Life Insurance Terms : Chapter 1 Completing the Application, Underwriting, and Delivering the Policy.

Policyowner

The person who is entitled to exercise the rights and privileges in the policy and who may or not be the insured.

Beneficiary

The person who receives the benefits from the policy of the insurance.

Illustration (Solicitation and Sales Presentations)

A presentation or depiction that includes non-guaranteed elements of a policy of individual or group life insurance over a period of years.

Investigative Consumer Reports "INSPECTION" (Company Underwriting)

A report similar to consumer report, but one that also provides information on the consumer's character, reputation, and habits. (Several Sources of Company Underwriting)

Disclosure Authorization Notice (Company Underwriting)

An act of identifying the name of the producer, representative or firm, limited insurance representative, or temporary insurance producer on any policy solicitation.

Disclosure (Solicitation and Sales Presentations)

An act of identifying the name of the producer, representative, or firm, limited insurance representative, or temporary insurance producer on any policy solicitation.

Required Signatures (Field Underwriting)

Both the agent and the proposed insured (usually the applicant) -must- sign the application (Part of Application Process)

Conditional Receipt (PART 2) (Field Underwriting)

"Most Common Receipt" -With this receipt, the applicant is covered by the insurance as of the date of application providing that the insurer subsequently determines the application to be insurable at the rating for which the policy was applied.

Conditional Receipt (PART 1) (Field Underwriting)

"Most Common Receipt". -It states that the coverage will be effective either on the date of the application or the date of the medical exam, whichever occurs last, unless the coverage is or rated, or issued with writers excluding specific coverage.

Underwriting (Company Underwriting)

"The risk selection process" The process of reviewing, accepting or rejecting applications for insurance.

Death Benefit

(Face amount/face value coverage) - The amount paid when a claim is issued against a policy of insurance.

Rules of Application (Field Underwriting)

1. If an applicant wants to change an answer on the application, an agent can have the applicant initial the change or complete a new form (NO erase or whiteout). 2. All the questions -must- be answered and not left incomplete.

Underwriter/agent "Responsibilities" (Field Underwriting)

1. Proper solicitation of applicants 2. Helping prevent adverse selection. 3. Completing the application 4. Obtaining the required signatures 5. (If applicable) Collecting the initial premium and issuing the receipt 6. Delivering the policy.

Buyer's Guide (Solicitation and Sales Presentations)

A booklet that describes insurance policies and concepts, and provides general information to help an applicant make an informed decision.

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.

Agency contract

A contract that is held between and an insurer and an agent/producer, and the duties and the responsibilities to the principal. An agent who is violation of the agency contract may be held personally liable to the insurer.

Life insurance

A coverage upon a person's life, and granting, purchasing or disposing of annuities.

Application (Field Underwriting)

A document that provides information for underwriting purposes . After the policy is issued, any unanswered questions are considered waved by the insurer. ** They all have (PART 1) General information and (PART 2) Medical information.

Fair Credit Reporting Act (Company Underwriting)

A federal law that established procedures consumer-reporting agencies must follow in order to ensure that records are confidential, accurate, relevant, and properly used. It protects consumers against the circulation of inaccurate or obsolete information. (Several Sources of Company Underwriting)

Health Insurance Portability and Accountability Act (HIPAA) (Company Underwriting)

A federal law that protects health information. "Protected health information"

Insurable Interest (Company Underwriting)

A financial interest in the life of another person; A possibility of losing something of value if the insured should die. In life insurance, this must exist at the time of policy application or policy issue. (Company Underwriting)

Warranty (Field Underwriting)

A material stipulation in the policy that if breached may void coverage. "A true statement upon which the validity of the insurance policy depends."

Premium (Field Underwriting)

A periodic payment to the insurance company to keep the policy in force (Premium with Applications)

Underwriter (Field Underwriting)

A person who evaluates and classifies risks to accept or reject them on behalf of the insurer.

Applicant / Proposed Insured

A person who requests or seeks insurance from the insurer.

Attending Physician's Statement (APS) (Company Underwriting)

A statement usually obtained from the applicant's doctor (Several Sources of Company Underwriting)

Consumer Reports (Company Underwriting)

A written and / or oral statement regarding a consumer's credit, character, reputation, or habits collected by a reporting agency from employment records, credit reports, and other public sources.

Policy Summary (Solicitation and Sales Presentations)

A written statement that describes the "features and elements" of the policy being issued.

Agent's Report (Company Underwriting)

Allows the agent to communicate with the underwriter and provide information about the applicant known by the agent that may assist in the underwriting process. (Several Sources of Company Underwriting)

Standard Risks (Company Underwriting)

An applicant or insured who is considered to have an AVERAGE probability of a loss based on health, vocation, and lifestyle (Risk Classification)

Substandard Risks (Company Underwriting)

An applicant who has a HIGHER than normal probability of loss, and who may be subject to an increased premium. Example: Poor health, Poor family health.... (Risk Classification)

Solicitation of Insurance (Solicitation and Sales Presentations)

An attempt to persuade a person to buy an insurance policy, and it can be done orally or in writing.

Agent / Producer

An individual who is licensed to sell, negotiate or effect insurance contracts on behalf of the insurer.

Medical Information Bureau (MIB) (Company Underwriting)

An information database that stores the health histories of individuals who have applied for insurance in the past. Most insurance companies subscribe to this database for underwriting purposes. It's a non-profit trade organization (Several Sources of Company Underwriting)

Preferred Risks (Company Underwriting)

An insurance classification for applicants who have a LOWER expectation of incurring loss, and who, therefore, are covered at a reduced rate. Example :Superior Healthy lifestyle (Risk Classification)

Premium Receipt (Field Underwriting)

Determines when the coverage will be effective. (Premium with Applications)

Medical Information and Consumer Reports (Company Underwriting)

For policies with higher amounts of coverage or if the application raised additional questions concerning the prospective insured's health, the underwriter may request a medical examination consisting of 1. Paramedical report 2. Attending Physician's Statement (APS) (Several Sources of Company Underwriting)

Classification of "Producer"

Insurance agent or broker

Material Misrepresentations (Field Underwriting)

Is a statement that, if discovered, would alter the underwriting decision of the insurance company. Furthermore, if they are considered "INTENTIONAL", they are considered fraud.

Paramedical Report (Company Underwriting)

Medical exam completed by paramedic or a registered nurse.(Several Sources of Company Underwriting)

Application (Company Underwriting)

One of the main sources of underwriting information for the Company (Several Sources of Company Underwriting)

Privacy Rule (Company Underwriting)

Patients have the right to view their medical information. On the other hand, it -allows- disclosures without individual authorization to public health authorities.

Agent's Report (Field Underwriting)

Provides the agent's personal observations concerning the proposed insured. (Part of Application Process)

Adverse Selection (Company Underwriting)

Risks which are more likely to take a loss (Company Underwriting)

Representations (Field Underwriting)

Statements made by the applicant on the insurance application that are believed to be true, but are not guaranteed to be true.

Insurer (Principal)

The company who issues the policy of insurance EX: NY Life/ Prudential

Face

The first page of the policy

Premium

The money paid to the insurance company for the policy of the insurance.

Insurance

Transfers the risk of loss from an individual or business entity to an insurance company, which in turn spreads costs of unexpected losses to many individuals.

Risk (Company Underwriting)

Uncertainty as to the outcome of an event when two or more possibilities exist. (Risk Classification)

Misrepresentations (Field Underwriting)

Untrue statements on the application that could void the contract.

Insurer

is the principal