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Life and Health Insurance > Unit 2 Underwriting > Flashcards

Unit 2 Underwriting Flashcards

1
Q

Most state laws allow life insurance applications to be backdated up to ____ months. If an application is backdated, the policy becomes effective as of the date requested on the application.

True or false: the applicant must pay any additional premiums that would have been paid from the backdate.

A

6 Months, True

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2
Q

Signatures:

The application form - must be signed by the ____ and ____.
- The ____ must sign if the applicant is not the insured
- A ____ must sign a corporation-owned policy
- A ____ signs a juvenile policy for the minor

A
  1. applicant
  2. producer
  3. proposed insured
  4. a company officer
  5. parent or legal guardian
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3
Q

Part 3 of a life insurance application is the Producer/Agents Report, or ____. The producer records information that pertains to the proposed insured including the producer’s relationship to the proposed insured and anything the producer knows about the proposed insured’s:
- ____
- ____
- ____

A

Producer’s Statement
Financial Status
Habits
Character

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4
Q

Producer’s Report: Does the proposed insured see the Producer’s Report?

Who signs the producer’s report?

A

No - it’s not attached to the policy or application when it’s issued.

Only the producer

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5
Q

An “____” insurance exists when the first premium is submitted with the life insurance application. If no premium is submitted with the application then coverage is ____ until the premium is paid for the issued policy.

A

Offer to buy

Delayed

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6
Q

When the first premium is collected at the time of application, the producer must provide the applicant with a ____. The effective date of coverage will depend on the type of ____ issued. (blanks are the same)

A

Receipt

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7
Q

The date of the application is the effective date of a __1__, as long as the applicant is found to be insurable under the company’s standard underwriting rules. Most __1__s are effective on the date of application, or the date of a required ____, whichever is later of these two events.

A

Conditional receipt

Medical Examination

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8
Q

With conditional receipts, if the proposed insured dies before a policy is issued, the application continues through the normal underwriting process and one of two things will occur: (2)

A
  1. If the application would have been approved, the policy continues in force
  2. If the application is denied, the premium will be returned
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9
Q

____ receipts are effective for 30-60 days from the date of application even if the applicant is found to be uninsurable. Rarely used with life insurance. Life insurance binders are called ____. The insurer can either issue a policy or cancel the binder before the end of the stated period.

A

Binding receipts

Temporary insurance agreements

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10
Q

Life Insurance Application

Part 1 - ____
Part 2 - ____
Part 3 - ____

A

Part 1 - General Info
Part 2 - Health Info
Part 3 - Producer’s Report

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11
Q

Name the 12 pieces of information in Part 1 - General Info:

A
  1. Name
  2. Address
  3. DOB
  4. Gender
  5. SSN
  6. DL
  7. Marital status
  8. Income
  9. Occupation and business address
  10. Type of policy and face amount being applied for
  11. Beneficiary
  12. Other insurance owned
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12
Q

Name the 11 pieces of information in Part 2 - Health Info:

A
  1. Height and weight
  2. Tobacco usage
  3. Drug usage
  4. International travel
  5. Current medical treatments
  6. Medications being taken
  7. Conditions the insured has sought treatment for or been diagnosed with in the past
  8. History of disability claims
  9. Health conditions prevalent in the insured’s family
  10. High-risk hobbies
  11. Name and address of current physician
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13
Q

An underwriter may ask the proposed insured’s regular doctor for an ____(APS) to find out about the applicant’s current condition and medical history with the physician. The underwriter may also ask for copies of ____.

A

Attending Physician’s Statement

Medical records

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14
Q

The ____ pays for medical exams and tests that are requested during the underwriting process.

A

Insurer

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15
Q

Can an insurer request AIDS testing for certain amounts of insurance?

A

Yes

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16
Q

AIDS: If tested and the results are positive for AIDS, a report is sent to the ____(MIB). This info is never shared with anybody else unless designated. If nobody is designated, state law may require this info to be sent to the ____.

