Insurance
What is an insurance application?
A form completed by the insured to determine premium and risk classification.
What is an underwriter?
A person who evaluates an applicant's risk and determines their insurability.
What is a term life insurance policy?
A policy that provides coverage for a specific period of time.
What is a rated policy?
A policy with a higher premium due to higher risk
What is a binding receipt?
A receipt given to an applicant after they pay their initial premium, indicating that coverage is in effect.
What is a conditional receipt?
A receipt given to an applicant after they pay their initial premium, indicating that coverage is pending.
What is a conditional receipt?
A receipt stating terms of coverage during underwriting.
What are Voting rights?
Ability to vote for members of the board of directors or governing body of the company
What is an agent's statement?
Additional information about the insured
What information is asked on an insurance application?
Age, sex, occupation, hobbies, habits, arrest history, height, weight, and health conditions.
Who is responsible for signing the application?
Agent
What is a diabetic rating?
An additional rating for applicants with diabetes due to their higher risk.
What is Lloyd's of London?
An alien insurer that provides coverage for high-risk situations.
What is an additional rating?
An increase in premium due to a higher risk factor.
What is an alien insurer?
An insurer formed under the laws of a different country than where they are doing business.
What is a Foreign Insurer?
An insurer incorporated in a different state that it is doing business in
What is a Domestic Insurer?
An insurer incorporated in the same state that they are doing business in
What is a Mutual Insurer?
An insurer owned by policyholders
What is a Stock Insurer?
An insurer owned by stockholders
What is a reinsurer?
An insurer that accepts risks transferred from another insurer.
Who else needs to sign the application besides the agent?
Applicant and proposed insured
When must insurable interest exist?
At the time of application
What is the disadvantage of a conditional receipt?
Claim may not be paid if applicant is not approved during underwriting.
What is the difference between a conditional and binding receipt?
Conditional provides coverage during underwriting, binding provides immediate coverage.
What is the most commonly used type of receipt?
Conditional receipt.
What is the most practical type of receipt for life and health applications?
Conditional receipt.
What is included in the underwriting process?
Determining risk and underwriting requirements
What is insurable interest?
Direct and identifiable interest in the insured's life and financial interest
What are the classifications of insurers?
Domestic Stock/Mutual, Foreign Stock/Mutual, Alien Stock/Mutual.
What is the Medical Information Bureau?
Electronic database of previously submitted insurance applications
What is Worker's Compensation?
Employer paid disability and health insurance for job-related illnesses and injuries.
What is FCRA?
Fair Credit Reporting Act - protects consumers from inaccurate information
What is the difference between Example 1 and Example 2?
In Example 1, the policy was not approved for the premium applied for. In Example 2, the policy was approved with an additional rating.
What is the agent's job at the time of application?
Inform applicant of required disclosures
What must an insurer do if an applicant is denied for insurance?
Inform the applicant of the source of information used to base the decision
What is an Attending Physician Statement?
Information provided by the insured's personal physician
What is required if a change is made in the application?
Initials from applicant and agent
What is social insurance?
Insurance provided by the federal or state government, such as Social Security.
When is a conditional receipt used?
Most commonly used for life and health applications.
What is the benefit of a binding receipt?
Provides immediate coverage upon payment.
Who conducts the physical examination?
Qualified professional at insurer's expense
What are ownership rights?
Receiving dividends and voting rights
What are Consumer Reports?
Reports on insured's personal characteristics
What is the right given to consumers under FCRA?
Right to refute any adverse information
What are Replacement Rules and Regulations?
Rules for replacing an existing policy with a new one
What is the role of an agent in the underwriting process?
To collect initial premiums, deliver policies, and explain any additional ratings or changes in premium.
What is the purpose of the Medical Information Bureau?
To compare information on insurance applications
What is the purpose of the physical examination?
To determine the insured's health status
What is the purpose of the insurer's underwriting department?
To determine underwriting requirements based on risk
What is the purpose of underwriting?
To evaluate an applicant's risk and determine their insurability.
