Chapter 9

Where is following information found in application : The purpose of these reports is to provide a picture of the applicant's GENERAL CHARACTER AND REPUTATION

Inspection Report

Which type of report gives info about GENERAL CHARACTER & REPUTATION

Inspection report

When must insurable interest exist

at policy inception

If applicant hands in application and money, the policy effective date will be _____

as of the date you turned in money

_____ term insurance - 1-11 months coverage. Seen more often with very high dollar clients, usually gives them time to be covered while liquidating assets to buy permanent coverage

Preliminary term insurance

2 most common Special Questionnaires you see in insurance applications are on what 2 hobbies?

aviation scuba diving

Generally, the party who delivers the insurance policy to the new policy owner is the a.) insurance company's home office b.) sales agent c.) state chief financial officer d.) underwriter

b.)

If a medical report is required on an applicant, it is completed by a.) a home office underwriter b.) a paramedic or examining physician c.) the agent d.) the home office medical director

b.)

The primary distinction between the insurability and approval types of conditional is when the a.) applicant pays the premium b.) coverage goes into effect c.) medical exam is given d.) applicant provides insurability

b.)

Which of the following statements about the Fair Credit Reporting Act is CORRECT a.) it prohibits insurance companies from obtaining reports on applicants from outside investigative agencies b.) it provides that consumers have the right to question reports made about them by investigating agencies c.) it applies to reports about applicants that are made by insurance agents to their companies d.) it prohibits insurance companies from rejecting an application based on a credit report

b.)

What are the limits to binding receipt coverage?

$100,000 and for not longer than 60 days

5 rights consumers have under Fair Credit Reporting Act 1.) You have to notified within _____ days that the report has been requested and disclosures about the nature and scope of the investigation sent within _____ days of the request 2.) You must be provided with the names of all the people contacted during the preceding _____ months 3.) If, based on the inspection report, you are rejected, the insurance company must provide you with the _____ 4.) If requested by the applicant, they have the right to know what is in the report. Supplied by the _____ not the insurance company 5.) You have the right to have _____

1.) 3, 5 2.) 6 3.) name and address of the consumer reporting agency that supplied the report 4.) reporting agency 5.) any corrections made

What are the 2 kinds of receipts applicants may receive : 1.) 2.)

1.) Conditional receipt 2.) Binding receipt

MIB bulletpoints !.) _____ organization 2.) Over _____ member companies 3.) Helps to hold down cost of life insurance through prevention of _____ and _____ 4.) Information is available to _____ companies ONLY 5.) Applicants are notified in writing that the company will make a report to _____ 6.) Applicants are advised that if they call another MIB member company, that company will be able to see the _____ report 7.) Applicants must sign _____ forms 8.) MIB arranges all disclosures and medical information is sent to applicant's _____ 9.) MIB gets ALL of its information from _____

1.) Non-profit 2.) 700 3.) misrepresentation and fraud 4.) member 5.) MIB 6.) MIB 7.) authorization 8.) physician 9.) life insurance applications

3 basic parts to application : 1.) 2.) 3.)

1.) Part 1, General info 2.) Part 2, Medical info 3.) Part 3, Agent's report

3 classifications of applicants (risk category) : 1.) 2.) 3.)

1.) Preferred risk 2.) Standard risk 3.) Substandard risk

RE binding receipts : The company binds you (meaning you are covered) until the company : 1.) 2.) 3.) or *you always have to pay the premium first

1.) accepts the offer 2.) rejects the offer 3.) or counteroffers

What 3 signatures are required on the application? 1.) 2.) 3.)

1.) the agent 2.) the insured 3.) policyowner, if someone other than insured

RE conditional receipt and medical exam 1.) If a medical exam is not required, then you are conditionally covered when _____ 2.) If a medical exam is required, then you are conditionally covered when _____

1.) the application is given with the premium 2.) the exam has been completed, assuming the premium was submitted

The following are required to be on the cover of every application : 1.) 2.) 3.)

1.) the name of the company 2.) the name of the agent 3.) the license number of the agent

If premium was NOT given with the application, the effective date is left up to the company. Usually issued when : 1.) 2.) 3.)

1.) the policy was delivered 2.) the premium collected, and 3.) a signed statement of the insured's continued good health was collected

Must be minimum of _____ years of age to sign insurance contract

15

What year was the Fair Credit Reporting Act passed?

1970

Backdating can go back up to _____ months to "save age". Why would you do this?

6 save premium. lower age=lower premium

What part of application would agent document if they saw applicant smoking after denying being a smoker?

Agent's report

Insurance companies may also get an APS from your doctor. What is APS?

