Underwriting and policy issue
Special Questionnaires
are used for applicants involved in special circumstances, such as aviation, military service, or hazardous occupations or hobbies. The questionnaire provides details on how much of the applicant's time is spent in these activities.
suitability form
Ensures that the customer is best suited for the policy they are purchasing. Prevents the sale of unnecessary insurance.
medical report
A medical report is sometimes used for underwriting policies with higher face amounts. If the information in the medical section warrants further investigation into the applicant's medical conditions, the underwriter may need an attending physician statement (APS).
application pt 3
Agent's report (statement) - Agent's personal observations of the applicant Includes financial condition, background, purpose of sale, and how long agent has known the applicant Part 3 of application often called agent's report. Agent records personal observations about the proposed insured. Because the agent represents the interests of the insurance company, the agent is expected to complete this part of the application fully and truthfully.
premiums and receipts
Agents should make every effort to collect the initial premium with the application. However, if premium is not collected with the application, the policy will not become valid until the initial premium is collected. The agent issues the applicant a premium receipt upon collecting the initial premium. The only time a customer will receive a receipt is if they pay their initial premium at the time of application. No receipt will be given at any other time.
Types of premium receipts
Conditional receipt and binding receipt
Application errors
If an agent realizes that an applicant has made an error on an application, the agent must correct the information and have the applicant initial the changes • An incomplete application will be returned to the agent • The agent can NEVER change the application without the customer present to initial the changes
Application
Insurable interest must exist between the policy owner and insured at the time when application is made
Application pt 2
Medical information-Health History Part 2 focuses on insured health and asks questions about it including history may require medical exam and or blood/urine test
Medical information bureau (MIB)
The MIB is a nonprofit trade organization which maintains medical information about individuals. Information from the MIB is used by life and health insurers. This helps insurance companies from adverse selection by applicants, as it detects misrepresentations, helps identify fraudulent information, and controls the cost of insurance. Information released from the Medical Information Bureau about a proposed insured may be released to the proposed insured's physician. MIB isn't notified if application is declined
USA Patriot Act
The USA PATRIOT Act was enacted in 2001 requires ins comp to establish formal anti money laundrering programs n to detect and deter terrorism
binding receipt
The binding receipt or the temporary insurance agreement provides coverage from the date of the application regardless of whether the applicant is insurable. Coverage usually lasts for 30 to 60 days, or until the insurer accepts or declines the coverage. Binding receipts are rarely used in life insurance, and are primarily used in auto and homeowners insurance.
backdating
The process of predating the application a certain number of months, up to 6 months, in an attempt to achieve a lower premium.
conditional receipt
The producer issues a conditional receipt to the applicant when the application and premium are collected. There are two types of conditional receipts: insurability and approval.
Inspection reports
This report provides information about the applicant's character, lifestyle, and financial stability. Inspection reports are usually only requested for larger coverages because they add expense to the underwriting process. and applicant has a right to recieve a copy
the agent issues the applicant
a premium receipt upon collecting the initial premium and only time reciept is given is after they pay their initial premium at the time of application
Underwriting process
accomplished by reviewing and evaluating information about an applicant and applying what is known of the individual against the insurer's standards and guidelines for insurability and premium rates.
Application pt 1 general info
age, dob, sex, address, martial status, occupation details ab requested insurance coverage: Type of policy, amount of insurance, Name and relationship of the beneficiary, other insurance the proposed insured owns other information includes tobacco use hazardous hobby foreign travel aviation activity military service
Upon policy delivery
agents must deliver the life insurance buyer's guide and policy summary to the applicant. A life insurance producer may also be required to obtain a signature on a statement of good health at the time of policy delivery
Credit reports:
an applicant's credit history is sometimes used for underwriting and to determine the likelihood of making premium payments
Field underwriting procedures
completed by the agent. Unlike the insurer, the agent has face-to-face contact with the applicant which can aid the insurer in risk selection. As field underwriters, agents help reduce the chance of adverse selection, assure that the application is filled out completely and correctly, collect the initial premium, and deliver the policy. Other duties include: • Forwarding the application to the insurer in a timely manner • Seeking additional information about the applicant's medical history if requested • Notifying the insurer of any suspected misstatements in the application Upon policy delivery, agents must deliver the life insurance buyer's guide and policy summary to the applicant. A life insurance producer may also be required to obtain a signature on a statement of good health at the time of policy delivery.
Effective data of coverage
if initial premium is not submitted with the application the policy effective date is established by insurer. In this case it could be the date of policy issuance or the date the polciy is delivered to the applicant premium collected and statement of continued good health signed
personal delivery
of the policy is a good practice as it allows the producer to explain the coverage to the insured (such as the riders, provisions, and options). Personal delivery also builds trust and reinforces the need for the coverage. All of the following acts can be considered means of delivery: mailing policy to the agent; mailing the policy to applicant; and the agent personally delivering policy.
applicant ratings
once all the information about a given applicant has been reviewed, the underwriter seeks to classify the risk that the applicant poses to the insurer. this evaluation is known as risk classification.
constructive delivery
policy delivery may be accomplished without physically delivering the policy into the policyowner's possession. Constructive policy occurs if the insurance company intentionally relinquishes all control over the policy and turns it over to someone acting for the policyowner, including the company's own agent. Mailing the policy to the agent for unconditional delivery to the policyowner also constitutes constructive delivery, even if the agent never personally delivers the policy. If the company instructs the agent not to deliver the policy unless the applicant is in good health, there is no constructive delivery.
Buyers guide
provides general information about the types of life insurance policies available, in language that can be understood by the average person.
policy summary
provides specific information about the policy purchased, such as the premium and benefits.
fair credit reporting act of 1970
regulated the way credit information is collected and used to protect the rights of consumers for who, an inspection or credit report has been requested regarding credit report and general reputation producer must provide a privacy notice to an applicant if personal info ab that applicant is disclosed and is passed along the applicant has the right to recieve a copy of the report when an investigative consumer report is used in connection with an insurance application
representation
statements made by applicants that are substantially true to the best of their knowledge but not warranted as exact in every detail
Signatures
the agent and the applicant are required to sign the application. If the application is someone other than the proposed insured except for a minor child the proposed insured must also sign the application
most common sources of underwriting information include
the application, the medical report, attending physician's statement, The medical information bureau, special questionnaires, inspection reports, credit reports
Purpose of Underwriting
to determine if the applicant is insurable and if so at standard or substandard rates. Is the applicant insurable? Does an insurable interest exist between the two of them? (risk classification)
An incomplete application is
usually returned. n new one is filled out
the statement of good health
verifies that the insured has not become ill, injured or disabled during the policy approval process (time between submitting application and delivery of the policy), or did not submit the initial premium with the application.
warranty
warranties are statements that are guaranteed to be literally true completely even if error is made it can make policy void
(face amount 50k or 100k)
wont require additional medical info other than provided by application they require medical report for further information
