Life Insurance Basic ( 2 )

Medical Information Bureau (MIB)

The MIB is a membership corporation owned by member insurance companies. It is a nonprofit trade organization. Which receives adverse medical information from insurances companies.

Field Underwriting

The agent is the company front line and is referred to as a field underwriter.

Application

The application is one of the mains sources of underwriting.

Application Procedures

The application is the starting point and basic source of information used by the company in the risk selection process. 1. Part 1 - General information 2.Part 2 - Medical Information It is the agent's responsibility to make certain that the application is filled out completely, correctly, and to the best of the applicant's knowledge.

Medical examinations and lab tests including HIV

The insurer is responsible for the costs of the exam. - HIV related test may only be performed with a written consent of the subjects, and may be determined positive only with confirmatory testing. - Furthermore, Insurers are only required to disclose negative test results to subjects that request such a disclosure. ex. Insurers cannot disclose positive that results. Instead the results will be disclosed to an individual designated by the subject.

Producer Report

The producer(agent's) report allows the producer to communicate with the underwriter and provide information about the applicant known by the agent that may assist in the underwriting process.

Suitability

The reasonable belief that the transaction is in the best interest of the insured.

Investigate Consumer Report

They are general reports of the applicants finances, character, work, hobbies, and habits.

Standard Risk

They are the risk.

Interest

This interest is a primary factor in lowering the premium rate.

Policy Issue and Delivery

When the insurer relinquishes control of the policy by mailing it to the policyowner, the policy is considered legally delivered. However, it is advisable to obtain a signed delivery receipt.

Premiums with the Application

Whenever the agent collects premiums, the agent must issue a premium receipt. The type of receipt issued will determine when coverage will be effective. - The most common type of receipt is a conditional receipt. The conditional receipt says that coverage will be effective either on the date of the application or the date of the medical exam. Whichever occurs last.

Preferred Risk

are those individuals who meet certain requirements and qualify for lower premiums than the standard risk. These applicants have a superior physical condition, lifestyle, and habits.

Mortality

rate of death

Premium Payment Mode

Mode refers to the frequency Higher Frequency = Higher Premium

Premium Determination

Premiums are paid in advance.

Agent's Report

Provides the agent's personal observations concerning the proposed insured

Substandard Risk

Rated/ Premium rated-up

Attending Physical Statement

Report from doctor who most recently treated applicant.

Underwriting

Risk selection and classification process

Classification of Risk

Standard, substandard, and preferred

Copying Underwriting

1. Application 2.Producer Report 3.Attending Physical Statement 4.Investigate Consumer Report 5.Medical Information Bureau (MIB) 6.Medical examinations and lab tests including HIV 7.Use and Disclosure of Insurance Information

Expense

Increase your premium.

Effective Date of Coverage

1. If the initial premium is not paid with the application, the agent will be required to collect the premium at the time of policy delivery. The agent may also be required to get a statement of good health from the insured. 2. If the full premium was submitted with the application and the policy was issued as requested, the policy coverage would generally coincide with the date of application. 3. Backdating( or antedating) The only allowable reason that an application may be backdated is to effect lower premium.

Duties of the replacing producer

1. Present to the applicant a Notice Regarding Replacement that is signed by both the applicant and the producer. 2. Obtain a list of all existing life insurance and/or annuity policies to be replaced 3. Submit to the replacing insurance company a copy of the replacement notice with the application

Duties of Existing Insurer

1. Send a letter notifying the policy owner of his or her to received information regarding the existing policy values.

Duties of the replacing insurance company

1. Send each existing insurance company a written communication advising of proposed replacement

Life Insurance Surrender Comparison Index Disclosure

A means of making a cost of the same types of life insurance policies.

Replacement

A practice of terminating an existing policy or letting it lapse, and obtaining a new one.

Policy Summary

A written statement describing the features and elements of the policy being issued Summary = Specific

Changes on the Application/Amendments

An agent should never erase or white out any information on an application for insurance.

Signatures Required

Both the agent and the proposed insured (usually the applicant) must sign the application.

Use and Disclosure of Insurance Information

Disclosure Authorization Notice. The notice will state the insurer's practice regarding collection and use of personal information.

A.M.O.S - ( Selection Criteria and Unfair Discrimination)

Ex. A - Age M - Medical O - Occupation S - Sex

Life and Health Insurance Guaranty Association

Guaranty Association are formed to protect policyowners, insureds, beneficiaries, and anyone entitled to payment under an insurance policy from the incompetence and insolvency of insurers. - The association will pay covered claims up to certain limits set by state law. ex. FDIC

Selection Criteria and Unfair Discrimination

However, insurance companies cannot unfairly discriminate between individuals of the same class and equal life expectancy in the rates, benefits, or any terms and conditions of the contract.

Incomplete Application

If a policy is issued with questions left unanswered, the contract will be interpreted as if the insurer waived its right to have an answer to the question. - The insurer will not have the right to deny coverage based on any information that the unanswered question might have contained.