Attending Physician Statement

Which is the most common type special questionnaire?

Aviation questionnaire

_____ receipt - binds the insurance company to applicant and they will pay the benefit in the event the applicant is ACCIDENTALLY killed within the first 30 days of the receipt, even if medical exam was required but not yet completed

Binding * this is the ONLY event in which company will pay when a medical exam wasn't completed as needed

_____ explains things in a way that the average consumers can understand _____ addresses the specific product being presented

Buyer's Guide Policy Summary

_____ receipt - says that if you die during underwriting, you are only covered IF the insurance company would have issued the policy EXACTLY as applied for. (ex. if company doesn't have full premium or if company would have made a counteroffer, you are not covered and benefit will not be paid, however, if policy would be issued exactly as applied for, they will pay the benefit)

Conditional

_____ is technically accomplished when the insurance company intentionally relinquishes all control of policy document and releases it to applicant or someone acting on behalf of applicant including company's own agent

Constructive delivery

The _____ Act was designed to protect rights of people for whom a credit report or inspection report was going to be conducted

Fair Credit Reporting Act

_____ was designed to protect rights of people for whom a credit report or inspection report was going to be conducted

Fair Credit Reporting Act

True or False Policies may be canceled because of the diagnosis or treatment of HIV/AIDS

False! Can NOT be canceled because of HIV/AIDS diagnosis

_____ is a federal law designed to protect your privacy concerning your medical records and the sharing of this information

HIPAA

Benefits under a life insurance policy may not be denied or limited based on the fact that the insured's death was caused directly or indirectly by exposure to _____ infection or specific sickness or medical condition derived from such infection

HIV/AIDS

When is only time a client will have to sign a document about their continued good health?

If premium is still owed upon policy delivery

How does applicant receive medical information found in medical exam (ex, a diagnosis they were not aware of)?

Insurance company will notify physician and physician will contact applicant

_____ - is a nonprofit organization whose purpose is to keep premiums down through the prevention of misrepresentation and fraud

MIB (medical information bureau)

What part of the application is following info found : medical exam info

Part 2, Medical info

What does MIB stand for?

Medical Information Bureau

Can an insurer non-renew the health insurance policy of an insured because of diagnosis of HIV/AIDS?

No!

What part of the application is following info found : first hand knowledge about applicant's FINANCIAL CONDITION and CHARACTER

Part 3, Agent's report

_____ contains information about : *agent *insurer *policy *each rider *premiums *dividends *benefit amounts *cash surrender values *policy loan interest rates *cost indexes

Policy Summary

Where does the MIB get information from?

Only insurance applications

What part of application is following info found : name, dob, SSN, smoking status, hobbies, etc...

Part 1, General info

The term '_____ solicitation' refers to no high pressure sales tactics, false adverstising (an unfair trade practice). A ______ and _____ are required to be delivered

Proper solicitation Buyer's Guide and Policy Summary

It is the _____'s responsibility to make sure the application is completed thoroughly

agent's

Where is following information found in application : Info pertaining to special hobbies, ex. agent would document pilot's logged hours

Special Questionares

How are errors on application amended?

The AGENT makes the correciton on the application, but the APPLICANT initials the correction

What is considered the policy anniversary date of the policy? What is significant about policy anniversary date of policy?

The policy effective date (date you turned in money) Policy anniversary date is when cash values increase and the dividends kick in

True or False Constructive delivery represents the time when the insurance company can no longer get out of the contract

True

True or False No health insurance policy may contain an exclusion or limitation with respect to coverage for exposure to HIV or a specific sickness or medical condition derived from such infection, except as provided in a preexisting condition clause

True

What is only condition under which you will be covered prior to completing medical exam when a medical exam is required

Under binding receipt, if death occurs ACCIDENTALLY within 30 days of the receipt, applicant is covered even if medical exam is required and not yet completed

_____ - aka risk selection, is the process of evaluating and selecting risks

Underwriting

_____ - process of reviewing the many characteristics that make up the risk profile, and then determine whether he/she is standard or substandard

Underwriting

Does the insurance company mailing the policy to the agent for unconditional delivery to client constitute constructive delivery, even if agent does not deliver the policy?

Yes

The first source of insurability information is the _____

application

All of the following statements about the classification of applicants are correct EXCEPT a.) a substandard applicant can never be rejected outright by the insurer b.) applicants who are preferred risks have premium rates that are generally lower than standard rate risks c.) an individual can be rated as a substandard risk because of a dangerous occupation d.) a standard applicant fits the insurer's guidelines for policy issue without special restrictions

a.)

