Life Insurance Underwriting and Policy Issue

McCarran-Ferguson Act (1945)

Act that gives states the authority to regulate insurance

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

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

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 signatures is not required on an individual insurance application? Producer Applicant Insured Insurer

Insurer

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

Fair Credit Reporting Act

Act that grants consumers to the right to know who requests to view their credit report over the past year

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

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 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

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 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

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

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

6

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

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

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

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

An applicant intentionally lying to an insurance company on an application in order to obtain a cheaper premium is an example of rebating coercion fraud twisting

fraud

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

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

representations

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

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

Upon policy delivery, which of the following must a producer have an applicant sign if no initial premium was collected with the life insurance application? A waiver of premium A replacement form A good health statement An exclusion

A good health statement

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 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

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

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

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

an initial made by the applicant

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

Marital status

A person who is a nonsmoker, of average weight, and in excellent health would most likely be in which risk classification? Standard Substandard Acceptable Preferred

Preferred

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

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

An applicant's character and personal habits can be obtained for underwriting purposes from which source? Investigative consumer report Attending physician's statement Medical Information Bureau (MIB) Credit report

Investigative consumer report

Which of these is likely to occur when life or health insurance is being applied for? The Medical Information Bureau (MIB) will determine the risk classification The agent is required to report all medical information to the Medical Information Bureau (MIB) Physical examinations are required Medical history from the insured may be reviewed and reported

Medical history from the insured may be reviewed and reported

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