5 - Life Insurance Underwriting and Policy Issue

Under the USA Patriot Act, insurers are required to report receipt of cash payments in excess of:

$10,000 The anti-money laundering provisions of the USA Patriot Act require insurers to report any cash payments received that are greater than $10,000.

A statement made by an insured in an insurance application that must be true to the best of one's knowledge and which becomes a part of the contract is known as:

A representation

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 26 Coverage became effective on the date the policy was delivered and first premium collected.

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

An agent gives a conditional receipt to a client for an insurance policy after collecting the initial premium. When will the policy become effective?

When the conditions of the receipt are met A conditional receipt indicates that certain conditions must be met in order for the insurance coverage to go into effect

When does a life insurance contract become effective if the initial premium is not collected during the application process?

When producer delivers policy and collects the initial premium

A student pilot can pay regular premium costs for her life insurance policy with the addition of which of the following?

Aviation exclusion

Who is NOT required to sign a life insurance application?

Beneficiary

A life insurance application must be signed by all of these, EXCEPT:

Beneficiary Beneficiaries are not required to sign an insurance application.

An incomplete life insurance application submitted to an insurer will result in which of these actions?

Application will be returned to the writing agent If the company discovers a mistake or incompletion, it usually returns the application to the producer.

Which of the following correctly explains the actions an agent should take if a customer wants to apply for an insurance policy?

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 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 In this situation, the producer should submit the application to the insurance company without the premium. However, if a premium is not paid with the application, the policy will not become valid until the initial premium is collected.

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 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

Consumer reports requested by an underwriter during the application process of a life insurance policy can be used to determine:

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.