Chapter Five: Life Insurance Underwriting and Policy Issue

When an insurance application is taken by a producer, which of these statements is true?

Any changes made on the application require the applicant's initials

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

Application will be returned to the writing agent

What is being delivered during a policy delivery?

Insurance contract to the proposed insured

Which of these terms accurately defines an underwriters assessment of information on an insurance application?

Risk classification

Upon delivery of a rated life insurance policy, the Producer must obtain each of the following EXCEPT

Signed HIPAA disclosure

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 initial premium

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

$10,000

When a policyowner cash surrenders a Universal Life insurance policy in it's early years, this may be considered a red flag for a(n)

Anti-Money Laundering violation

T applies for a life insurance policy and is told by the producer that the insurer is bound to the coverage as of the date of the application or medical examination, whichever is later, provided that T is an acceptable risk. What item is given to T?

Conditional receipt

An agent takes an individual insurance application, collects the appropriate premium, and issues the prospective insured a conditional receipt. The next step the insurance company will take is to:

Determine if the applicant is an acceptable risk by completing standard underwriting procedures

On delivery of a policy, a signed statement of good health is typically requested if

The application was submitted without the initial premium

M completes an application for life insurance but does not pay the initial premium. All of these actions must occur before M's policy goes into effect EXCEPT

free-look period has expired

A Medical Information Report (MIB) report may disclose which of the following:

Prior use of Marjuana

IF the initial premium is not collected during the application process, when does an insurance contract become effective

When the agent delivers the policy and collects the initial premium

ABC Insurance Company has accepted a life insurance application which contains unanswered questions. The company then makes the application part of the life contract. In this situation, the insurer has

waived one of its legal rights

In order for coverage on a non-medical insurance application to take effect the same day, the producer must collect a signed application and

The initial premium

K applies for a life insurance policy on herself and submits the initial premium with the application. She is given a receipt by the agent stating that coverage begins immediately if the application is approved. What kind of receipt was used?

Conditional

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

Which of these actions should a producer take when submitting an insurance application to an insurer?

Inform insurer of relevant information not included on the application

Information obtained from a phone conversation to the proposed insured can be found in which of these reports?

Inspection report

Which of these factors do NOT play a role in the underwriting of a life insurance policy?

Marital status

Q applied for life insurance and submitted the initial premium on January 1. The policy was issued February 1, but it was not delivered by the agent until February 7. Q is dissatisfied and returns the policy February 13. How will the insurer handle this situation?

Policy was returned within the free-look period, premium will be fully refunded

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

Which of the following statements about the classification of applicants is false?

Substandard applicants are never declined by underwriters

All of these are considered sources of underwriting about an applicant, ,except:

Ratings service

An underwriter determines that an applicant's risk should be recategorized due to a health issue. This policy may be issued with a(n)

An exclusion for the medical condition

On August 6, D submitted an application for a $50,000 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 along with a signed health statement

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

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

Aviation exclusion