What is the purpose of the Notice to Applicant?
To inform applicants that a consumer report may be requested
What is the agent's responsibility regarding signatures?
To make sure all necessary signatures are obtained and witnessed
What is the purpose of HIPAA?
To protect privacy of medical information
What is the purpose of the agent's statement?
To provide additional information about the insured
What is the purpose of a conditional receipt?
To provide coverage during underwriting process.
What is an example of a binding receipt?
A receipt that guarantees coverage immediately upon payment.
What is a binding receipt?
A receipt that guarantees coverage immediately.
Who can the reasons for denial be provided to?
Applicant's physician if requested
What are the conditions for a claim to be paid with a conditional receipt?
Approval for face amount, premium amount, and type of plan applied for.
What tests may be included in a physical examination?
Blood, saliva, urine samples; blood pressure, EKG, height and weight
What are the two ways private insurance companies are classified?
By Ownership and By Site of Incorporation
What else may be required on an insurance application?
Face amount of insurance, beneficiary designations, primary care physician, other insurance coverage, and policyowner's name and relationship.
What are the two federal laws that govern the insurance application process?
HIPAA and FCRA
What is an example of information that requires written consent from the insured?
HIV test
What must the insured be notified of when providing medical information?
How it will be used or disclosed
Who signs as the insured if a wife is taking out a policy on her husband?
Husband
What happens if an applicant dies during the underwriting process?
If a binding receipt is issued, the claim will be paid without conditions. If not, the claim will be denied.
What happens if an application is submitted with missing information?
It can result in a delay of issuing the policy or not being able to issue the policy.
What is the disadvantage of a binding receipt?
May not be practical for life and health applications.
Is underwriting done on the owner if they are not the insured?
No
Are beneficiaries required to sign the application?
No, unless they are also the owner
What types of relationships are usually accepted as having insurable interest?
Parents/children, spouses, business partners
What are dividends?
Payment to stockholders or policyholders when the company earns a profit
What is an example of a conditional receipt?
Pete paid initial premium for $100,000 term life policy and was approved for the same.
What are the three common risk categories?
Preferred, Standard, Substandard
What is the purpose of the application?
Primary source of insurability information
What happens if the applicant is not going to be the insured?
Proposed insured's signature is required
What is the benefit of a conditional receipt?
Provides coverage during underwriting process.
What is Medicaid?
State administered health insurance for the needy.
Who completes the agent's statement?
The agent
Whose responsibility is it to ensure the application is completed properly?
The agent's.
What is a monthly premium?
The amount paid each month for insurance coverage.
What happens if an applicant dies during the underwriting process with a conditional receipt?
The claim will be paid if underwriting is completed and approved.
What happens if an applicant agrees to an additional rating and pays the difference, but then dies?
The claim will be paid.
What is the policy effective date?
The date that coverage begins.
What happens if the underwriting department denies a policy?
The initial premium is returned to the applicant.
What happens if an applicant is not approved during underwriting with a conditional receipt?
The policy will not be issued and the premium will be refunded.
What is underwriting?
The process of evaluating an applicant's risk and determining their insurability.
What is the purpose of an insurance application?
To act as the primary source of information for the underwriting department to determine insurability.
What is the purpose of inspection reports?
To assess insured's personal characteristics
What is the purpose of a binding receipt?
To provide immediate coverage upon payment.
What is the purpose of the Attending Physician Statement?
To provide medical information about the insured
What is the purpose of the application?
To serve as the primary source of insurability information
What is the purpose of the initial premium?
To submit with the completed application
What does the underwriting department determine?
Underwriting requirements based on risk and amount of insurance applied for
What are some life insurance programs for veterans?
Veteran's Group Life, National Service Life, Servicemembers' Group Life.
Who signs as the owner/applicant if a wife is taking out a policy on her husband?
Wife
What is required to obtain a person's medical information according to HIPAA?
Written consent from the insured
Can a policy be kept if the insurable interest relationship ends?
Yes
Is it poor customer service to submit an incomplete application?
Yes.
