Underwriting and Policy Issue
P completes an application for a $10,000 life policy, but does not give the producer the initial premium. P's coverage becomes effective when P receives the policy and pays the premium P passes the medical examination the producer receives the policy the insurance company approves the policy
P receives the policy and pays the premium
The USA Patriot Act was enacted in 2001 2002 2003 2004
2001 - to detect and deter terrorism
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 policy is issued The date of policy delivery When the conditions of the receipt are met The date the sales appointment was set
when the conditions of the receipt are met
Any changes made on an insurance application requires the initials of whom? Insured Agent Applicant Beneficiary
applicant
Upon delivery of a rated life insurance policy, the Producer must obtain each of the following EXCEPT Signed HIPAA disclosure Signed amendment Signed statement of Good Health The required premium
signed HIPAA disclosure
Under the USA Patriot Act, insurers are required to report receipt of cash payments in excess of $10,000 $7,500 $5,000 $2,500
$10,000 - anti money laundering provisions require this
An incomplete life insurance application submitted to an insurer will result in which of these actions? Application will be returned to the writing agent Application will be approved with restrictions Application will be pending until a MIB report is sent to the insurer Application will be automatically declined
application will be returned to the writing agent
At what time must a policyowner have insurable interest on the insured in order for the life policy to be valid? After the Contestable period When the policy proceeds are paid At the time of application When the insured dies
at the time of application
A student pilot can pay regular premium costs for her life insurance policy with the addition of which of the following? Guaranteed Insurability rider Aviation exclusion Impairment rider Accidental Death Benefit rider
aviation exclusion
A life insurance application must be signed by all of these EXCEPT the policyowner the agent the insured (if an adult) beneficiary
beneficiary
Who is NOT required to sign a life insurance application? Adult insured Policyowner Agent Beneficiary
beneficiary
Information obtained from a phone conversation to the proposed insured can be found in which of these reports? Agent's report MIB report Inspection report Attending physician's report
inspection report
What is the purpose of a Policy Summary? It details the commissions earned by the agent It guarantees a policy will be issued It allows the consumer to compare the costs of different policies It highlights the critical parts of the policy issued
it highlights the critical parts of the policy issued
A Medical Information Report (MIB) report may disclose which of the following Prior preferred rating Prior use of marjuana Prior lapsing of policy Prior bankruptcy judgement
prior use of marijuana
Consumer reports requested by an underwriter during the application process of a life insurance policy can be used to determine driving history probability of making timely premium payments if applicant is a tobacco user overall health of the applicant
probability of making timely premium payments
All of these are considered sources of underwriting information about an applicant EXCEPT Inspection Report Credit Report Rating Services Medical Information Bureau
rating services
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 issued a voidable policy committed an act of fraud assigned the risk to a reinsurer
waived one of its legal rights
When does a life insurance contract become effective if the initial premium is not collected during the application process? After all medical and personal information has been evaluated When insurer receives initial premium from the producer When producer delivers policy and collects initial premium After application has been approved by the underwriters
when producer delivers policy and collects initial premium
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 an insuring agreement a mutual assent a warranty a representation
a representation
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? Binding Initial Premium Conditional Contingent
conditional - "if the application is approved"
What is being delivered during a policy delivery? A binding receipt to the proposed insured Insurance contract to the proposed insured Application and initial premium to the insurer Policy summary sheet and disclosure material to the proposed insured
insurance contract to the proposed insured
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) Federal Fair Credit Act Violation Title 18 Fraud violation Anti-Money Laundering violation Unfair Trade Practice violation
anti-money laundering violation
When an insurance application is taken by a producer, which of these statements is true? The applicant should have an attorney present during the application process Any changes made on the application require the applicant's initials Any changes made on the application can later be initialed by the producer if the applicant is unavailable The producer has the discretion to ask or not to ask any of the questions listed on the application
any changes made on the application require the applicant's initials
An applicant's medical information received from the Medical Information Bureau (MIB) may be furnished to the agent applicant's spouse National Association of Insurance Commissioners (NAIC) applicant's physician
applicant's physician
Before a life insurance policy is issued, which of these components of the contract is required? Applicant's signature on application Beneficiary's signature A conditional receipt Attending Physician Statement (APS)
applicant's signature on application
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 Collect initial premium along with a signed health statement Explain to the applicant the policy is no longer in effect due to change in health condition Collect initial premium and leave a binding receipt
collect the initial premium along with a signed health statement
What is the purpose of the U.S.A. Patriot Act? detect and deter fraud detect and deter alien insurance companies detect and deter terrorism detect and deter misrepresentations
detect and deter terrorism
An underwriter determines that an applicant's risk should be recategorized due to a health issue. This policy may be issued with a(n) delayed effective date exclusion for the medical condition extended Contestable period Concealment clause
exclusion for the medical condition
Which Federal law allows an insurer to obtain an inspection report on a potential insured? Medical Information Bureau Act Freedom of Information Act Fair Credit Reporting Act Medical Information Act
fair credit reporting act
Which of these actions should a producer take when submitting an insurance application to an insurer? Issue a binding receipt to applicant if no initial premium is submitted Disclose to the applicant the amount of commissions to be earned on this transaction Inform insurer of relevant information not included on the application Arrange for a copy of the Attending Physician Statement (APS) to be sent to the producer
inform insurer of relevant information not included on the application
Which of these factors do NOT play a role in the underwriting of a life insurance policy? Avocations Credit status Marital status Occupation
marital status - avocations are hobbies or minor occupations
The underwriting process involves all of these EXCEPT for Credit report Policy loan Risk classification Application
policy loan
Which factors are taken into consideration when an insurance company determines the premium rate for a Whole Life policy on an applicant? Geographical location Source of income Risk classification Marital status
risk classification
In order for coverage on a non-medical insurance application to take effect the same day, the producer must collect a signed application and a Medical Information Report the initial premium forward it immediately to the insurer Attending Physician Statement
the initial premium
