Chapter 1: Completing the application, underwriting, and delivering the policy

What are the 4 required elements of an insurance contract

1.Agreement 2.Consideration 3.Competent parties 4. Legal Purpose

Upon policy delivery, the producer may be required to obtain any of the following EXCEPT: Statement of good health Payment of premium Delivery receipt A signed waiver of premium

A signed waiver of premium

When must insurable interest exist in life insurance

At the time of application

A Producer agent must do all of the following when delivering a new policy to the insured EXCEPT: Explain the rating procedures if the policy is rated differently than applied for Disclose commissions earned from the sale of the policy Explain the policy provisions, riders, and exclusions. Collect any premium due

Disclose the commissions earned from the sale of the policy

What two Parts make up a life insurance application

Part 1- General Information Part 2- Medical Information

Which of the following will be included in a policy summary? Primary and secondary beneficiary designations Premium amounts and surrender values Copies of illustrations and application Comparisons with similar policies

Premium amounts and surrender values A policy summary must be delivered along with the policy and will provide the producers name and address, the insurance companies home office, the generic name of the policy issued, and premium, cash value, surrender value and death benefit figures for specific policy years

Chapter 1 Learning Objectives

Recognize a legal Insurance Contract Identify major steps in insurance underwriting Understand duties and responsibilities Know when policy is delivered and coverage begins

What is the purpose of a buyer's guide? To provide information about the issued policy To allow the consumer to compare the costs of different policies To provide the name and address of the agent/producer issuing the policy To list all policy riders

To allow the consumer to compare the costs of different policies

Why should the producer personally deliver the policy when the first premium has already been paid? To help the insured understand all aspects of the contract To ensure the producer gets paid commission To find out how the family has been doing since the initial presentation To make sure the policy is not stolen or lost

To help the insured understand all aspects of the contract

An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will coverage begin? On the application Date When the agent submits the application to the company and the company issues a conditional receipt When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable statement of good health On the designated effective date

When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable statement of good health

If a policy includes a free-look period of at least 10 days. the buyers guide may be delivered to the applicant. Within 30 days after the first premium payment was collected Prior to filling out the application for insurance With the policy Upon issuance of the policy

With the policy

insurance policy

a contract between a policyowner (and/or insured) and an insurance company which agrees to pay the insured or the beneficiary for loss caused by specific events

Agent/Producer

a legal representative of an insurance company; the classification of producer usually includes agents and brokers; agents are the agents of the insurer

Applicant or proposed insured

a person applying for insurance

Beneficiary

a person who receives the benefits of an insurance policy

Life Insurance

coverage on human lives

Adverse Selection

insuring of risks that are more prone to losses than the average risk

Insured

person covered by the insurance policy; may or may not be the policy owner

lapse

policy termination due to nonpayment of premium

Death Benefit

the amount paid upon the death of the insured in a life insurance policy

Insurer (principal)

the company who issues an insurance policy

Premium

the money paid to an insurance company for the insurance policy

Policy Owner

the person entitled to exercise the rights and privileges in the policy