Arkansas Life Insurance Review
An annuity has 2 distinct periods. What are they called, and what happens during each?
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What are the four steps a producer must follow when replacing an existing policy?
1. Present to the applicant a "Notice Regarding Replacement" that is signed by both the applicant and the producer, and a copy must be left with the applicant. 2. Obtain a list of all existing life insurance and/or annuity policies to be replaced including policy numbers and the names of all companies being replaced. 3. Leave the applicant with the original or a copy of written or printed communications used for presentation to the applicant. 4. Submit to the replacing insurance company, with the application, a copy of the replacement notice.
If a credit report is found to be inaccurate and is corrected, the agency must send the corrected information to all parties to which they had reported the inaccurate information within the last how many years?
2
How long does the insurer have to provide the additional information in the investigative consumer report to the consumer?
5 days after the consumer requests it.
At what point does coverage begin when an agent issues a Conditional Receipt?
A conditional receipt will be given with an effective date of the date of application or the date of the medical exam, whichever is later.
Insurance Policy
A contract between a policyowner (and/or insured) and an insurance company which agrees to pay the insured or the beneficiary for loss caused by specific events
What are illustrations in life insurance policies?
A presentation or depiction that includes nonguaranteed elements of a policy of individual or group life insurance over a period of years. A life insurance illustration must distinguish between guaranteed and projected amounts.
What is a replacing insurer and an existing insurer?
A replacing insurer is the company that issues the new policy, and the existing insurer is the company whose policy is being replaced.
What is an attending physician's statement and when is it required?
A statement potentially required by the underwriter (during the underwriting process) from a medical practitioner who treated the applicant for a prior medical problem.
In a life insurance policy, when must insurable interest exist?
At the time of application
Who is required to sign an application for life insurance?
Both the agent and the proposed insured (usually the applicant...if not, the policyowner must also sign).
What is the difference between a consumer report and an investigative consumer report?
Consumer reports are existing written and/or oral information regarding a consumer's credit, character, reputation, etc. while investigative consumer reports can obtain information through an investigation and interviews with associates, friends, and neighbors of the consumer.
For which life insurance policies are consumer reports not allowed to contain certain types of prohibited information such as bankruptcies more than 10 years old or any other negative information (arrests, etc.) more than 7 years old?
For policies less than $150,000
What info is gathered in Parts 1 and 2 of the application?
General Information about the applicant including name, age, etc. as well as the type of policy applied for, any existing policies and if the proposed insurance will replace them...and Medical Information about the applicant. If insurance is for more than $50,000, a medical exam by a paramed will usually be required.
When does an insurance policy go into effect?
If premium was paid, the policy will generally go into effect as of the date of the application. If not, it will go into effect when the premium is collected.
When would an insured be required to sign a statement of good health?
If the initial premium is not paid with the application. This is a statement that might be required to verify that the insured has not suffered injury or illness since the application date.
What is the purpose of the Fair Credit Reporting Act?
It established procedures that consumer-reporting agencies must follow in order to ensure that records are confidential, accurate, relevant, and properly used. It also protects consumers against the circulation of inaccurate or obsolete information.
MIB
Medical Information Bureau that receives adverse medical information from insurance companies and maintains confidential medical impairment information on individuals.
What is the purpose of the agent's report?
Provides the agent's personal observations concerning the proposed insured...and while it does not become a part of the entire contract, it is a part of the application process.
What does representation mean and how does it differ from a warranty?
Representations are statements believed to be true to the best of one's knowledge (in this case, the answers the insured gives on the insurance application), but they are not guaranteed to be true like a warranty (usually given by the insurance company) upon which the validity of the insurance policy depends.
How does a substandard risk policy differ from a standard risk?
Substandard risk policies are for applicants who are not acceptable at standard rates because of physical condition, personal or family history of disease, occupation, or dangerous habits...but who would be acceptable with the premium rated-up.
When does a free-look period begin if a policy is delivered by mail?
The postmark date
What is underwriting?
The risk selection and classification process and involves a careful analysis of many different factors to determine the acceptability of applicants for insurance. In other words, the process in which an insurance company determines whether or not a particular applicant is insurable, and if so , what premium to charge.
Insurable interest
To purchase insurance, the policyowner must face the possibility of losing money or something of value in the event of loss. The insurance company will determine the breadth of insurable interest.
Insurance
Transfers the risk of loss from an individual or business entity to an insurance company, which spreads the costs of unexpected losses to many individuals
Any individual who willfully violates the Fair Credit Reporting Act will be subject to a penalty of up to how much?
Up to $2,500
A person who knowingly and willfully obtains information on a consumer from a consumer reporting agency under false pretenses may be fined and/or imprisoned for how long?
Up to 2 years
When is a policy considered delivered?
When the agent personally delivers the policy to the insured OR when the insurer relinquishes control of the policy by mailing it to the policy owner.
How do annuities differ from life insurance policies?
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How does continuous premium straight life differ from 20-year limited pay life?
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How does inflation affect the purchasing power of a fixed annuity?
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How does the premium for Joint Life compare to the premium on two policies covering the same two individuals for the same death benefit?
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How soon can payments begin in a deferred annuity?
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What are accumulation units?
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What are the 2 premium payment options in annuities?
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What are the characteristics of term life insurance?
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What are the characteristics of whole life insurance?
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What are the similarities and differences between variable life and traditional whole life policies?
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How can an insurance company use the information it obtains from the MIB?
It can only be used as an aid in helping insurers know what areas of impairment they might need to investigate further. An applicant cannot be refused simply because of some adverse info on their MIB.
What happens to the benefit if the annuitant dies during the accumulation period?
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What is annually renewable term insurance?
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Which features of an adjustable life policy can be changed by the policyowner?
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With Variable Universal Life, to what does the term variable refer?
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Within how many days is the consumer required to be notified in writing after an investigative consumer report has been requested?
3
Agent/Producer
A legal representative of an insurance company
