Completing the application, underwriting, and Delivering the policy

The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective?

As of the application date -If the full premium was summitted with the application and the policy was issued as requested, the policy coverage effective date would generally coincide with the date of application

which is the primary source of information used for insurance underwriting?

Application -The application contains most of the information used for underwriting purposes. this is why its completeness and accuracy are so crucial. Know this!: an insurance application is the key source underwriters use for information about the applicant.

Most agents try to collect the initial premium for submission with the application. When an agent collects the initial premium from the applicant, the agent could issue the applicant a

Premium receipt. -When collecting the initial premium, the agent should issue the applicant a premium receipt. Know this!: Conditional receipt (most common receipt) means the applicant may be covered as early as the date of the application

Another name for a substandard risk classification is

Rated - Substandard risk classification is also referred to as "rated' since these policies could be issued with the premium rated-up, resulting in a higher premium

what is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act?

$2,500 -An individual who willfully violates this Act enough to constitute a general pattern or business practice will be subject to a penalty of up to $2,500

An investor buys a life policy on an elderly person in order to sell it for a life settlement. This is an example of

A STOLI policy -Stranger-originated life insurance (STOLI) policies are usually purchased by people who have no relationship with the insured with the intention of selling them for life settlements.

If an agent fails to obtain an applicant's signature on the application, the agent must.

Return the application to the applicant for a signature. - All applications must have the appropriate authorized signatures

which part of an insurance application would contain information regarding the cause of death of the applicant's deceased relatives?

Medical information Part 2- medical Information of the application includes information on the prospective insured's medical background, present health, any medical visits in recent years, medical status of living relatives and causes of death of deceased relatives.

If and insurer requires a medical examination of an applicant in connection with the application for life insurance, who is responsible for paying the cost of the examination?

The insurer -During the underwriting process, an insurer may require that an applicant receive a medical examination. The insurer is responsible for the associated cost of the examination.

What is the purpose of a disclosure statement in life insurance policies?

To explain features and benefits of a proposed policy to the consumer -Disclosure statements will help the applicants to make more informed and educated decisions about their choice of insurance

which of the following reports will provide the underwriter with the information about an insurance applicant's credit?

Consumer report -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 public sources.

which of the following statements is NOT true concerning insurable interest as it applies to life insurance? A) debtor has an insurable interest in the life of a lender. B) Business partners have an insurable interest in each other C) A husband or wife has an insurable interest in their spouse D) An individual has an insurable interest in his or her own life

debtor has an insurable interest in the life of a lender. -A lender has an insurable interest in the life of a debtor, but only to the extent of the debt. the debtor does NOT! have insurable interest in the life of the lender

Contracts are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as

Contract of Adhesion -Insurance policies are written by the insurer and submitted to the insured on a take-it-or-leave -it basis. The insured does not have any input into the contract, but simply adheres to the contract.

When Y applied for insurance and paid the initial premium on August 14, he was issued a conditional receipt. During the underwriting process, the insurance company found no reason to reject the risk or classify it other than as standard. Y was killed in an automobile accident on August 22, before the policy was issued. in this case, the insurance company will

Issue the policy anyway an pay the face value to the beneficiary. -The conditional receipt says that coverage will be effective either on the date of the application or the date of the medical exam, whichever occurs last, as long as the applicant is found to be insurable as a standard risk, and policy is issued exactly as applied for.

all of the following would be considered an insurance transaction EXCEPT.

Obtaining an insurance license - An insurance transaction means the carry on of business in insurance, which could include the solicitation of a policy, advising, negotiation, or inducement related to coverage or claims. Obtaining an insurance license is a prerequisite to transaction insurance