Life insurance Chapter one Completing the application, underwriting, and delivering the policy

Application The application contains most of the information used for underwriting purposes. This is why its completion and accuracy are so crucial.

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

Buyer Guide. This explained the life insurance in a way that the average consumer can understand. It does not address specific policy of the insurer.

Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process?

3 days An investigative consumer report cannot be made unless the consumer is advised in writing about the report within 3 days of the date the report was requested.

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

Must be informed of the source of the report. Such as the name and address of the reporting agency.

Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report

Insurable interest STOLI policies violate the principle of insurable interest because the purchaser of a stranger- originated life insurance policy doesn't know the insured or have any interest in the insured longevity.

Stranger-originated life insurance policies are in direct opposition to the principle of a. law of large numbers b. good faith c. indemnity d. insurable interest

Contracts 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.

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

Insurable interest and consent To ensure legal purpose of a life insurance policy, it must have both insurable interest and consent

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

Inspection Report. Inspection report cover moral and financial information regarding a potential insured, usually supplied by private investigators and credit agencies. Companies that use inspection reports are subject to the rules outlined in the Fair Credit Reporting Act.

An insurer receives a report regarding a potential insured that includes the insured's financial status, hobbies and habits. What type of a report is that?

RIsk selection. Underwriting involves selecting risks that fall within the parameter of loss that was used by the actuary when the rates were developed.

What is the main responsibility of a company's underwriting unit?

Substandard Because individual represents an under-average insurance risk because of physical condition, personal or family history of disease, occupation, habits or hobbies. This rating incurs the highest premium of policy is issued.

Which of the following types of risk will result in the highes premium?

1. Habits 2.Ancestry 3.Prior insurance 4. Credit history Ancestry Consumer Reports include written and oral information regarding a Consumers Credit, character, reputation, and habits collected by a reporting agency from employment records, credit reports, and other public sources

if an insurance company wishes to order a consumer report on an applicant 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

Charge a higher premium. The premium rate will be adjusted to reflect the insurers increased risk.

if an applicant for a life insurance policy is found to be a substandard risk the insurance company is most likely to

Other insurance coverages

Part 2 of the application for life insurance provides questions regarding all of the following EXCEPT 1.family health history 2.alcohol and tobacco consumption 3.other insurance coverages 4.recent surgeries

$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 $2500.

What is the maximum penalty for habitual willful non compliance with the Fair Credit Reporting Act?

It is intended to provide coverage on a date earlier than the date of the issuance of the policy.

What is the purpose of a conditional receipt?

When the application is signed and a check is given to the agent The policy can be effective as early as the date if the application, if the premium is submitted with the application and the police is issued as applied for.

When is the earliest a policy may go into effect?

Unilateral (one- sided) In a unilateral contract, only one of the parties to the contract is legally bound to do anything.

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

-Person must be of legal age. - Person must not be under the influence of drugs or alcohol -Person must be mentally competent to understand the contract.

In terms of parties to a contract, which of the following describes a competent party?

1. Explain the policy provisions, riders, and exclusions. 2.Disclose commissions earned from the sale of the policy. 3.Collect any premium due. 4. Explain the rating procedures of the policy is rated differently than applied for. Answer: 2.Disclose commissions earned from the sale of the policy. ***A producer must explain policy provisions, exclusions, and riders at the time of delivery, as well as the rating procedures, especially if the policy is rated differently than applied for. The producer must also collect any due premium and have the insured sign the statement of continued good health!

A producer must do all of the following when delivering a new policy to the insured EXCEPT

Education is not an underwriting factor nor is it information included on the application.

All of the following information about the applicant is identified in the General INformation section of a life insurance application EXCEPT 1. Education 2.Gender 3.Occupation 4.Age

As a field underwriter, a producer is responsible for all of the following tasks EXCEPT 1. Solicit business that will fall within the insurers underwriting guidlines 2. Help prevent adverse selection 3.Obtain appropriate signatures of the application for insurance 4. Issue the policy that is requested

As a field underwriter, a producer is responsible for all of the following tasks EXCEPT 1. Solicit business that will fall within the insurers underwriting guidlines 2. Help prevent adverse selection 3.Obtain appropriate signatures of the application for insurance 4. Issue the policy that is requested

Applicants past income. In classifying a risk, the Home Office underwriting department will look at the applicants past medical history, pre

In classifying a risk, the home office underwriting department will look at all of the following EXCEPT?

The customers associates, friends, and neighbors provide the reports data. Both consumer reports and investigative consumer reports provide additional information from an outside source about a customers character and reputation, and bothe types of reports are used under the Fair Credit Reporting Act. The main difference is that the information for investigative consumer reports is obtained though an investigation and interviews with associates, friends and neighbors of the consumer.

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