Underwriting – Lesson 6 Flashcards
When using a nonmedical application for life insurance, what is a common practice?
If the answers given in the health statement do not meet the insurers underwriting standard, a medical examination can be requested by the underwriter.
The applicant, insured, and policy owner could be how many persons?
As many as three
What act was passed in 1970 to safeguard consumers and gave consumers the right to dispute incorrect information?
The Fair Credit Act
Which is NOT a way for insurance companies to charge more for a substandard risk?
Reduced paid up
An applicant for insurance may pay initial premium and receive a document from the agent indicating the policy is issued as requested, coverage begins on the date of the document. What is this document called?
Binding receipt
What is used to establish life insurance rate?
- Mortality
- Interest
- Expenses
A person could be rated as a substandard risk based on what?
- Physical condition
- Hazardous avocation
- Hazardous occupation
What act was passed in 1970 in order to protect consumers?
Fair credit act
The applicant and a policyowner are required to be the same person. True or false?
False
An agent is not required to disclose to insurer material information disclosed to him by the applicant that is not specifically asked on the application form. True or false?
False
Regarding the medical information bureau: insurers can deny coverage based solely on information obtained from an MIB report. True or false?
False
Ernie apply for nonmedical life policy. He filled out all paperwork and paid the premium. He received a binding receipt from the agent. Ernie then suffers a fatal accident. Underwriting determines Ernie to be an uninsurable risk. What will happen?
The company will pay the death benefit.
What is the purpose of a cost comparison index?
To try to determine which of two similar policies is less costly.
Why should an Agent convince an applicant to pay the premium at the time of application?
If the applicant is found to be an insurable risk, the policy will go into force sooner.
What is considered to be actually delivery of the policy?
Delivery of the policy to the insured by the agent.
A premium that takes into consideration the insurance company’s cost is:
A gross premium
Paying annually for a policy requires a smaller dollar outlay than a quarterly premium payment mode. True or false?
True
Many companies will not require a medical examination if the policy has a small face amount; what is that face amount?
$50,000 or $100,000
Are applicants required to be informed in writing that the insurer may report health information to the MIB?
Yes
What are the three acceptable risks?
- Preferred risks
- Standard risks
- Substandard risks
Does the flat extra premium has any effect on the growth of cash values in the policy?
It does not
What are the two major types of receipts given to the insureds?
Conditional and binding
What is the maximum amount of insurance coverage offered under the binding receipt?
$100,000
Mailing the policy to the policy owner is considered what type of delivery?
Constructive delivery.
Starting in 2014, insurers can charge older people how many times more than the amount charged for younger adults?
No more than three times.
