

Binding receipt

Answer 6

Temporary, not common in life insurance

Question 7

Underwriting Sources of information

Answer 7

Application –primary source
Medical exam & testing
Attending Physician Statement (APS)
AIDS testing
Applications may not ask about sexual orientation
– Testing not based on geographical location
– Requires insureds written consent
– Cannot be reported to the MIB

■ Medical Information Bureau
– Application cannot be denied solely on MIB information
– Insured must be informed of MIB
– MIB gets its information from insurance companies

■ Consumer reports
– Insured must be informed
■ Investigative reports
– Insured must give consent

Question 8

Classification of Risks

Answer 8

■ Standard
■ Preferred
■ Substandard
■ Declined

Question 9

Agent delivery

Answer 9

Usually must get signed delivery report

Question 10

Statement of good health

Answer 10

Required if no premium with application
if health changed –agent can’t deliver policy

Question 11

Effective date of coverage

Answer 11

■ Terms of conditional receipt is issued
■ Substandard and pays additional premium—date of policy issue
■ No receipt—policy issue date if premium paid at delivery

Question 12

Fair Credit Reporting Act

Answer 12

■ Third party information
■ Notice to applicant REQUIRED
■ Consumers have rights and can dispute information in files
■ Penalty: fines (max of $5,000) and/or imprisonment (one year)

Question 13

STOLI/IOLI

Answer 13

■ Banned in most states.
■ Investors named as beneficiaries.

Question 14

U.S. Patriot Act

Answer 14

■ Designed to prevent and detect money laundering and financing of terrorism
■ Report suspicious activity

Question 15

ERISA

Answer 15

■ Protects participants in employee benefit plans
■ Qualified pension plans & group insurance
■ Reporting and disclosure information for plan participants