Life Insurance - Underwriting and Policy Issue
Under the USA Patriot Act, insurers are required to report receipt of cash payments in excess of
$10,000
What is the purpose of a policy summary?
It highlights the critical parts of the policy issued
Upon delivery of a rated life insurance policy, the Producer must obtain each of the following EXCEPT
Signed HIPAA disclosure - disclosure should be taken at the time of sale with the application
Why must an insurance applicant answer all questions on the application?
Statements and representations on the application are part of the consideration for issuing a policy
Before a life policy is issued, which of these contract elements is necessary?
A signed application by the prospect
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
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
Information obtained from a phone conversation to the proposed insured can be found in which of these reports?
Inspection report
A life insurance application must be signed by all of these, EXCEPT:
beneficiary
P has recently signed an application for insurance. The insurer MUST advise her in writing that an investigative consumer report may be conducted according to the
Fair Credit Reporting Act
The entity whose sole purpose is sharing medical data among its member companies is called the
Medical Information Bureau (MIB)
A statement made by an insured in an insurance application that must be true to the best of one's knowledge and which becomes a part of the contract is known as
a representation
P is a producer who notices 5 questions on a life application were not answered. What actions should P take?
Set up a meeting with the applicant to answer the remaining questions
K is an agent who takes an application for individual life insurance and accepts a check from the client. He submits the application and check to the insurance company, however the check was never signed by the applicant. If the application is approved, when will coverage be effective?
The date the agent delivered the policy, collected the premium, and obtained a good health statement from the insured
What is the purpose of the U.S.A. Patriot Act?
detect and deter terrorism
A(n) _____ contained in a life insurance policy states that the policy will NOT cover certain risks
exclusion
An underwriter determines that an applicant's risk should be recategorized due to a health issue. This policy may be issued with a(n)
exclusion for the medical condition
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
Which of these factors do NOT play a role in the underwriting of a life insurance policy
marital status
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
The reason for backdating a policy is
to obtain a premium rate based on an earlier age
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
The USA Patriot Act was enacted in:
2001
All are true statements regarding the underwriting process, EXCEPT:
AIDS and HIV virus exams can be conducted in a discriminatory fashion
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
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
Any changes made on an insurance application requires the initials of whom?
Applicant
Before a life insurance policy is issued, which of these components of the contract is required?
Applicant's signature on application
What is the initial source of underwriting for an insurance policy?
Application containing statements from the insured
An incomplete life insurance application submitted to an insurer will result in which of these actions?
Application will be returned to the writing agent
A student pilot can pay regular premium costs for her life insurance policy with the addition of which of the following?
Aviation Exclusion
A pilot applies for Life insurance. The insurer approves the application with a $10 additional monthly premium modification due to the risk involved. The pilot declines the additional premium modification. The insurer will then likely issue the coverage with a(n)
Aviation Exlusion
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
Which of the following correctly explains the actions an agent should take if a customer wants to apply for an insurance policy?
Complete the application and review the information with the customer prior to obtaining the customer's signature, then send the application off to the insurance company
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
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. Assuming that T is an acceptable risk, what item is given to T?
Conditional Receipt
A life insurance application may be rejected on the basis of all of these factors EXCEPT
Gender
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
What is being delivered during a policy delivery?
Insurance contract to the proposed insured
Which of these do NOT constitute policy delivery?
Policy issued with a rating
The underwriting process involves all of these, EXCEPT for:
Policy loan
A Medical Information Report (MIB) may disclose:
Prior use of marijuana
Consumer reports requested by an underwriter during the application process of a life insurance policy can be used to determine
Probability of making timely premium payments
All of these are considered sources of underwriting information about an applicant EXCEPT
Rating Services (sources are inspection report, credit report, medical info bureau)..
Which factors are taken into consideration when an insurance company determines the premium rate for a Whole Life policy on an applicant?
Risk classification
Which of these terms accurately defines an underwriter's assessment of information on a life insurance application?
Risk classification
Upon policy delivery, a signed good health statement is requested from the applicant. Why would this be necessary?
The initial premium was NOT submitted with the application
Why is an applicant's signature required on a life insurance application?
To attest that the statements on the application are accurate to the best of the applicant's knowledge
Life insurance companies are required to establish and maintain an anti-money laundering compliance program according to which federal regulation?
USA Patriot Act
An applicant's medical information received from the Medical Information Bureau (MIB) may be furnished to the
applicant's physician
D the agent met with a prospect and ended up selling an insurance policy. While filling out the insurance application, D makes a mistake. In this situation, D MUST
correct the information and have the prospect initial the change
What action should a producer take if the initial premium is NOT submitted with the application?
forward the application to the insurance company without the premium
