Chapter 7: Life Insurance Delivery

Life Insurance: Handling a Claim

Claims and its payment summarize the end of the process and in life insurance it means the death of the insured. Proof of death is needed to secure the claim in life insurance from a medical coroner and a certificate of death is needed.

Life Insurance: Issuing the Policy

A life insurance application may approved as applied for, modified, or even amended provided the applicant is even approved by the underwriters of the contract. - death benefit may be waived if there is an amendment stating no death benefits from a PEC - another change could be a more limited form of coverage

Life Insurance: Fiduciary and Overview

Be responsible about their money and act the eyes and ears for the insurance company while working in the best interests of the customer.

Life Insurance: Binding Receipt

Company is liable from the application regardless of the applicant's insurability. Coverage last for a specific time period (usually 30 to 60 days) or until insurer issues the policy. If application rejected then coverage terminates at end of period.

Life Insurance: Effective Date

Effective dates identify the state of the coverage but also establishes the date by which future annual premiums must be paid - if a receipt was issued in exchange for the payment of an initial premium deposit then the date of receipt will generally be the policy effective date

Life Insurance: Inspection Receipt

Insured wants to examine the policy and does not pay full premium mode. Applicant signs the inspection report, inspects, and then pays premium.

Life Insurance: Temporary Insurance Agreement

Life insurance is provided immediately to the individual applying for coverage - applicant does not need to be insurable while underwriting is taking place - insurer can cancel the coverage at any moment but claims filed during underwriting process must be honored

Life Insurance: Buyer's Guide and SBC

Must be delivered by the agent in some way shape or form.

Life Insurance: Replacement

The purchase of one life insurance policy to replace another. Replacement can be disadvantageous if the interest rates have change or have a lower fixed interest rate. - producers must comply with state regulation when replacing coverage - new apps require proof of insurability - premiums may be higher based on the attained age - new incontestable and suicide periods - existing policy provisions may be lost - new policy will not have current cash values

Life Insurance: Payment of Claims

When the insured dies the life insurance company should be notified as soon as possible. Generally the producer must let the insurance company know of the insured's death. - Insurance company has 60 DAYS to pay the death claim - proof of death and certificate needed

Collection of Premium

- collect the initial premium - policy does not effectuate until premium paid - no premium no contract - if premium paid later then a "statement of good health" is required to indicate no change form application date.

Life Insurance: Producer's Responsibilities Upon Death

- notify insurer immediately (if beneficiary has not already done so) - contact the beneficiary of the policy - help the beneficiary complete a proof of death form and obtain the certificate of death - beneficiary may or the insured have/had the option to set the settlement option

Life Insurance: Replacement - Producer Responsibilities

Producer must state that old policies will be: - lapsed, forfeited, surrendered or terminated - converted to reduced paid-up insurance, continued as an extended term, reduced in value by use of nonforfeiture benefits - amended to produce a reduction in the benefits or in the term for which coverage would remain in force - reissued with a reduction in cash value Need to collect a statement indicating that a replacement of life insurance is needed/requested by the policyowner

Life Insurance: Policy Summary

The policy summary addresses the specific product that the applicant applied for, and it identifies the insurer, the policy, and each rider. The summary includes information about premiums, dividends, benefit amounts, cash surrender values, policy loan interest rates, and life insurance index costs.

Life Insurance: Professionalism and Ethics

Consumers choose ethics and professional performance more than they choose financial performance (according to studies) - Ethics means setting a standard of conduct or behavior that establishes honorable values. - A professional is an individual in an occupation with advanced training, knowledge, skill and experience to perform their role. Professionals should relate information to their clients in a ethical and easy to understand matter for their client.

Life Insurance: Personal Delivery

Delivery is necessary to complete the sale - conditional receipt has not been issued then a statement of good health may be required to be sent in - allows agent to review policy and explain any misunderstood concepts - identifying effective dates of coverage - additional sales opportunities

Life Insurance: Conditional Receipt

Generally this receipt makes the individual covered from the date of the application with full premium mode paid. However options change with no premium mode: 1) date of a medical examination 2) if applicant dies while waiting for approval, then claim will be paid if policy would have been issued in favor as approved If proposed insured found substandard then more premium needed and application is not approved until additional premium mode paid and substandard policy delivered to applicant If no initial premium then statement of good health needed

Life Insurance: Payment less than Face Amount

Generally would be the result of a few factors - outstanding loan against the cash value of a whole life policy (subtract loan plus interest from death benefit) - past premium payment is due against the policy (generally a 30 day grace period of policy and therefore this option only applies during grace period window) - Errors made in determining the sex, age, and any other factor that may affect the policy benefits: if error made then the benefit amount can be increased or decreased based upon the correct information from the application/effective date of the policy`

Life Insurance: Replacement - Insurer Responsibilities

Insurer must: - make sure all replacements are in compliance with state regulations - notifying each insurer whose insurance is being replaced and upon request, furnishing a copy of any proposal - maintaining copies of proposals and receipts

Life Insurance: Mailing the Policy

Legally the policy is considered delivered when it is mailed out or turned over to the policyowner or someone acting on the policy owner's behalf. - constructive delivery: is deemed to occur when the insurer mails a policy to its producer for actual delivery to the policy owner - not considered legal if an in-person meeting is needed to secure certificate of good health

Life Insurance: Policy Retention

The producer acts as a responsible party to the insurance company and is therefore responsible for acting in the best interest of the company and working to retain as many clients as possible.

Life Insurance: Amendments

insurer may amend policy terms depending on the results of the underwriting process aka someone comes back substandard then face amount may be altered, or amendment stating no death benefits resulting from an existing medical condition.