Life Insurance Underwriting and Policy Issue Vocab & Notes Chap 5 Flashcards
_________________ requires that an individual have a valid concern for the continuation of the life or well-being of the person insured. Without __________________, an insurance contract is not legally enforceable and would be considered a wagering contract. ___________________ only needs to exist at the time of the application (the inception of the contract). A person is considered to have unlimited _____________________ in themselves.
Insurable Interest
A form supplied by the insurance company, usually filled in by the agent and medical examiner (if applicable) on the basis of information received from the applicant. It is signed by the applicant and is part of the insurance policy if it is issued. It gives information to the home office underwriting department, so it may consider whether an insurance policy will be issued and, if so, in what classification and at what premium rate.
Application
This part of the application asks general questions about the proposed insured, including name, age, address, birth date, sex, income, marital status, and occupation. Details about the requested insurance coverage are also included in this Part such as:
-Type of policy
-Amount of insurance
-Name and relationship of the beneficiary
-Other insurance the proposed insured owns
-Additional insurance applications the insured has pending
-Other information sought may indicate possible exposure to a hazardous hobby, foreign travel, aviation activity, or military service.
-Tobacco use.
General (Part1)
This part of the application focuses on the proposed insured’s health and asks a number of questions about the health history, not only of the proposed insured, but of the proposed insured’s family, too. This section must be completed in its entirety for every application. Depending on the proposed policy face amount, this section may or may not be all that is required in the way of medical information. The individual to be insured may be required to take a medical exam and/or provide a blood test or urine specimen. Physical exams, if requested by the insurer, are performed at the expense of the insurer.
Medical (Part II)
This part of the application is where the agent reports personal observations about the proposed insured. Because the agent represents the interests of the insurance company, the agent is expected to complete this part of the application fully and truthfully. In this part the agent provides additional information about the applicant’s financial condition and character, the background and purpose of the sale, and how long the agent has known the applicant. The agent’s report also usually asks if the proposed insurance will replace an existing policy. If the answer is yes most states demand that certain procedures be followed to protect the rights of consumers when policy replacement is involved.
Agent’s Report (Part III)
A service organization that collects medical data on life and health insurance applicants for member insurance companies.
The Medical Information Bureau
A report ordered by the insurance company and completed by a physician, hospital or medical facility who has treated, or who is currently treating, a person seeking insurance.
It’s one of the most frequently ordered additional sources of medical background information and can be for a specific ailment (diabetes, broken leg, etc.) or for a general family doctor.
Attending physician statement (APS)
Reports of an investigator providing facts required for a proper underwriting decision on applications for new insurance and reinstatements.
Inspection Reports
A summary of an insurance applicant’s credit history, made by an independent organization that has investigated the applicant’s credit standing.
Credit Report
A federal law requiring an individual to be informed if she is being investigated by an inspection company. The law also outlines the sharing and impact of such information and requires individuals to be notified prior to being investigated.
The Fair Credit Reporting Act
The grouping of different risks according to their estimated cost or likely impact, likelihood of occurrence, countermeasures required, etc.
Risk Classification
A risk whose physical condition, occupation, mode of living, and other characteristics indicate a prospect for longevity for unimpaired lives of the same age.
Preferred
A person who, according to a company’s underwriting standards, is entitled to insurance protection without extra rating or special restrictions.
Standard
A person who is considered an under average or impaired insurance risk because of physical condition, family or personal history of disease, occupation, residence in unhealthy climate, or dangerous habits.
Substandard
An informational consumer guide books that explain insurance policies and insurance concepts; in many states, they are required to be given to applicants when certain types of coverages are being considered. Buyer’s Guides are often used with life insurance, long-term care insurance, and annuities.
A Buyer’s Guide
