Underwriting - Section 10 - Quiz

Which rating would be considered best of the following choices?

Moody Baa1 (Hint: Is considered a rank number 4 on the chart)

In the event of a loss, the insured is required to submit all of the following except:

A completed Statement of the acting doctor (Hint: Companies generally need three items submitted: A completed Statement of Claim, a form that includes such things as your full name and address and a certified death certificate, and original insurance policy, if available)

Which of the following is true concerning AIDS testing and underwriting?

A policy may not contain exclusions for AID/HIV losses

One of the underwriter's duties is classification of the risk. Which of the following would be incorrect concerning classification?

A preferred risk is reflected in the mortality table (Hint: The mortality table reflects a standard or average risk)

The purpose for this rider is to provide money for the insured to pay for medical and nursing care expenses if diagnosed with terminal illness.

Accelerated Benefits (Hint: The living need or accelerated benefits rider pays part of the death benefit (usually up to 50%) to the insured in the event he diagnosed with terminate illness that will result in death within 1 to 2 years)

Which consumer publication must be given to the insured that describes the type of coverage that is being offered?

Buyers guide (also a policy summary must be delivered)

Usually companies offer several options when a policy is rated. Below are all true except:

Charge for a lower age than the actual age

Which of the following is a true statement?

Critical Illness riders pay benefits upon first diagnosis of a covered condition, and doesn't need to result in death (Hint: Critical Illness Benefit pays a lump-sum benefit to the policyowner upon the insured's first diagnosis of a covered condition)

____________ is the amount by which an insurance company's assets exceed its liabilities and capital.

Earned surplus

All the following companies rate insurance companies financial strength except:

Fitch's Investor Service (Hint: The correct name is Fitch and Moody's Investor Service)

Which of the following is a significant difference between individual policies and Group Life Insurance contracts?

Group underwriting is base don averages, such as the average age, the average working conditions and the average health condition of the group members

_______ guarantees that when a contract is annualized, the income payments will be based on the greater of the actual contract value or a minimum payout base.

Guaranteed Minimum Income Benefits

Which rider would allow the insured to buy additional coverage at special times without a medical exam?

Guaranteed insurability (usually every 3 years)

All of the following statements pertaining to life insurance are correct except:

In establishing premium rates, a company must assume it will earn a high rate of interest on its invested premiums

Which of the following statements about the MIB is not true?

Insurance companies may use MIB reports to decline a policy (Hint: The insurance company must have other factors to refuse the application)

What are the two methods most often used to compare the cost of life insurance policies?

Interest Adjusted Cost Method and Traditional Net Cost

Jackson is paying $100 per month for his universal life policy which has a waiver of monthly deductions. Jackson was disabled 5 years. Which of the following is true?

Jackson's mortality and expense charges would be paid however no money will be paid into the cash account

Higher retention rates are advantages for all parties involved in life insurance because:

Lower expenses and lower product prices

All the following are true concerning MIB except:

MIB gets its information from claim forms and physicians (Hint: Medical Information Bureau (MIB) gets its information only from underwriters)

Money returned to policyholders from an insurance company's earnings is called:

Policy dividends

Sometimes a substandard risk is also called

Rated

All of the following are true regarding surplus except:

Shareholders surplus is 50% of the capital

The State of California's required financial report includes all the following information except:

The company's declined policy results (Hint: Declined policy numbers are not part of the requirement for this financial report)

All of the following are disadvantages of the Traditional Net Cost Method except:

The dividends and premium payments are projections (Hint: The dividends and cash values are projections; cost coverage will be affected by the actual dividends and cash values)

Morbidity tables are used by insurance companies to calculate:

The likelihood of sickness (Hint: Annuity table predict longevity)

All of the following statements are true regarding a disability income rider except:

The monthly income is based on a % of the death benefit of the policy to which it is attached

An accelerated death benefit rider (also known as living needs rider) in a life insurance policy allows which of the following?

The policyowner may receive a portion of the proceeds prior to the death under certain circumstances

Jason has been disabled for 5 years and his policy had a waiver of premium rider. Which of the following is true?

The premiums that were paid would have no effect on the either the cash value or the death benefit (Hint: Waiver of premium is a rider which pays the insurance premium when the insured is disabled and does not have to be repaid in any manner)

The incorrect statement concerning the cost of living rider would be:

There is usually a premium increase for the additional protection if the insured can prove insurability (Hint: The insured does not have to prove insurability for the increase in death benefit)

How do the level term rider on a Family Maintenance Policy and the decreasing term rider on a Family Income policy differ from all other level and decreasing term riders in that:

These riders are used to produce income instead of a death benefit