ExamFX Field Underwriting Procedures

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Material Misrepresentation

is a statement that, if discovered, would alter the underwriting decision of the insurance company. If they are intentional, they are considered fraud.

Medical Information Bureau (MIB) report

owned by member insurance companies and it is a nonprofit trade organization which receives adverse medical information from insurance companies and maintains confidential medical impairment information on individuals.

Investigative Consumer Reports

similar to consumer reports in that they also provide information on the consumer's character, reputation, and habits. Except the information is obtained through an investigation and interviews with associates, friends and neighbors of the consumer. These reports cannot be made unless the consumer is advised in writing about the report within 3 days of the date the report was requested and must be advised that they have a right to request additional information concerning the report, and the insurer or reporting agency has 5 days to provide the consumer with the additional information.

4 essential elements for forming a legal binding contract

Agreement (offer and acceptance) Consideration Competent parties Legal purpose

Attending Physician Report (APS)

If the underwriter deems it necessary, statement 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. The physician can explain exactly what the applicant was treated for, the treatment required, the length of treatment and recovery, and the prognosis.

Parties to a contract (Competent Parties)

Must be capable of entering into a contract in the eyes of the law. Generally, this requires that both parties be of legal age, mentally competent to understand the contract, and not under the influence of drugs or alcohol.

Unilateral Contract

Requires that only one of the parties to the contract is legally bound to do anything.

The following parties must sign the application form

The agent; The applicant; and The proposed insured (if different from the applicant).

Acceptance (Agreement)

Takes place when an insurer's underwriter approves the application and issues a policy.

Fair Credit Reporting Act

The act established procedures that consumer- reporting agencies must follow in order to ensure that records are confidential, accurate, relevant, and properly used. The law also protects consumers against the circulation of inaccurate or obsolete personal or financial information.

Consideration

The binding force in any contract that states that both parties must give something of value for the transfer of risk. Insured: representations made in the application and the payment of premium; Insurer: the promise to pay in the event of loss.

Legal Purpose

The purpose of the contract must be legal and not against public policy. To ensure legal purpose of a Life Insurance policy, for example, it must have both: insurable interest and consent.

Misrepresentations

Untrue statements on the application that could void the contract.

Pre-existing condition

a medical condition for which the insured sought medical advice or treatment within a specified period of time prior to the policy issue.

Representations

are statements believed to be true to the best of one's knowledge, but they are not guaranteed to be true.

Consumer Reports

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

Warranty

is an absolutely true statement upon which the validity of the insurance policy depends.

Contract of Adhesion

is prepared by one of the parties (insurer) and accepted or rejected by the other party (insured). In other words, insurance contracts are offered on a "take- it-or-leave-it" basis by an insurer.

Insurable Interest

is proven by love and affection, economic or financial loss. In life and health insurance, it is required at the time of policy issuance.

Conditional Contract

requires that certain conditions must be met by the policyowner and the company in order for the contract to be executed, and before each party fulfills its obligations. For example, the insured must pay the premium and provide proof of loss in order for the insurer to cover a claim.


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