UNIT 2 Flashcards
UNDERWRITING
THE PROCESS OF EVALUATING A RISK TO DETERMINE IF IT IS ACCEPTABLE BASED ON ITS ESTABLISHED INSURANCE COMPANY GUIDLINES.
IF THERE IS A MISTAKE ON AN APPLICATION, HOW MUS THIS BE ADDRESSED ?
THE APPLICANT MUST PLACE THEIR INITIALS NEXT TO THE CORRECTION
MOST STATE LAWS ALLOW LIFE INSURANCE APPLICATIOINS TO BE BACK DATED UP TO HOW MANY MONTHS?
6 MONTHS
WHO IS REQUIRED TO SIGN THE APPLICATION?
INSURED, PRODUCER’/ AGENT AND THE APPLICANT/ OWNER (IF NOT THE INSURED)
WHAT IS ON THE PRODUCERS REPORT?
THE INSUREDS FINANCIAL STATUS, HABITS AND CHARACTER, ANYTHING TO DO WITH THE PRODUCERS RELATIONSHIP TO THE PROPOSED INSURED.
THE INSURED DOES NOT SEE THIS REPORT, IT IS NOT ATTACHED TO THE POLICY.
CONDITIONAL RECEIPT
AS LONG AS THE APPLICANT IS FOUND TO BE INSURABLE UNDER THE COMPANYS STANDARD UNDERWRITING RULES, THE DATE THE APPLICATION IS SIGNED AND COMPLETED IS THE EFFECTIVE DATE OR THE EFFECTIVE DATE OF THE MEDICAL EXAMINATION, WHICHEVER IS LATER OF THESE 2 EVENTS.
BINDING RECEIPTS
EFFECTIVE 30-60 DAYS FROM THE DATE OF THE APPLICATION EVEN IF THE APPLICANT IS FOUND TO BE UNINSURABLE. MOST OFTEN USED WITH AUTO OR HOMEOWNERS AND RARELY WITH LIFE INSURANCE.
GENERAL INFORMATION (PART 1) OF THE APPLICATION INCLUDES WHAT PERSONAL DATA REGARDING THE INSURED
NAME, ADDRESS, DOB, GENDER,SSN,DRIVERS LICENSE #, MARITAL STATUS, INCOME, OCCUPATION AND BUSINESS ADDRESS, TYPE OF POLICY AND FACE AMOUNT, BENEFICIARY, OTHER INSURANCE OWNED.
HEALTH INFORMATION (PART 2) OF THE APPLICATION CONTAINS WHAT INFORMATION?
HEIGHT AND WEIGHT, TOBACCO USAGE, DRUG USAGE, INTERNATIONAL TRAVEL, CURRENT MEDICAL TREATMENTS, MEDICATIONS BEING TAKEN,CONDITIONS THE INSURED HAS SOUGHT TREATMENT FOR OR BEEN DIAGNOSED WITH IN THE PAST, HISTORY OF DISABILITY CLAIMS, HEALTH CONDITIONS PREVALENT IN THE INSUREDS FAMILY, HIGH RISK HOBBIES, NAME AND ADDRESS OF PHYSICIAN
ATTENDING PHYSICIANS STATEMENT
A STATEMENT TO FIND OUT ABOUT THE APPLICANTS CURRENT CONDITION AND MEDICAL HISTORY WITH THE PHYSICIAN.
WHO PAYS FOR MEDICAL EXAMS AND TESTING DURING UNDERWRITING PROCESS?
THE INSURER
MEDICAL INFORMATION BUREAU (MIB)
A NON PROFIT INSURANCE TRADE ASSOCIATION THAT MAINTAINS UNDERWRITING INFORMATION ON APPLICANTS.
- insurers may not make adverse underwriting decision based solely on the basis of information from the MIB
- Insurers do NOT report underwriting decisions to the MIB.
- An applicant must be given written notice that information may be reported to and obtained from the MIB and insurers must get applicants written authorization to do so
- Applicants must also be notified that applying for insurance or filing a claim with another company may trigger the release of MIB information.
CONSUMER REPORTS
USED TO DETERMINE CONSUMERS ELIGIBILITY FOR PERSONAL CREDIT OR INSURANCE OR FOR EMPLOYMENT. THEY MAY BE ISSUED ONLY TO PERSONS WHO HAVE A LEGITIMATE BUSINESS NEED FOR THE INFORMATION.
INVESTIGATIVE CONSUMER REPORTS
ARE REPORTS CONTAINING INFORMATION OBTAINED BY INTERVIEWING INDIVIDUALS WHO KNOW SOMETHING ABOUT THE CONSUMER SUCH AS ASSOCIATES, FRIENDS, AND NEIGHBORS. CONSUMERS MUST BE NOTIFIED AND GIVE THEIR CONSENT TO HAVING SUCH REPORTS DONE.
STANDARD RISK
AVERAGE HEALTH AND NORMAL LIFE EXPECTANCY AND FALL INTO THE NORMAL RANGE ANTICIPATED BY THE COMPANY WHEN IT ESTABLISHED ITS PREMIUMS.
