Unit 2 Life/Health Insurance Underwriting Flashcards
underwriting
the process of evaluating a risk to determine if it is acceptable based on established insurance company guidlines
changes to the application
must be initialed by the applicant
backdating
allowable under life insurance applications in most states up to 6 months
required signatures on application
-insured
-producer/ agent
-applicant (if not the insured)
producer report/ producer’s statement
-never seen by client
-completed and signed by the producer
-not attached to the policy
conditional receipt
-premium paid with application
-insurance effective date is the later or date application completed and signed or medical exam (if required)
-must be standard or preferred risk which can be determined after death
binding receipt
-temporary (30-60 days)
-not common in life insurance
underwriting sources of information
-the application (primary source)
+part 1: general information
+part 2: health information
+part 3: producer’s report
-attending physician’s statement (APS)
-medical examinations and testing (insurer pays)
+AIDS considerations (requires insured’s written consent)
+Medical Information Bureau (insured must be informed, application cannot be denied based on this information)
-consumer reports (must inform insured)
-investigative reports (must get consent from insured)
4 classification of risks
-standard
-preferred
-substandard
-declined
standard risk
average health and normal life expectancy
preferred risk
excellent health. may be insured at discounted rate
substandard risk
high-risk, below average life expectancy. may be rated up/ rated meaning additional charge for premium
declined (risk)
applicant is not insurable at any price
selection criteria and unfair discrimination
-race
-religion
-national origin
-place of residence or place of origin
agent delivery
will usually get a signed receipt on delivery to the policyowner
statement of good health
-required if no premium with application
-if health changed, agent can’t deliver policy
effective date of coverage
the later date of money received or medical examination
fair credit reporting act
-notice to applicant is required within 3 days
-third party information
-consumers have rights and can dispute information in files
-penalty: fines (max of $5,000) and/ or imprisonment (one year)
STOLI/ IOLI
-banned in most states
- investors named as beneficiaries
US Patriot Act
-designed to prevent and detect money laundering and financing of terrorism
-reports suspicious activity
ERISA
-protects participants in employee benefit plans
-qualified pension plans and group insurance
-reporting and disclosure of information for plan participants
