Life Insurance Underwriting Flashcards
Tendency of a disproportionate number of people of poor risk to seek or buy insurance or maintain existing insurance in force
Adverse Selection
Date halfway between birthdays when the applicants age changes to the next higher age.
Age Change
Person completing the application to the insurance company for the insurance policy
Applicant
Statement of Information given when a person applies for life, health, or disability insurance. Underwriters use the information as a basis in deterring whether the application qualifies for acceptance under the company’s guidelines
Application
Used when the application or medical examiners report reveals conditions or situations, past or present, about which more information is desired.
Attending Physician Statement (APS)
Practice of making the effective date of a policy earlier than the application date. Used to make the insurers age lower than the applicants real age in order to get a lower premium. Limit to 6 months
Backdating
Type of receipt given by an insurance company upon the completion of an insurance application if the initial premium is collected with the application. Insurance becomes effective on the receipt date and continues for a specified period of time or until the insurer declines the application.
Binding Receipt (Unconditional Receipt)
Pamphlet that describes and compares various forms of life or health insurance. Give the consumer information to help them make an informed decision when purchasing insurance coverage.
Buyers Guide
Form customarily required to be signed by the agent and given to the prospective owner at the time a new application is completed. Without a valid conditional receipt of, no coverage is in force until the policy is issued, delivered, and accepted with the initial premium paid
Conditional Reciept
Detailed background investigation that may include an interview with coworkers, friends, and neighbors about an applicants character, reputation, lifestyle, etc.
Consumer Report (Investigative Consumer Report)
Summary of an insurance applicants credit history made by an independent organization that has investigated the applicants credit standing
Credit Report
Individual whose application for coverage was rejected by an insurance company
Declined Risk
Comparison form required by various state regulatory agencies to be given to every policy owner when replacing an existing policy with another
Disclosure Form
Statement or proof of a person’s health history and current health status that qualifies that person for coverage
Evidence of Insurability
Federal law passed in 1970 that provides an insurer with the right to receive additional information with regards to applicants for insurance coverage. Law allows the insurer to conduct a consumer report on applicants and proposed insureds.
Fair Credit Reporting Act of 1970