Underwriting and Pilicy Issue Flashcards
The Application
is 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.
General (Part 1)
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 Part I 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.
Medical (Part II
f 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 medical 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.
Agent’s Report (Part III)
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 Part III, 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.
An attending physician statement (APS
s 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. An APS is 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.
Binding Receipts
are given by a company upon an applicant’s first premium payment. The policy, if approved, becomes effective from the date of the receipt.
A Buyer’s Guide
is 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 Conditional Receipt
is given to the policy owners when they pay a premium at time of application. Such receipts bind the insurance company if the risk is approved as applied for, subject to any other conditions stated on the receipt.
Credit Report
is a summary of an insurance applicant’s credit history, made by an independent organization that has investigated the applicant’s credit standing.
Constructive delivery
is accomplished technically if the insurance company intentionally relinquishes all control over the policy and turns it over to someone acting for the policyowner, including the company’s own agent. Mailing the policy to the agent for unconditional delivery to the policyowner also constitutes constructive delivery, even if the agent never personally deliver.
he Fair Credit Reporting Act
is 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.
Inspection Reports
are reports of an investigator providing facts required for a proper underwriting decision on applications for new insurance and reinstatements.
he Medical Information Bureau
is a service organization that collects medical data on lifeand health insurance applicants for member insurance companies.
A Policy Summary
is a summary of the terms of an insurance policy, including the conditions, coverage limitations, and premiums. Policy summaries are often used with life insurance, long-term care insurance, and annuities. Preferred is a risk whose physical condition, occupation, mode of living, and other characteristics indicate a prospect for longevity for unimpaired lives of the same age.
Representations
are statements an applicant makes as being substantially true to the best of the applicant’s knowledge and belief, but which are not warranted to be exact in every detail. Representations must be true only to the extent that they are material to the risk.
