Chapter 6: Life Underwriting

Which scenario would most life insurance policies exclude coverage for? A tourist traveling abroad on a major airline carrier An individual who has a hobby racing cars once a month An airline pilot who flies for a commercial carrier A soldier on leave at home

An individual who has a hobby racing cars once a month

In which of the following relationships would there NOT be an insurable interest? Parent to child Business partner to business partner Brother to sister Business owner to business customer

Business owner to business customer

Which of the following describes a person who is NOT acceptable by an insurer at standard rates because of health history, occupation, or hobbies? Standard risk Preferred risk Unacceptable risk Substandard risk

Substandard risk

When does a life insurance policy typically become effective? When the policy is issued When initial premium is collected and policy is issued When the application is completed and signed When the completed application is signed and initial premium is collected

When initial premium is collected and policy is issued

Underwriters can acquire information from all of the following sources EXCEPT Medical Information Bureau (MIB) consumer reports attending physician's statements genetic testing

genetic testing

A field underwriter's main task is assign a risk classification to the insured report medical information to the Medical Information Bureau (MIB) to ensure an applicant's medical information is accurate and complete to approve or decline an applicant

to ensure an applicant's medical information is accurate and complete

An insurance applicant with a below-average likelihood of loss is typically considered to be a preferred risk subpar risk declined risk standard risk

preferred risk

An insurance producer is often responsible for field underwriting during the application process. All of these are possible field underwriting roles EXCEPT providing disclosure information to the applicant collecting initial premium policy delivery providing commission information to the applicant

providing commission information to the applicant

How many months can a life insurance policy normally be backdated from the date of application? 3 6 9 12

6

An attending physician's statement would be appropriate for which life insurance purpose? Attending physician's statements are mandatory during the application process At the request of the applicant to assist in the underwriting decision At the request of the producer to assist in the underwriting decision At the request of the insurer to assist in the underwriting decision

At the request of the insurer to assist in the underwriting decision

An insurer has a right to screen applicants for HIV in which of the following ways? Blood test for HIV Inquiring about risky sexual behavior Inquiring about sexual orientation Automatically declining an application due to sexual orientation

Blood test for HIV

Which of the following is a requirement for ANY change in an insurance application? Change must be initialed by the agent Change must be initialed by the applicant Change must be approved by the insurer Change must be notorized

Change must be initialed by the applicant

What would happen if a life insurance applicant is given a conditional receipt from an insurance agent and then dies the next day? Claim will be denied by insurer Claim will be paid if money was received by the insurance company Claim will be paid if underwriter has received the application Claim will be paid if application is approved

Claim will be paid if application is approved

Which of the following would be considered an underwriting duty of an agent? Requesting medical information from the Medical Information Bureau (MIB) Completing all applications and collecting initial premiums Accepting or declining an application Assigning a risk classification

Completing all applications and collecting initial premiums

All of these are typically sources of underwriting information for life or health insurance EXCEPT Consumer reports Medical Information Bureau (MIB) reports Disclosure authorization response Attending physician's statement (APS)

Disclosure authorization response

An insurance company needs to obtain personal information from a third party concerning an applicant. Which law do all insurers and their producers need to comply with? USA Patriot Act Personal Information Act Fair Credit Reporting Act McCarran-Ferguson Act

Fair Credit Reporting Act

The principle of insurable interest, in regards to a life insurance contract, is accurately described in which statement? An agent establishes insurable interest An individual does not have insurable interest on his or her own life Insurable interest only pertains to business arrangements Insurable interest can be based on the love and affection of individuals related by blood or law

Insurable interest can be based on the love and affection of individuals related by blood or law

In regards to a life insurance contract, which of the following statements is NOT true regarding the concept of insurable interest? Individuals are assumed to have insurable interest in themselves Insurable interest is established by a court of law Insurable interest can be established sufficiently by sentimental attachment alone Insurable interest must exist at the time of the application

Insurable interest can be established sufficiently by sentimental attachment alone

Which of the following signatures is not required on an individual insurance application? Producer Applicant Insured Insurer

Insurer

What is involved when a life insurance policy has been backdated? Setting a policy's effective date prior to a preexisting condition Redating a policy after it has been issued Reinstating a lapsed policy Making the policy effective on an earlier date than the present

Making the policy effective on an earlier date than the present

All of these are considered key factors in underwriting life insurance EXCEPT Tobacco use Health history Age Marital status

Marital status

All of these are considered sources of information that can assist an underwriter in determining whether or not to accept a risk EXCEPT Agent's report Medical Information Bureau (MIB) Inspection reports National Association of Insurance Underwriters

National Association of Insurance Underwriters

Which of these is NOT considered to be a risk factor in life insurance underwriting? Number of children Health history Hobbies Occupation

Number of children

Which of these is considered to be a document that describes the critical segments of a life insurance policy? Buyer's guide Policy summary Consumer report Buyer's summary

Policy summary

Which of the following statements is CORRECT regarding an individual applying for life or health insurance? The applicant waives all privacy rights The applicant's family medical history is always required The applicant's medical history is irrelevent The applicant's medical history may be analyzed and reported

The applicant's medical history may be analyzed and reported

Which of the following would be a valid reason why a policy premium would be higher than the standard premium? The insurer is not a member of the MIB The agent quoted the wrong price The insured does not have the necessary financial reserves The insured does not meet established underwriting requirements

The insured does not meet established underwriting requirements

Which of the following does a life insurance policy summary normally include? The policy's cash value Agent's report Policyowner's MIB report Stated beneficiary

The policy's cash value

What happens when an insurance policy is backdated? The policy's elimination period is waived The time frame for reinstating a lapsed policy is extended The policy's probation period is earlier than the present The policy's effective date is earlier than the present

The policy's effective date is earlier than the present

What is the purpose of the Medical Information Bureau (MIB)? To accept or decline insurance applicants To set the premium rates for insurers To help underwriters evaluate risk To perform physical examinations on applicants

To help underwriters evaluate risk

Which of the following pertains to the analysis of an applicant's personal information and determining whether insurance should be issued or declined? Adverse calculation Underwriting Risk classification Actuarial determination

Underwriting

An underwriter's primary responsibility to an insurer is to protect against natural selection inverse selection adverse selection risk selection

adverse selection

An individual most likely will have an insurable interest in insuring a person's life if an economic interest exists for the continuance of the insured's life a financial interest exists at the time of insured's death there is any blood relationship with the insured a business relationship exists

an economic interest exists for the continuance of the insured's life

A change in an insurance application requires an initial made by the producer an initial made by the applicantv approval by the insurer submitting a new application

an initial made by the applicantv

Preferred risk policies with reduced premiums are issued by insurance companies because the insured has a higher face amount than average a better ability to pay premiums over a long period of time worse than average mortality or morbidity experience better than average mortality or morbidity experience

better than average mortality or morbidity experience

Statements made by an insurance applicant on an application are considered to be irrevocable warranties representations guarantees

representations

Signatures for an insurance application MUST be obtained by the producer from all of the following sources EXCEPT the producer the insured the policyowner the beneficiary

the beneficiary