Module 5 - Life Underwriting
P completes an application for a $10,000 life policy but does not give the producer the initial premium. P's coverage becomes effective when -P receives the policy and pays the premium -P passes the medical examination -The producer receives the policy -The insurance company approves the policy
P receives the policy and pays the premium
Which of these do NOT constitute policy delivery? -Policy mailed to applicant -Policy mailed to agent -Policy delivered to the applicant by the agent -Policy issued with a rating
Policy issued with a rating
An applicant's medical information received from the Medical Information Bureau (MIB) may be furnished to the -Agent -Applicant's spouse -National Association of Insurance Commissioners (NAIC) -Applicant's physician
Applicant's physician
Which of these factors do NOT play a role in the underwriting of a life insurance policy? -Avocations -Credit status -Marital status -Occupation
Marital status
An incomplete life insurance application submitted to an insurer will result in which of these actions? -Application will be returned to the writing agent -Application will be approved with restrictions -Application will be pending until a MIB report is sent to the insurer -Application will be automatically declined
Application will be returned to the writing agent: discovered mistakes or incomplete applications will be returned to the producer
At what time must a policy owner have an insurable interest on the insured in order for the life policy to be valid? -After the Contestable period -When the policy proceeds are paid -At the time fo application -When the insured dies
At the time fo application:
A student pilot can pay regular premium costs for her life insurance policy with the addition of which of the following? -Guaranteed Insurability Rider -Aviation Exclusion -Impairment Rider -Accidental Death Benefit Rider
Aviation Exclusion
Who is NOT required to sign a life insurance application? -Adult insured -Policy owner -Agent -Beneficiary
Beneficiary
On August 6, D submitted an application for a $50,00 Life Insurance policy and did not pay the initial premium. On August 18, D went to his doctor complaining of chest pains, and some tests were given by the doctor. The life policy was delivered by the producer on August 20 and D explains what had recently taken place with the doctor. What action should the producer then take? -Collect initial premium -Collect initial premium along with a signed health statement -Explain to the applicant the policy is no longer in effect due to a change in the health condition -Collect initial premium and leave a binding receipt
Collect initial premium along with a signed health statement: In this situation, the producer should deliver the policy and obtain a premium payment along with a signed health statement
Which of the following correctly explains the actions an agent should take if a customer wants to apply for an insurance policy? -Have the customer sign a blank application, then take the application back to his office to complete prior to sending it off to the insurance company -Complete the application over the phone with the customer, sign the application for the customer, then send the application off to the insurance company -Complete the application and review the information with the customer prior to obtaining the customer's signature, then send the application off to the insurance company -Have the customer fill out the application and send it to his office for him to sign, then send it off to the insurance company
Complete the application and review the information with the customer prior to obtaining the customer's signature, then send the application off to the insurance company
What is the purpose of the USA Patriot Act? -Detect and deter fraud -Detect and deter alien insurance companies -Detect and deter terrorism -Detect and deter misrepresentations
Detect and deter terrorism
From what authority derives the requirement that an insurance application contains a disclosure stating that an investigative consumer report may be obtained on an applicant? -Fair Credit Reporting Act -Medical Information Bureau -Part III of the application -Life Insurance
Fair Credit Reporting Act
Which Federal law allows an insurer to obtain an inspection report on a potential insured? -Medical Information Bureau Act -Freedom of Information Act -Fair Credit Reporting Act -Medical Information Act
Fair Credit Reporting Act of 1970, or FCRA, established procedures for the collection and disclosure of information obtained on consumers through investigation and credit reports
Information obtained from a phone conversation to the proposed insured can be found in which of these reports? -Agent's report -MIB report -Inspection report -Attending physician's report
Inspection report
What is being delivered during a policy delivery? -A binding receipt to the proposed insured -Insurance contract to the proposed insured -Application and initial premium to the insurer -Policy summary sheet and disclosure material to the proposed insured
Insurance contract to the proposed insured
On January 8, an applicant filled out an application for a life insurance policy but did not include the initial premium. The insurance company approved the application on January 14 and issued the policy January 15. The producer delivered the policy on January 26 and collected the first premium. When did the coverage become effective? -January 8 -January 14 -January 15 -January 26
January 15, coverage became effective on the date the policy was delivered and first premium collected
Q applied for life insurance and submitted the initial premium on January 1. The policy was issued on February 1, but it was not delivered by the agent until February 7. Q is dissatisfied and returns the policy on February 13. How will the insurer handle this situation? -Premium will be fully refunded minus a surrender charge -Policy was not returned within the free-look period, premium will not be refunded -Policy was returned within the free-look period, premium will be fully refunded -Premium will be fully refunded minus a prorated amount for the period of February 7 - February 13
Policy was returned within the free-look period, premium will be fully refunded: the free-look period begins when the policy is delivered to policy owner
Consumer reports requested by an underwriter during the application process of a life insurance policy can be used to determine: -Driving history -Probability of making timely premium payments -If the applicant is a tobacco user -Overall health of the applicant
Probability of making timely premium payments: the purpose of these reports is to provide a picture of an applicant's general character and reputation, mode of living, finances, and any exposure to abnormal hazards
All of these are considered sources of underwriting information about an applicant, EXCEPT: -Inspection Report -Credit Report -Rating Services -Medical Information Bureau
Rating Services (A.M. Best, Standard & Poor's)
Why is an applicant's signature required on a life insurance application? -To attest that the statements on the application are warranties -To attest that the statements on the application are accurate to the best of the applicant's knowledge -To give Power of Attorney to the producer if needed -To attest that all statements on the application are guaranteed to be true
To attest that the statements on the application are accurate to the best of the applicant's knowledge