Underwriting - Section 10

In the event of a loss, the insured is required to submit all of the following: A statement of claim form. A certified death certificate. A copy of the original insurance policy. Except:

A completed Statement of the acting doctor.

Which of the following is true concerning AIDS testing and underwriting?

A policy may not contain exclusions for AID/HIV losses.

One of the underwriter's duties is classification of the risk. Which of the following would be incorrect concerning classification?

A preferred risk is reflected in the mortality table. The mortality table reflects a standard or average risk.

The purpose for this rider is to provide money for the insured to pay for medical and nursing care expenses if diagnosed with terminal illness.

Accelerated Benefits.

Which consumer publication must be given to the insured that describes the type of coverage that is being offered?

Buyers guide.

Usually companies offer several options when a policy is rated. Below are all true except:

Charge for a lower age than the actual age. This substandard risk (sometimes called rated) applicant would have higher premiums if accepted. The charge would be at a higher age not lower than the actual age.

Which of the following are not true statement? Accelerated Benefit riders pay benefits upon a terminal illness diagnosis of a covered condition and doesn't need to result in death. Critical Illness riders pay for medical and nursing care. Accelerated Benefit riders have no restrictions and benefits may be used for anything the insured chooses.

Critical Illness riders pay benefits upon first diagnosis of a covered condition, and doesn`t need to result in death.

____________ is the amount by which an insurance company's assets exceed its liabilities and capital.

Earned surplus.

All the following companies rate insurance companies financial strength

Fitch's Investor Service. The correct name is Fitch and Moody's Investor Service.

Which of the following is a significant difference between individual policies and Group Life Insurance contracts?

Group underwriting is based on averages, such as the average age, the average working conditions and the average health condition of the group members

__________ guarantees that when a contract is annuitized, the income payments will be based on the greater of the actual contract value or a minimum payout base.

Guaranteed Minimum Income Benefits.

All of the following statements pertaining to life insurance premiums are correct: For an insurance company, the costs of doing business must be reflected in its premiums. The expense factor in premium rate-making frequently is referred to as loading An insurance company invests the premium money it collects to earn interest Except:

In establishing premium rates, a company must assume it will earn a high rate of interest on its invested premiums. The insurer assumes a low rate of interest in order to make sure they collect enough premium to meet their contractual obligations.

The following statements about the MIB are true : The MIB collects information on consumers for use in the insurance underwriting process. The main goal is to prevent fraud and protect policyowners against selection of adverse risks. Data collected includes medical conditions, driving records, criminal activity, and more Except:

Insurance companies may use MIB reports to decline a policy. The insurer assumes a low rate of interest in order to make sure they collect enough premium to meet their contractual obligations.

What are the two methods most often used to compare the cost of life insurance policies?

Interest Adjusted Cost Method and Traditional Net Cost.

Jackson is paying $100 per month for his universal life policy which has a waiver of monthly deduction. Jackson was disabled 5 years. Which of the following is true?

Jackson's mortality and expense charges would be paid however no money will be paid into the cash account.

Higher retention rates are advantages for all parties involved in life insurance because:

Lower expenses and lower product prices.

All the following are true concerning MIB : MIB does not reveal if a life insurance application was rated, issued or rejected. An application cannot be rejected solely on the information in MIB. MIB keeps inputted information for only 7 years. Except;

MIB gets its information from claim forms and physicians.

Which rating would be considered best of the following choices?

Moody Baa1.

Money returned to policyholders from an insurance company`s earnings is called:

Policy dividends.

Sometimes a substandard risk is also called _____________.

Rated.

All of the following are true regarding surplus: Earned surplus is when you combine the shareholder surplus with the policyowner surplus. Surplus is the amount when assets exceed its liabilities and capital. Policyowner surplus is 50% of the underwriting income profit. EXcept:

Shareholder surplus is 50% of the capital. Shareholder Surplus is 50% of the underwriting income profit for a stock insurance company that is taxed in theyear earned.

The State of California's required financial report includes all the following information : Any changes in financial condition, capital, and surplus. The financial condition of the company. Any liabilities, income, and expenses. Execpt:

The company's declined policy results.

All the following are disadvantages of the Traditional Net Cost Method : The method doesn`t take into consideration the time value of money. The method`s calculations depend upon the policyowner having the policy for a certain # of years. Cost coverage will be affected by the actual dividends and cash values Except:

The dividends and premium payments are projections. The dividends and cash values are projections; cost coveragewill be affected by the actual dividends and cash values.

Morbidity tables are used by insurance companies to calculate:

The likelihood of sickness. Morbidity predicts the likelihood of sickness. Annuity tables predict longevity.

All the following statements are true regarding a disability income rider: The DI rider costs additional premium to add to a policy. The insurance company will waive the policy premiums and pay a monthly income to the insured. The DI rider is exactly like the waiver of premium rider, except for the monthly income benefit. Except:

The monthly income is based on a % of the death benefit of the policy to which it is attached. This monthly income is based on a percentage of the faceamount of the policy to which it is attached.

The correct statement concerning the cost of living rider would be: A cost of living rider protects against inflation eroding the life insurance death benefit. There is usually a maximum percentage increase. Inflation increases is tied to increases in the consumer price index. Except:

There is usually a premium increase for the additional protection if the insured can prove insurability.

How do the level term rider on a Family Maintenance Policy and the decreasing term rider on a Family Income policy differ from all other level and decreasing term riders in that:

These riders are used to produce income instead of a death benefit.

Which rider would allow the insured to buy additional coverage at special times without a medical exam?

Guaranteed insurability.

An accelerated death benefit rider (also known as living needs rider) in a life insurance policy allows which of the following?

The policyowner may receive a portion of the proceeds prior to the death under certain circumstances. Accelerated Death benefit advances the death benefit proceeds to the insured while alive if they are diagnosed terminal.

Jason has been disabled for 5 years and his policy had a waiver of premium rider. Which of the following is true?

The premiums that were paid would have no effect on the either the cash value or the death benefit.