An applicant, in good health, completed the application without the premium. Upon delivery of the policy the agent noticed the applicant's health had changed. The agent is to do which of the following a.) return the policy to the insurance company b.) deliver the policy, obtain a check, and a signed statement of the insured's good health c.) collect the additional premium d.) start the underwriting process over again

a.)

If an applicant is missing answers to certain questions and the policy is issued, the company can take which course of action a.) the company may rescind the policy b.) the company may demand the applicant answer the questions and there would be no coverage during this period c.) the company can take no action, as it was the agent's responsibility to complete the application d.) the company can contest the validity of the policy

a.)

Which of the following statements pertaining to a life insurance policy application is CORRECT a.) the names of both the insured and beneficiary are indicated on the application b.) if an applicant's age is shown erroneously on a life insurance application as 28 instead of 29, the result may be a premium quote that is higher than it should be c.) the size of the policy being applied for does not affect the underwriting process d.) the agent's report in the application must be signed by the agent and the applicant

a.)

Which of the following statements regarding the Fair Credit Reporting Act (FCRA) is CORRECT a.) applicants must be notified within a short period of time that their credit report has been requested b.) if an applicant for insurance is rejected based on a consumer report, the name of the reporting agency must be kept confidential c.) if requested to do so, the insurance company must provide the actual consumer report to the applicant d.) consumer reports are final in nature and cannot be disputed by an applicant

a.)

Elaine signs an application for a $50,000 non medical life policy, pays the first premium and receives a conditional insurability receipt. If Elaine were killed in an auto accident two days later a.) the company would reject the application on the basis that death was accidental b.) her beneficiary would receive $50,000, if Elaine qualified for the policy as applied for c.) the premium would be returned to Elaine's family because the policy had not been issued d.) the company would reject the death claim because the underwriting process was never completed

b.)

Which of the following statements pertaining to the Medical Information Bureau (MIB) is CORRECT a.) the MIB is operated by a national network of hospitals b.) information obtained by the MIB is available to all physicians c.) the MIB provides assistance in the underwriting of life insurance d.) applicants may request that MIB reports be attached to their policies

c.)

Generally, scuba divers will be insured, unless they go into _____

caves

Proposed insured must sign authorizations for the insurance company to pull a _____ and _____, and agent must sign as witness

consumer report medical information

In the application, if there are any missing answers to questions when the policy is issued, or, if the applicant has committed fraud, (lied about a material fact), and the company discovers this at any time during the _____ period, they can void the contract

contestable

If the insurance company requests an inspection report, which of the following would require notice to be given to the applicant a.) The Freedom of Information Act b.) The Office of Insurance Regulation Information Act c.) The Health Insurance Portability & Accountability Act d.) The Fair Credit Reporting Act

d.)

Underwriting is a process of a.) selection and issue of policies b.) evaluation and classification of risks c.) selection, reporting, and rejection of risks d.) selection, classification, and rating of risks

d.)

Agent must sign along with application, a form attesting the the _____ statement has been given to the applicant

disclosure

A _____ is the agent or producer going out soliciting business

field underwriter

An insurer may NOT furnish specific test results for exposure to HIV infection to an insurer industry data bank IF a review of the information would _____

identify the individual and the specific test results

The more _____ you buy, the more comprehensive and diligent the underwriting process will be

insurance

Remember, a _____ is information the company uses to determine whether to issue or not to issue a policy

material fact

Representations are considered fraudulent ONLY when they relate to a _____

material fact

Application is never complete until _____ exam is completed, if one is required by insurance company

medical

Regarding HIV/AIDS testing, the only party outside of the insurance company or it's employees, insurance affiliates, agents, or reinsurers who may receive information about the test results is the _____ and _____

person being tested persons designated in writing by the person tested

An applicant shall not be notified of a positive test result (HIV/AIDS) by the insurer, but by the _____

physician designated by the applicant, or Department of Health

HIV/AIDS testing exclusion clause : The insurer must disclose its intent to test a person for HIV _____ to testing for HIV/AIDS and must get the person's _____ to administer the test. The written consent must contain : 1.) an _____ of the test 2.) the _____ of the test 3.) the _____ of the test 4.) _____ of the test 5.) meaning of the _____ of the test 6.) right to _____ of information

prior, written informed consent 1.) explanation 2.) purpose 3.) potential uses 4.) limitations 5.) results 6.) confidential treatment

If an insurance company accepts the application and then, before the incontestable period takes effect, discovers incomplete or incorrect information, the company may _____ or _____ the contract

rescind or cancel

An insurer may inquire whether a person has been tested for HIV infection, but _____ may not by used in the underwriting process or in the determination of which applicants may be tested

sexual orientation

You must give a Buyer's Guide at the time _____

you collect the premium