Ch. 5 - Life Insurance Underwriting and Policy Issue

When a policyowner cash surrenders a Universal Life insurance policy in it's early years, this may be considered a red flag for a(n)

Anti-Money Laundering violation

When an insurance application is taken by a producer, which of these statements is true?

Any changes made on the application require the applicant's initials

At what time must a policy owner have insurable interest on the insured in order for the life policy to be valid?

At the time of the application

What action should a producer take if the initial premium is NOT submitted with the application?

Forward the application to the insurer without the initial premium

What is the purpose of a Policy Summary?

It highlights the critical parts of the policy issued.

The underwriting process involves all of these EXCEPT for

Policy loan

Which of the following statements is CORRECT about an agent who is taking an insurance application?

The agent should have the applicant initial any changes made on the application

A Medical Information Report (MIB) report may disclose which of the following

Prior use of marijuana

the USA Patriot Act was enacted in

2001.

Agent J takes an application and initial premium from an applicant and sends the application and premium check to the insurance company. The insurance company returns the check back to J because the check is made out to J instead of the insurance company. What action should J take?

Return to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company

Which factors are taken into consideration when an insurance company determines the premium rate for a Whole Life policy on an applicant?

Risk classification

P is a producer who notices 5 questions on a life application were not answered. What actions should P take?

Set up a meeting with the applicant to answer the remaining questions

K 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?

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

M completes an application for life insurance but does not pay the initial premium. All of these actions must occur before M's policy goes into effect EXCEPT

free-look period has expired