Life Underwriting

What is the main purpose of the M.I.B.?

Prevent fraud and misrepresentation

All of the following are commonly used when investigating the insurability of an applicant EXCEPT:

Talking to the neighborhood watch

Credit scores are used by insurers when determining insurability of a client. Which of the following regarding the Fair Credit Reporting Act (FCRA) is FALSE?

The FCRA requires insurers to explain the reason(s) behind any issued denials of coverage.

Part III of the application contains which of the following?

The agent's report

Which of the following is NOT part of the insurance underwriting process?

The notifying of risks

When conducting business, a life insurance agent can use which of the following titles?

-Investment advisor -Financial planner -Financial consultant *(None of the above)*

Mrs. Selleck runs a Christmas store and needs $200,000 of permanent life insurance in June. Because her business is cyclical, she is "cash poor" until October. How can Mrs. Selleck obtain the insurance she needs?

-Preliminary term for interim coverage -Typically, this coverage works for up to 11 months. A temporary insurance agreement has a maximum of $100,000 and 60 days.

What is the maximum benefit period of preliminary term for interim coverage?

11 months

Who completes a medical report when required by the insurance underwriters?

A physician or paramedic

Underwriting is the name of the process used by insurers to rate risk. Once the risk has been rated, it is classified. Which of the following is the classification for an individual that would pose the least amount of risk to the insurer?

Preferred

Insurance companies are required by the ___________ to notify an applicant, in writing, that an investigative consumer report may be made on him.

Fair Credit Reporting Act

How is a life insurance agent similar to a field underwriter?

He/she actually sees the applicant.

Which of the following would have the greatest impact on the underwriting process for risk on an individual?

He/she is grossly overweight.

Insurance companies investigate potential insureds before issuing a policy. In which of the following reports would the insurer have information about a prospective insured's lifestyle?

Inspection report

Which of the following statements is NOT true about the Fair Credit Reporting Act?

It is a state law.

What kind of safeties or guarantees are provided by the Fair Credit Reporting Act?

It requires that the applicant for insurance be informed that a consumer report may be requested.

The regulation of insurance at the state level was the result of which of the following?

McCarran-Ferguson Act

The agent's report, in which an agent can comment on the client, the situation and/or circumstances, or any other thing that the agent thinks is noteworthy, is located in which part of the application?

Part III

The M.I.B. (Medical Information Bureau) is a valuable tool in the insurance industry. Which of the following is a true statement pertaining to the M.I.B.?

The medical information contained in the M.I.B. is received from insurance applications.

The producer is responsible for field underwriting. Field underwriting is done when the producer is in front of the applicant. Which of the following is not expected from a producer as part of the field underwriting?

The producer should note how many children the applicant has in the house.

Under the Fair Credit Reporting Act, when an applicant has been denied insurance coverage because of information contained in a consumer report, the applicant is entitled to which of the following?

The right to obtain disclosure of the source of the information in the consumer report

Once the insurer has looked at the facts pertaining to a life insurance applicant, the insurer will categorize the risk and calculate premiums based on which of the following?

The risk classification and mortality, interest earnings and expenses

For a life insurance policy, when can a statement of good health be required?

When the application is made and no initial premium is paid

The part of the application that provides information about an applicant, such as financial condition, character, purpose of sale, and how long the agent has known the applicant, is-

The agent's report

Marcus is an applicant for a standard risk policy. When is he considered to be covered?

When the insurer mails the policy for delivery (which had the initial one month premium submitted with the application)