7 - Life Insurance Underwriting and Policy Issue

After an applicant reads and signs an insurance application, he/she should be conscious of the fact that a false statement could lead to a loss of coverage premium refunds are not allowed policy is guaranteed to be issued the premium quoted by the agent is final

a false statement could lead to a loss of coverage

An applicant submits a life insurance application where an investigative consumer report is used in the underwriting process. Which of these statements is true? applicant can determine which items in the report to leave out insurer can obtain a copy of this report without the applicant's knowledge fee for the report is typically paid by the applicant applicant has a right to receive a copy of the report

applicant has a right to receive a copy of the report

A policyowner pays the first annual premium for a $50,000 life insurance policy and dies one month after the policy effective date. Which of these statements is normally true? premium will be refunded with interest premium received by insurer is considered to be unearned proceeds are prorated to 1/12th of the full amount beneficiary receives $50,000 income tax free

beneficiary receives $50,000 income tax free

Which report contains information regarding an individual's general reputation and credit standing? credit report consumer report MIB report agent's report

consumer report

Kevin is an agent who takes an application for individual life insurance and accepts a check from the client. He submits the application and check to the insurance company, however the check was never signed by the applicant. If the application is approved, when will coverage be effective? date of sales appointment date application was submitted date of application date the agent delivered the policy, collected the initial premium, and obtained a good health statement from the insured

date the agent delivered the policy, collected the initial premium, and obtained a good health statement from the insured

When an applicant applies for a large amount of life insurance coverage, which of the following would likely NOT be an underwriting requirement consumer report eye examination urine sample blood sample

eye examination

Insurable interest in one's own life is legally considered as illegal limited generally unlimited contingent on future earnings

generally unlimited

When the disclosure of an insured's nonpublic information is involved, what is the insurer obligated to do? insurer is not obligated to take any action insurer is not obligated to verify that the producer is in compliance give notice, explain and allow opting out provide the proper NAIC paperwork

give notice, explain and allow opting out

An insured may be required to sign which document at policy delivery to ensure there has not been any adverse medical conditions since the time of the application? binding receipt good health statement agent's report MIB disclosure

good health statement

The Medical Information Bureau (MIB) consists of members from which group? doctors hospitals insurance companies underwriters

insurance companies

The initial premium for a life insurance policy is typically paid in what way? the applicant mails it to the insurer after the policy has been approved it is typically obtained by the producer and forwarded to the insurer it is typically forwarded to the insurer by the applicant the producer pays it from any commissions received

it is typically obtained by the producer and forwarded to the insurer

An insurance policy may be issued with a preferred insurance premium in all of these situations EXCEPT good credit history living in a rural area good health history being a nonsmoker

living in a rural area

Which of these is NOT used as selection criteria in the underwriting process? credit report national origin age of applicant sex of applicant

national origin

A signed good health statement may be requested by a life producer at the time of policy issue application policy delivery physical examination

policy delivery

Where is the difference between a standard and a substandard risk? backdating coverage is not offered premium charges back-end charges

premium charges

When a producer submits an application that discloses personal information regarding the applicant, who supplies the privacy notice? producer insurer underwriter fiduciary

producer

Which of these is NOT considered the responsibility of a producer during the underwriting process? collecting additional medical information promptly sending the completed application to the insurance company forwarding any material personal observations to the insurer selecting the final approve date

selecting the final approve date

In what situation could an insurance policy's coverage be modified? Applicant is a: preferred risk substandard risk standard risk uninsurable

substandard risk

An agent gives a conditional receipt to a client for insurance policy after collecting the initial premium. When will the policy become effective? when the policy is issued the date of the policy delivery when the conditions of the receipt are met the date the sales appointment was set

when the conditions of the receipt are met