Underwriting – Lesson 6

Question 0

When using a nonmedical application for life insurance, what is a common practice?

Answer 0

If the answers given in the health statement do not meet the insurers underwriting standard, a medical examination can be requested by the underwriter.

Question 1

The applicant, insured, and policy owner could be how many persons?

Answer 1

As many as three

Question 2

What act was passed in 1970 to safeguard consumers and gave consumers the right to dispute incorrect information?

Answer 2

The Fair Credit Act

Question 3

Which is NOT a way for insurance companies to charge more for a substandard risk?

Answer 3

Reduced paid up

Question 4

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?

Answer 4

Binding receipt

Question 5

What is used to establish life insurance rate?

Answer 5

1. Mortality
2. Interest
3. Expenses

Question 6

A person could be rated as a substandard risk based on what?

Answer 6

1. Physical condition
2. Hazardous avocation
3. Hazardous occupation

Question 7

What act was passed in 1970 in order to protect consumers?

Answer 7

Fair credit act

Question 8

The applicant and a policyowner are required to be the same person. True or false?

Answer 8

False

Question 9

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?

Answer 9

False

Question 10

Regarding the medical information bureau: insurers can deny coverage based solely on information obtained from an MIB report. True or false?

Answer 10

False

Question 11

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?

Answer 11

The company will pay the death benefit.

Question 12

What is the purpose of a cost comparison index?

Answer 12

To try to determine which of two similar policies is less costly.

Question 13

Why should an Agent convince an applicant to pay the premium at the time of application?

Answer 13

If the applicant is found to be an insurable risk, the policy will go into force sooner.

Question 14

What is considered to be actually delivery of the policy?

Answer 14

Delivery of the policy to the insured by the agent.

Question 15

A premium that takes into consideration the insurance company’s cost is:

Answer 15

A gross premium

Question 16

Paying annually for a policy requires a smaller dollar outlay than a quarterly premium payment mode. True or false?

Answer 16

True

Question 17

Many companies will not require a medical examination if the policy has a small face amount; what is that face amount?

Answer 17

$50,000 or $100,000

Question 18

Are applicants required to be informed in writing that the insurer may report health information to the MIB?

Answer 18

Yes

Question 19

What are the three acceptable risks?

Answer 19

1. Preferred risks
2. Standard risks
3. Substandard risks

Question 20

Does the flat extra premium has any effect on the growth of cash values in the policy?

Answer 20

It does not

Question 21

What are the two major types of receipts given to the insureds?

Answer 21

Conditional and binding

Question 22

What is the maximum amount of insurance coverage offered under the binding receipt?

Answer 22

$100,000

Question 23

Mailing the policy to the policy owner is considered what type of delivery?

Answer 23

Constructive delivery.

Question 24

Starting in 2014, insurers can charge older people how many times more than the amount charged for younger adults?

Answer 24

No more than three times.