Unit 2- Life/ Health Insurance Underwriting

Question 1

What are Changes in the Application? 📝🖋

Answer 1

Must be initialed by the applicant.

Question 2

What is Backdating?

Answer 2

Usually no more than 6 months, premium can be lowered based on an applicants earlier age, and applicant must pay any additional premiums that would have been paid from the backdate, and the policy is effective the day it was requested on the application.

Question 3

What are Required Signatures?

Answer 3

• Insured
• Producer/agent
• Applicant(if not the insured)

Question 4

What is a Producers Report

Answer 4

• Completed by the producer/agent

* Not attached to policy if issued

Question 5

What is a Conditional Recipt?

Answer 5

•Premium paid with application 
•Insurance effective-later of date application completed and signed
-Medical exam (if required)
•Must be standard or preferred risk
-Can be determined after death

Question 6

What is a Binding receipt?

Answer 6

Temporary. Not common in Life Insurance.

Question 7

What are Underwriting Sources of Information?

Answer 7

•Application- primary source
•Medical exams & testing
•Attending Physician Statement (APS)
•AIDS testing: applications may not ask about sexual orientation
-testing not based on geographical location
-Requires insureds written consent
-Cannot be reported to the MIB ( Medical Information Bureau).
• Medical Information Bureau
- Application cannot be denied solely on MIB information
-Insured must be informed of MIB
- MIB gets its info from insurance companies
•Consumer report
-Insured must be informed
• Investigative reports
-Insured must give consent

Question 8

What are the classifications of Risk

Answer 8

• Standard
• Preferred
• Substandard
• Declined

Question 9

What is Agent Delivery?

Answer 9

•Usually must get signed delivery receipt

Question 10

What is a Statement of Good Health

Answer 10

• Required if no premium with application

* If health changed- agent can’t deliver policy.

Question 11

What is the Effective Date of Coverage?

Answer 11

• Terms of conditional recipt is issued
• Substandard and pays additional premium- date of policy issue
• No recipt- policy issue date if premium paid at delivery

Question 12

What is is the Fair Credit Reporting Act?

Answer 12

• Third party information
• Notice to applicant REQUIRED
• Consumers have rights and can dispute information in files
• Penalty: fines (max of 5,000) and/or imprisonment (one year)

Question 13

What is STOLI/ IOLI?

Answer 13

STranger-Owned Life Insurance or Investor Owned Life Insurance
▪︎Investors who persuade seniors to take out a new life insurance policy
▪︎Banned in most states because its a form of fraud
▪︎Investors named as beneficiaries

Question 14

What is the U.S. Patriot Act?

Answer 14

▪︎Designed to prevent and detect money laundering and financing of terrorism
▪︎Report suspicious activity

Question 15

What is ERISA?

Answer 15

▪︎Protects participants in employee benefit plans
▪︎Qualified pension plans& group insurance
▪︎Reporting and disclosure information for plan participants