Which of the following correctly explains the actions an agent should take if a customer wants to apply for an insurance policy? Have the customer sign a blank application, then take the application back to his office to complete prior to sending it off to the insurance company Complete the application over the phone with the customer, sign the application for the customer, then send the application off to the insurance company 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 Have the customer fill out the application and send it to his office for him to sign, then send it off to the insurance company
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
From what authority derives the requirement that an insurance application contains a disclosure stating that an investigative consumer report may be obtained on an applicant? Fair Credit Reporting Act Medical Information Bureau Part lll of the application Life Insurance Buyer's Guide
fair credit reporting act
Which parts of a life insurance policy are guaranteed to be true? Rating Representation Statement Warranty
warranty
Why is an applicant's signature required on a life insurance application? To attest that the statements on the application are warranties To attest that the statements on the application are accurate to the best of the applicant's knowledge To give Power of Attorney to the producer if needed To attest that all statements on the application are guaranteed to be true
to attest that the statements on the application are accurate to the best of the applicant's knowledge
Which of the following correctly explains the actions an agent should take if a customer wants to apply for an insurance policy? Have the customer sign a blank application, then take the application back to his office to complete prior to sending it off to the insurance company Complete the application over the phone with the customer, sign the application for the customer, then send the application off to the insurance company 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 Have the customer fill out the application and send it to his office for him to sign, then send it off to the insurance company
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
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? Binding receipt Conditional receipt Warranty receipt Backdated receipt
conditional receipt - only applies when it is assumed that the insured is of an acceptable risk
What action should a producer take if the initial premium is NOT submitted with the application? Keep the application until premium is paid Forward the application to the insurer after giving the applicant a binding receipt Forward the application to the insurer without the initial premium Forward the application to the insurer after giving the applicant a conditional receipt
forward the application to the insurer without the initial premium
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 policy is delivered free-look period has expired insurance company issues policy initial premium is collected
free-look period has expired
An insurance company may NOT reject a prospective insured's life application on the basis of which of the following factors? Hobbies Weight Gender Medical history
gender
On January 8, an applicant filled out an application for a life insurance policy but did not include the initial premium. The insurance company approved the application on January 14 and issued the policy January 15. The producer delivered the policy on January 26 and collected the first premium. When did the coverage become effective? January 8 January 14 January 15 January 26
january 26
Which of these do NOT constitute policy delivery? Policy mailed to applicant Policy mailed to agent Policy delivered to the applicant by the agent Policy issued with a rating
policy issued with a rating
Q applied for life insurance and submitted the initial premium on January 1. The policy was issued February 1, but it was not delivered by the agent until February 7. Q is dissatisfied and returns the policy February 13. How will the insurer handle this situation? Premium will be fully refunded minus a surrender charge Policy was not returned within the free-look period, premium will not be refunded Policy was returned within the free-look period, premium will be fully refunded Premium will be fully refunded minus a prorated amount for the period of February 7 - February 13
policy was returned within the free-look period, premium will be fully refunded
Agent J takes an application and initial premium from an applicant and sends the application and premium check to the insurance company. The insurance company returns the check back to J because the check is made out to J instead of the insurance company. What action should J take? Deposit the applicant's check into his account and make a personal check out to the insurance company from his personal account Return to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company Cross off his name on the "pay to" portion of the check, write the name of the insurance company, and send the check back to the insurance company Deposit the check in to his personal account, use the funds to purchase a cashiers check, and send the new cashiers check back to the insurance company
return the check to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company
Agent J takes an application and initial premium from an applicant and sends the application and premium check to the insurance company. The insurance company returns the check back to J because the check is made out to J instead of the insurance company. What action should J take? Deposit the applicant's check into his account and make a personal check out to the insurance company from his personal account Return to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company Cross off his name on the "pay to" portion of the check, write the name of the insurance company, and send the check back to the insurance company Deposit the check in to his personal account, use the funds to purchase a cashiers check, and send the new cashiers check back to the insurance company
return to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company
Which of these terms accurately defines an underwriter's assessment of information on a life insurance application? Risk classification Warranty review Insurable interest Inspection report
risk classification
P is a producer who notices 5 questions on a life application were not answered. What actions should P take? Mail incomplete application to applicant to be completed and returned to the agent Submit the application as-is to the insurer Call the applicant and complete application over the phone Set up a meeting with the applicant to answer the remaining questions
set up a meeting with the applicant to answer the remaining questions
What would the Medical Information Bureau (MIB) identify? Testing positive for marijuana use from a previous screening Existing life insurance coverage with other carriers Credit scores Primary physician
testing positive for marijuana use form a previous screening
Which of the following statements is CORRECT about an agent who is taking an insurance application? The agent should avoid asking the applicant questions that may cause embarrassment The agent should have the applicant initial any changes made on the application The agent may allow a member of the applicant's immediate family to sign the application if the applicant is not available The applicant may answer routine questions on the application for the applicant
the agent should have the applicant initial any changes made on the application
On delivery of a policy, a signed statement of good health is typically requested if A conditional receipt was given to the applicant The quarterly premium payment mode was selected The policy contains a guaranteed insurability rider The application was submitted without the initial premium
the application was submitted without the initial premium
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 sales appointment was made The date the application was submitted to the insurance company The date of application The date the agent delivered the policy, collected the initial premium, and obtained a good health statement from the insured
the date the agent delivered the policy, collected the initial premium, and obtained a good health statement from the insured