5 - Life Insurance Underwriting and Policy Issue

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 factors do NOT play a role in the underwriting of a life insurance policy? Avocations Credit status Marital status Occupation

Marital status

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

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

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

Binding receipt

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initial premium Collect initial premium along with a signed health statement Explain to the applicant the policy is no longer in effect due to change in health condition Collect initial premium and leave a binding receipt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 initial premium along with a signed health statement

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

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

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

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

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

Who is NOT required to sign a life insurance application? Adult insured Policyowner Agent Beneficiary

Beneficiary

All of these are considered sources of underwriting information about an applicant EXCEPT Inspection Report Credit Report Rating Services Medical Information Bureau

Rating Services

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

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

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

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