CH1 Completing the Application, Underwriting and Delivering the Policy

What is policy replacement?

A new policy is issued while an existing policy is terminated or reissued with a reduction in cash value

Who is a field underwriter?

Agent/Producer

At what point coverage begin when an agent issues a conditional receipt for a life insurance policy?

Either on the date of the application or the date of the medical exam (whichever occurs last)

What are two elements are necessary for a life insurance contract to have a legal purpose?

Insurable interest and consent

Insurance is a contract that protects the insured from what?

Loss

Health insurance contracts are unilateral. What does that mean?

Only one party makes a legally enforceable promise

How can health insurance policies be delivered to the insured?

Personally delivered by the agent or mailed

What term describes the fee a person pays an insurance company to receive coverage?

Premium

What is the main responsibility of a companys underwriting unit?

Risk selection

If an agent fails to obtain the applicants signature on the insurance application, what must the insurer do?

Send the application back to the applicant for signature

What are three types of risk rating classifications in life insurance?

Standard, substandard and preferred

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

The Agent

Whose responsibility is it to determine that all the questions on an insurance application are answered?

The Agent

What is the purpose of the agents report during the application process?

The agents report discusses the agents personal observations about the proposed insured that may help in the underwriting process.

If an applicant for a life insurance policy and the potential insured are two different people, what would be the underwriters main concern?

The existence of insurable interest between the applicant and the insured

What law protects consumers from the circulation of inaccurate or obsolete information?

The fair credit reporting act

Who must have insurable interest in the insured?

The policyowner

What is insurance underwriting?

The process of risk selection and classification

How is the information obtained for an investigative consumer report?

Through interviews with the applicant's associates, friends and neighbors

During which stage in the insurance process do insurers evaluate information that identifies adverse selection risks?

Underwriting

What is the name of the process that insurance companies use to determine whether or not an applicant is insurable?

Underwriting

When would a misrepresentation be considered material?

When it may alter the underwriting decision

In forming an insurance contract, when does an acceptance usually occur?

When the insurer approves a prepaid application

When does an insurance policy go into effect?

When the policy is delivered and the premium is paid

when must insurable interest exist in a life insurance policy?

at the time of application

what type of report provides information about the applicants hobbies and financial status?

investigate consumer report

what risk classification would typically qualify for lower premiums?

preferred risk

what term describes the fee a person pays an insurance company to receive coverage?

premium

if an insurer needs to obtain information about the applicant from investigators, what is insurer required to do?

provide the applicant a disclosure authorization notice

in health insurance contracts, the insured is not legally bound to any particular action; however, the insurer is obligated to pay for losses covered by the policy. what contract element does this describe?

unilateral

when would a misrepresentation on an insurance application be considered fraud?

when it is intentional and material

In insurance, when is the offer usually made on a contract?

when the insurance application is submitted