Completing the Application, Underwriting and Delivering the Policy
What type of report provides information about the applicant's hobbies, habits and financial status?
inspection report
Health insurance contracts are unilateral. What does that mean?
only one party makes a legally enforceable promise
In health insurance contracts, the insured is not legally bound to any particular action; however, the insurer is obligated to pay for losses covered by the policy. What contract element does this describe?
unilateral
What is policy replacement?
A new policy is issued while an existing policy is terminated or reissued with a reduction in cash value
Who is a field underwriter?
Agent/Producer
What are the four elements in an insurance contract?
Agreement (offer and acceptance), consideration, competent parties, and legal purpose
When must insurable interest exist in a life insurance policy?
At the time of application
When must the policy summary for a life insurance policy be delivered to the policy owner?
At the time of policy delivery
When a change needs to be made on the application for insurance, which is the best method for correcting the information?
Complete a new application or ask the applicant to initial the correction on the original application.
Health contracts are prepared by insurers and must be accepted by the insured on an 'as is' basis. This describes what aspect of a health insurance contract?
Contract of adhesion
At what point does coverage begin when an agent issues a conditional receipt for a life insurance policy?
Either on the date of the application or the date of the medical exam (whichever occurs last)
What law protects consumers from the circulation of inaccurate or obsolete information?
Fair Credit Reporting Act
Insurance is a contract that protects the insured from what?
Loss
What is adverse selection?
People who are more likely to submit insurance claims are seeking insurance more often than preferred risks
How can health insurance policies be delivered to the insured?
Personally delivered by the agent or mailed
What document describes the specific information about a policy?
Policy summary
Who must have insurable interest in the insured?
Policyowner
What risk classification would typically qualify for lower premiums?
Preferred risk
If an insurer needs to obtain information about the applicant from investigators, what is the insurer required to do?
Provide the applicant a Disclosure Authorization Notice
What is the best way to handle incomplete insurance applications?
Return the application to the applicant for completion
What is the main responsibility of a company's underwriting unit?
Risk selection
Whose responsibility is it to determine that all the questions on an insurance application are answered?
The agents
If an applicant for a life insurance policy and the potential insured are two different people, what would be the underwriter's main concern?
The existence of insurable interest between the applicant and the insured
What is insurance underwriting?
The process of risk selection and classification
During which stage in the insurance process do insurers evaluate information that identifies adverse selection risks?
Underwriting
What is the name of the process that insurance companies use to determine whether or not an applicant is insurable?
Underwriting
When would a misrepresentation on an insurance application be considered fraud?
When it is intentional and material
In insurance, when is the offer usually made on a contract?
When the insurance application is submitted
In forming an insurance contract, when does an acceptance usually occur?
When the insurer approves a prepaid application
What are the three types of risk rating classifications in life insurance?
Preferred, standard and substandard
What term describes the fee a person pays an insurance company to receive coverage?
Premium
If an agent fails to obtain the applicant's signature on the insurance application, what must the insurer do?
Send the application back to the applicant for signature
What is the purpose of the agents report during the application process?
The agent's report discusses the agent's personal observations about the proposed insured that may help in the underwriting process
When does an insurance policy go into effect?
When the policy is delivered and the premium is paid
If an applicant does not receive his or her insurance policy, who would be held responsible?
agent
What is a warranty in an insurance contract?
An absolute true statement upon which the validity of the insurance contract is based
What entities make up the Medical Information Bureau?
Insurers
What are the three main instances when insurable interest exists in life insurance?
Insuring your own life, the life of a family member, or the life of a business partners or someone who has a financial obligation to the policyowner
What report is used to assess risk associated with a health insurance applicants lifestyle and character?
Investigative consumer report
When would a misrepresentation be considered material?
When it may alter the underwriting decision
How is the information obtained for an investigative consumer report?
Through interviews with the applicant's associates, friends and neighbors
What two elements are necessary for a life insurance contract to have legal purpose?
Insurable interest and consent
What do individuals use to transfer their risk of loss to a larger group?
Insurance