Life Insurance Underwriting Process
underwriter (Santa Claus)
Selection (risk) and Classification process
When do you collect initial premium?
at the time of the application
Insurance is the .....
transfer of risk
Who is the M.I.B. owned by?
- owned by member insurance companies - used to look up previous info. on prospective insured
What are the sources and regulations for company underwriting?
-Agents Report -Investigative Report -Medical Examination -MIB- Medical Information Bureau
What are the Risk Classifications?
-Preferred- reduce risk-reduced rate -Standard- average exposure-standard rate -Substandard- increased risk of loss and rate -Declined - too high a risk- not covered
What is the process of issuing an insurance policy?
-Solicitation & Sales Presentation -Underwriting: Field and Company -Premium Determination -Policy Issue and Delivery
What is a warranty and who can issue them?
-an absolutely true statement (ex. D.O.B.) -only issued by companies
What is the effective date of coverage when the premium is NOT paid with the application?
-not effective until agent collects initial payment -collect when delivering the policy -the agent may also have to get a "statement of good health"
non-medical application
-part 2 of application filled out w/o having to give blood -usually amount of insurance is relatively small
Buyer's Guide (B.G.- Basic General Info.)
-provide prior to accepting initial premium (time of application) -generic information (cost & coverage) -helps compare policies
agent's report
-provides the agent's personal observations concerning the proposed insured -not part of the contract but part of the application
What is a representation?
-true statement to the best of knowledge Ex. "I think"
unconditional receipt
-used mostly with property and casualty insurance -coverage begins immediately for a specific length of time until the policy is issued
What are the three primary factors used in premium determination?
1. Risk- mortality rate of death 2. Interest 3. Expense
What is "Free look?"
10 day window for the "insured" to look over the policy
What is the "Free look" for a policy replacement?
20 days
insurable interest 3 B's
Bucks- own bucks Blood - own family Business - own business - employer can insure employee (group insurance)
Do you ever erase or white out on an application?
No- draw a line through change and have insured initial
required signatures on paper application
agent and insured (usually applicant)
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
agent/producer
a legal representative of an insurance company
beneficiary
a person who receives the benefits of an insurance policy
What do you do if the insured can't pay the initial premium with the application?
conditional receipt
life insurance
coverage on human lives
insurable interest must....
exist at the time of application
Policy Summary
key features and elements of specific info. for client
conditional receipt
life insurance coverage begins when application is given to agent or when medical exam is done - whichever occurs last
Policy Illustration
never part of the contract and not guaranteed
insured
person covered by the insurance policy-may or may not be the policyowner
applicant
person filling out application - not person paying for policy
lapse
policy termination due to nonpayment of premium
written statement disclosure
provides basic info. about the cost & coverage of insurance being solicited
death benefit
the amount paid upon the death of the insured in a life insurance policy
What is the main source of company underwriting?
the application
insurer
the company who issues an insurance policy
What is the effective date of coverage when the premium is paid with the application?
the date of application
premium
the money paid to the insurance company for the insurance policy
policyowner
the person entitled to exercise the rights and privileges in the policy - person paying for policy
