Ins. Exam: Field Underwriting Procedures

When delivering a policy, which of the following is an agent's responsibility?

Collect payment at time of delivery (if payment has not already been collected)

underwriting

important when replacement is involved; it's an underwriter's duty to evaluate risk and decide whether or not a person is eligible for coverage; insured may be under the assumption that a replacing policy is in his/her best interests, but after being evaluated by an underwriter, where premium and risk are exchanged, an insured may not be paying the same premium or receiving the same benefits

Explaining sources of insurability information

in order to determine insurability of the applicant, the insurer may use several sources such as a Medical Information Bureau (MIB) report for gathering underwriting information; applicant must be advised of the sources to be used and how the information is gathered; all sources used to verify insurability must adhere to the Fair Credit Reporting Act

Premiums with the application

initial premium is collected for a health insurance policy and sent to the insurer with the application; a conditional receipt is given to the applicant by the agent; agents cannot bind coverage (only insurers can), so the coverage does not begin until the insurer has approved the application and issued the policy

pre existing conditions

medical condition for which the insured sought medical advice or treatment within a specified period of time prior to the policy issue; health conditions covered under the current policy may not be covered under the new policy because of pre-existing condition limitations, or new waiting periods may be required in a new policy

changes in application

most companies require applications to be filled out in ink; if agent makes a mistake, start over with a fresh application or draw a line through the incorrect answer and insert the correct one; applicant must initial the correct answer

notice to the applicant

must be issued to all applicants for health insurance coverage; informs the applicant that a credit report will be ordered concerning his or her past history and any other health insurance for which they have previously applied; agent must leave this notice with the applicant

Adhesion

one party prepares the contract; the other party must accept it as is

Consent

permission to do something

insured

person covered by the insurance policy; may or may not be the policy owner

insurer (principal)

the company who issues an insurance policy

premium

the money paid to the insurance company for the insurance policy

policy owner

the person entitled to exercise the rights and privileges in the policy

Insurable interest

the policy owner facing the possibility of losing something of value in the event of loss

HIPAA Privacy

under privacy rule for HIPAA, protected information includes all "individually identifiable health information" held or transmitted by a covered entity or its business associate, in any form or media, whether electronic, paper or oral--called protected health information (PHI); a covered entity must obtain the individual's written authorization to disclose information that is not for treatment, payment, or health care operations

no initial premium w/ application

when a premium did not accompany the application for insurance, upon delivery, the agent must collect the premium and obtain a statement of continued good health from the applicant before releasing the policy

replacement

when an agent attempts to replace the insured's current health insurance policy with a new one, the agent needs to be careful not to mislead the insured or provide coverage that is to the insured's detriment; it's the agents responsibility to carefully compare the benefits, limitations and exclusions found in the current and the proposed replacement policy; agent also must make sure that the current policy is not cancelled before the new policy is issued

In a replacement situation, all of the following must be considered EXCEPT

A. Assets B. Benefits C. Limitations D. Exclusions Answer: A

Which is true regarding obtaining underwriting sources?

A. The insurer does not need to inform the applicant of how the information is gathered; informing only of the source is sufficient B. The insurer only needs to inform the applicant of how the information is being gathered; it is not necessary to disclose the sources. C. It is illegal to obtain information from outside sources in order to determine an applicant's insurability D. The applicant must be informed of the sources contacted and how the information is being gathered. Answer: D; it is required by law that an insurer informs the applicant of all sources that will be contacted in determining the applicant's insurability, in addition to how the information will be gathered

On a health insurance application, a signature is required from all of the following individuals EXCEPT

A. the policy owner B. the agent C. the spouse of the policy owner D. the proposed insured Answer: C; every health insurance application requires the signature of the proposed insured, the policy owner (if different than the insured), and the agent who solicits the insurance

What is the term used for an applicant's written request to an insurer for the company to issue a contract, based on the information provided?

Application

An agent is ready to deliver a policy to an applicant but has not yet received payment. Upon delivery, the agent collects the applicant's premium check, answers any questions the applicant may have, and then leaves. What did he forget to do?

Ask her to sign a statement of good health; if the premium is not collected until the policy is delivered, the agent must receive a statement of good health, which acknowledges that the insured's health status has not changed since the policy was approved

To comply with Fair Credit Reporting Act, when must a producer notify an applicant that a credit report may be requested?

At the time of application

What document describes an insured's medical history, including diagnosis and treatments?

Attending Physician's Statement; an APS is the best way for an underwriter to evaluate an insured's medical history; the report includes past diagnosis, treatments, length of recovery time, and prognoses

The insurance policy, together with the policy application and any added riders form what is known as

Entire contract

An applicant for a health insurance policy returns a completed application to her agent, along with a check for the first premium. She receives a conditional receipt two weeks later. Which of the following has the insurer done by this point?

Neither approved the application nor issued the policy

What is the best way to change an application?

Start over with a fresh application; most companies require that the app be filled out in ink. The agent might make a mistake while filling out the app or the applicant might answer a question incorrectly and want to change it.

If an applicant does not receive a new insurance policy, who would be held responsible?

The agent

Before a customer's agent delivers his policy, the insurer makes a last-minute change to the policy. The agent informs the customer of this change, and he accepts it. What must the agent do now?

The agent should ask the customer to sign a statement acknowledging that he is aware of the change

An agent is in the process of replacing the insured's current health insurance policy with a new one. Which of the following would be a proper action?

The old policy should stay in force until the new policy is issued; the agent must make sure that the current policy is not cancelled before the new policy is issued

Insurance policy

a contract between a policy owner (and/or insured) and an insurance company which agrees to pay the insured or the beneficiary for loss caused by specific events

Agent/Producer

a legal representative of an insurance company; the classification of producer usually includes agents and brokers; agents are the agents of the insurer

Applicant or proposed insured

a person applying for insurance

explaining policy and its provisions, riders, exclusions, and ratings

agent has a responsibility to provide the insured with an explanation of the policy's principal benefits and provisions; if policy is issued with any changes or amendments, the agent is required to explain these changes and obtain the insured's signature acknowledge receipt of these amendments

Policy delivery

agent has the responsibility to deliver the policy to the insured and to collect any premium that may be due at the time of delivery

submitting application to company for underwriting

agent is obligated to check the application to make certain that all questions have been answered and all necessary signatures have been collected; agent then sends the application to the insurer

completeness and accuracy

agent must take special care with the accuracy of the application in the interest of both the company and the insured; because the application is often the main source of underwriting information, it is the agent's responsibility to make certain that the application is filled out completely, correctly, and to the best of the applicant's knowledge

Medical Exam Report

conducted by physicians or paramedics at the insurance company's expense; usually not required with regard to health insurance; more common with life insurance underwriting; insurer is responsible for costs of the exam

credit reports

contain factors related to a risk's potential for loss; include consumer reports (information regarding a consumer's credit, character, reputation, or habits collected from employment records, credit reports, and other public sources) and investigate consumer reports (information obtained through an investigation and interviews with associates, friends and neighbors of the consumer)

Signatures

every health insurance application requires the signature of the proposed insured, the policy owner (if different than the insured), and the agent who solicits the insurance

Aleatory

exchange of unequal amounts

Attending Physician Report

if the underwriter deems it necessary, an attending physician's statement (APS) will be sent to the applicant's doctor to be completed; this source of information is best for accurate information on the applicant's medical history; physician can explain exactly what the applicant was treated for, the treatment required, the length of treatment and recovery, and the prognosis