PREFERRED RISK
REPRESENT EXCELLENT HEALTH. A RISK OF LOSS IS BELOW AVERAGE AND THEREFORE FAVORABLE TO THE COMPANY.
SUBSTANDARD RISK
REPRESENT BELOW AVERAGE LIFE EXPECTANCY, HIGH RISK LIFE INSURANCE. A RISK OF LOSS THAT IS ABOVE AVERAGE AND THEREFORE UNFAVORABLE TO THE COMPANY.
DECLINED
NOT INSURABLE AT ANY PRICE.
CANNOT UNFAIRLY DISCRIMINATE AGAINST:
RACE, RELIGION, NATIONAL ORIGIN OR PLACE OF RESIDENCE
STATMENT OF GOOD HEALTH
AGENT MUST ATTEST THAT THE POLICY OWNER’S HEALTH IS THE SAME AS IT WAS WHEN THEY APPLIED FOR THE POLICY.
FAIR CREDIT REPORTING ACT
REQUIRES CONSUMER REPORTING AGENCIES TO ADOPT REASONABLE PROCEDURES FOR EXCHANGING INFORMATION ON CREDIT, PERSONNEL, INSURANCE AND OTHER SUBJECT IN A MANNER THAT IS FAIR AND EQUITABLE TO THE CONSUMER WITH RESPECT TO THE CONFIDENTIALITY, ACCURACY, RELEVANCY AND PROPER USE OF THIS INFORMATION.
FAIR CREDIT REPORTING ACT
NOTICE TO APPLICANT
MUST BE ISSUED TO ALL APPLICANTS FOR THE LIFE OR HEALTH INSURANCE COVERAGE.
THIS NOTICE INFORMS THE APPLICANT THAT A REPORT WILL BE ORDERED CONCERNING THEIR PAST CREDIT HISTORY AND ANY OTHER LIFE OR HEALTH INSURANCE FOR WHICH THEY HAVE APPLIED.
*NOTICE MUST BE GIVEN NO LATER THAN 3 DAYS AFTER REPORT REQUESTED
*CONSUMER CAN MAKE WRITTEN REQUEST FOR COMPLETE DISCLOSURE OF THE NATURE AND SCOPE OF THE INVESTIGATION
FAIR CREDIT REPORTING ACT
CONSUMER RIGHTS
CONSUMERS WHO FEEL THAT INFORMATION IN THEIR FILES IS INACCURATE OR INCOMPLETE MAY DISPUTE THE INFORMATION, AND THE REPORTING AGENCIES MAY BE REQUIRED TO REINVESTIGATE AND CORRECT OR DELETE INFORMATION.
FAIR CREDIT REPORTING ACT
PENALTIES
VIOLATORS MAY BE SUBJECT TO FINES AND IMPRISONMENT. THE MAXIMUM PENALTY FOR OBTAINING CONSUMER INFORMATION REPORTS UNDER FALSE PRETENSES IS $5,000.00, IMPRISONMENT FOR 1 YEAR OR BOTH.
STOLI
STRANGER OWNED LIFE INSURANCEOR INVESTOR OWNED LIFE INSURANCE. TRANSACTIONS ARE LIFE INSURANCE ARRANGEMENTS INVOLVE INVESTORS WHO PERSUADE SENIORS TO TAKE OUT A NEW LIFE INSURANCE POLICY, WITH THE INVESTORS NAMED AS BENEFICIARY.
ANTI-MONEY LAUNDERING PROVISIONS OF THE USA PATRIOT ACT
THE TYPES OF SUSPICIOUS ACTIVITY THAT INSURERS MUST REPORT ARE:
- RECEIPT OF ANY CASH PAYMENT IN EXCESS OF OVER 10K
- PUCHASE OF INSURANCE THAT IS NOT CONSISTANCE WITH CUSTOMERS NEEDS
- REQUEST TO HAVE REFUND OR SURRENDER PROCEEDS OR OTHER BENEFITS PAID TO A PARTY NOT CLEARLY RELATED TO THE PURCHASER.
- GREATER INTEREST IN THE EARLY TERMINATION FEATURES OF A PRODUCT RATHER THAT ITS POTENTIAL PERFORMANCE
- FICTITIOUS IDENTIFICATION OR RELUCTANCE TO PROVIDE IDENTIFICATION; AND MAXIMUM BORROWING AGAINST A PRODUCTS VALUE SOON AFTER ITS PURCHASED.
ERISA
WAS ENACTED TO PROTECT THE INTERESTS OF PARTICIPANTS IN EMPLOYEE BENEFIT PLANS AS WELL AS THE INTERESTS OF THE PARTICIPANTS BENEFICIARIES. MUCH OF THE LAW DEALS WITH QUALIFIED PENSION PLANS.
- DETAILED STANDARDS FOR FIDUCIARIES
- protects participants in employee benefit plans
- Qualified pension plans and group insurance plans
- Reporting and disclosure information for plan participants, their beneficiaries, the DOL and the IRS.*
Strict penalties are imposed on those who do not fulfill this duty
