Field Underwriting Procedures

Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?

3 days

If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?

5 days

What is material misrepresentation?

A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company

Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. What contract characteristic does this describe?

Adhesion

What information are members of all the MIB required to report?

Adverse medical information about the applicant's or insured

An insured pays a $100 premium every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered loss. What characteristic of an insurance contract does this describe?

Aleatory

What describes the concept that the insured pays a small amount of premium for a large amount of risk on the part of the insurance company?

Aleatory

In insurance, an offer is usually made when

An applicant submits an application to the insurer

If an insurance company wishes to order a consumer report on an application to assist in the underwriting process, and if a notice of insurance information practices has been provided, the report may contain all of the following information EXCEPT the applicant's

Ancestry

What is the term used for an applicant's written request to an insurer for the company to issue a contract, based on the information provided?

Application

An agent is ready to deliver a policy to an applicant but has not yet received payment. Upon delivery, the agent collects the applicant's premium check, answers any questions the applicant may have, and then leaves. What did he forget to do?

Ask her to sign a statement of good health

In a replacement situation, all the following must be considered EXCEPT

Assets

To comply with Fair Credit Reporting Act, when must a producer notify an applicant that a credit report may be requested?

At the time of application

If an underwriter requires extensive information about the applicant's medical history, what report will best serve this purpose?

Attending Physician's Statement

The proposed insured makes the premium payment on a new insurance policy. If the insured should die, the insurer will pay the death benefit to the beneficiary if the policy is approved. Example of what contract?

Conditional

Which one of the following includes information regarding a person's credit, character, reputation, and habits?

Consumer report

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

Consumer report

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

Contracts adhesion

What is NOT an essential element of an insurance contract?

Counteroffer

The insurance policy, together with the policy application and any added riders form what is known as

Entire Contract

Which of the following best describes the aleatory nature of an insurance contract?

Exchange of unequal values

What protects consumers against inaccurate or obsolete or financial information?

Fair Credit Reporting Act

What phase begins after a new policy is delivered?

Free look period

When would a misrepresentation on the insurance application be considered fraud?

If it is intentional and material

A life insurance policy has a legal purpose if both of which of the following elements exist?

Insurable interest and consent

MIB was created to protect

Insurance companies from adverse selection by high risk persons.

What entities make up the Medical Information Bureau?

Insurers

An insured stated on her application for life insurance that she had never had a heart attack, when in fact she had a series of minor heart attacks last year for which she sought medical attention. Which of the following will explain the reason a death benefit claim is denied?

Material misrepresentation

What is the medical information bureau?

Non profit organization that maintains underwriting information on applicants for life and health insurance

What is a definition of a unilateral contract?

One-sided: only one party makes an enforceable promise

Underwriting is a major consideration when an insured wishes to replace her current policy for all the following reasons EXCEPT

Premiums always stay the same

The Federal Fair Credit Reporting Act

Regulates consumer reports

What is the best way to make a change on an application for insurance?

Start over with a fresh application.

Which one of the following would provide an underwriter with information concerning an applicant's health history?

The Medical Information Bureau (MIB)

Whose responsibility is it to inform an applicant for health insurance about the insurer's information gathering practices?

The agent

Which of the following would qualify as a competent party in an insurance contract?

The applicant has a prior felony conviction

Insurable Interest can be best described by

The applicant must experience a financial loss due to an accident or sickness that befalls the insured.

What is the entire contract in health insurance underwriting?

The application and the policy issued

What is NOT the consideration in a policy?

The application given to a prospective insured

Which of the following is NOT the consideration of policy?

The application given to a prospective insured

In comparison to consumer reports, which one of the following describes a unique characteristic of investigative consumer reports?

The consumer's associates, friends, and neighbors provide the report's data

An agent is in the process of replacing the insured's current health insurance policy with a new one. Which of the following would be a proper action?

The old policy should stay in force until the new policy is issued.

In terms of parties to a contract, which of the following does NOT describe a competent party?

The person must have at least completed secondary education.

Who must sign a health insurance application?

The policyowner, the insured (if different), and the agent

An insured is upset that her new health insurance policy was delivered to her by certified mail and not through her agent. Which of the following is true?

There is nothing wrong with this form of policy delivery.

In forming an insurance contract, when does acceptance usually occur?

When an insurer's underwriter approves coverage

When should an agent obtain a Statement of Good Health from the insured?

When the premium was paid upon policy delivery and not at the time of application

Whose responsibility is it to determine if all of the questions on an application have been answered?

agent

An agent makes a mistake on the application and then corrects his mistake by physically entering the necessary information. Who must then initial that change? (Corrections too)

applicant

If an insurer decides to obtain medical information from different sources in order to determine the insurability of an applicant, who must be notified of the investigation?

applicant

An insurance contract requires that both the insured and the insurer meet certain conditions in order for the contract to be enforceable. What contract characteristic does this describe?

conditional

When both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is

conditional

Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT

conditions

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated?

consideration

When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following?

consideration

What entity can legally bind coverage?

insurer

Who must pay for the cost of a medical examination required in the process of underwriting?

insurer

If only one party to an insurance contract has made a legally enforceable promise, what kind of contract is it?

unilateral

In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe?

unilateral

A statement that is guaranteed to be true, and if untrue, may breach an insurance contract?

warranty