A

Medical Information Bureau

Department of Health

17
Q

The ____ (HIPAA) imposes specific requirements on the disclosure of insured’s health information by medical providers, insurers, and producers. Applicants must be given full notice of: (3)

A

Health Insurance Portability and Accountability Act

  1. Insurer’s info-sharing practices
  2. Their right to maintain privacy
  3. An opportunity to refuse to have their information released
18
Q

The __1__ is a non-profit insurance trade association that maintains underwriting information on applicants. When member companies discover unfavorable info about an applicant during their underwriting process, they report it to the __1__ using ____ signifying certain conditions. The purpose of the __1__ is to reduce instances of misrepresentation and fraud.

A

Medical Information Bureau

Codes

19
Q

True of false: insurers can make an adverse underwriting decision based solely on the info from the MIB?

A

False

20
Q

True or false: Insurers report underwriting decisions to the MIB?

A

False

21
Q

True or false: Applicants must be given written notice that information may be reported to and obtained from the MIB and insurers must get an applicant’s written authorization to do so.

A

True

22
Q

True or false: Applicants must also be notified that applying for insurance or filing a claim with another company may trigger the release of MIB information.

A

True

23
Q

____ reports are reports containing info 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. These are also called ____.

A

Investigative Consumer Reports

Inspection Reports

24
Q

____ risks mean average health and normal life expectancy and fall into the normal range anticipated by the company when it established its premiums. These risks can be insured for standard rates.

A

Standard Risks

25
Q

____ risks represent excellent health. A risk of loss that is below average and therefore favorable to the company. Favorable risk factors include such things as a healthy lifestyle, clean medical history, or low-risk occupation. These risks may be insured at discounted rates.

A

Preferred Risks

26
Q

____ risks represent below average life expectancy and high-risk life insurance. A risk of loss that is above average and therefore unfavorable to the company. Risk factors include poor health, dangerous occupation, or risky habits. These risks are sometimes referred to as being ____ (sometimes shortened to just rated).

A

Substandard Risks

Rated Up

27
Q

When an insurer’s guidelines indicate that an applicant is not insurable at any price the application is ____.

A

Declined

28
Q

Can insurers discriminate based upon where somebody lives?

How about if the person is blind?

A

No and No

29
Q

True or false: to be considered “delivered” the agent must get a signed copy of the receipt on delivery to the policyowner.

A

Yes (most of the time)

30
Q

During the ____ appointment, the producer will review with the policyowner the policy, riders, exclusions, and other details to make sure they understand it.

A

Delivery appointment

31
Q

During the delivery appointment, the agent/producer must collect the first premium if it was not paid at the time of application. Additionally, the policyowner must sign a statement of ____ attesting that their health is the same as when they applied for the policy.

A

Statement of Good Health

32
Q

FCRA penalty for obtaining consumer info reports under FALSE PRETENSES is $____ imprisonment for one year or both.

A

$5000

33
Q

____ (STOLI)

____(IOLI)

(Banned in most states, commonly used method of fraud targeting senior citizens)

A

Stanger-Owned Life Insurance

Investor-Owned Life Insurance

34
Q

PATRIOT Act - must report any receipt of any cash payment in excess of $____

A

$10,000

35
Q

____ (ERISA) was enacted to protect the interests of participants in employee benefit plans as well as the interests of the participant’s beneficiaries. Much of the law deals with qualified pension plans but some sections also apply to group insurance plans.

A

Employee Retirement Income Security Act

36
Q

ERISA Reporting and Disclosure - info must be made available to: (4)

A
  1. Plan participants
  2. Beneficiaries
  3. Department of Labor
  4. The IRS
37
Q

ERISA Reporting and Disclosure - pieces of information that must be made available: (5)

A
  1. a summary plan description to each plan participant and the DOL
  2. a summary of material modifications that details changes in any plan description to each plan participant and the DOL
  3. an annual return or report (Form 5500) submitted to the DOL
  4. a summary annual report to each plan participant
  5. any terminal report to the DOL

Life and Health Insurance (18 decks)

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