chapter 3 life insurance basics
if an underwriter wants to know more information about past health issues mentioned on the application what shall they request?
attending physician statement
care must be taken to make sure the application is completely in its entirety. If the applicant needs to ______ on the application, the best thing to do is to _____ the application and start over. As an alternative, most insurers allow a correction to be made. The incorrect entry should be ______ and _____by the producer and applicant and then the correct and trait written next to it. The incorrect entry may never be ____ or _____ and written over. a producer may not, under any circumstances, ____ an entry made by the applicant on the application. If the producer realize the applicant made it there on an application, he or she must ____with the applicant to address the issue and make any necessary changes
change a response / destroy/ crossed out / initialed / erased / whited out / change / meet
explain interest in life insurance?
Beatriz at the insurers learn on their general account investment is an important factor in determining the premium rate it charges policyowners. The more interest the insurer can earn through its investment, the last premium it needs to charge
who was the buyer's guide developed by?
I said the National Association of insurance Commissioners or which contains language approved by the director of Department of Insurance
what are the two things that have to be proven in order to purchase life insurance on another adult?
The applicant must prove insurable interest and received the proposed insured is written permission
in a life insurance policy what should the applicant reasonably expect?
a benefit or Advantage from the continued life of the insured or loss when the life ends
what is a policy summary?
a document that succinctly States the coverage, cost, benefits, limitations, exclusions, and terms of the specific life insurance policy for the particular prospective buyers
the ease and relative lack of expense involved in_____ is key to permanent life insurance ______
accessing the cash value / living benefits
in permanent life insurance the policy owner fully owns the cash value and ______
allows access to it while the policy is in force, providing a living benefit
what is the owner in a life insurance policy?
also known as a policy owner, it is the party who purchases the contract and who has all the rights and responsibilities. They are responsible for paying the premiums and get to name the other two parties to the contract
why doesn't make sense in a cross purchase approach for there to be only a few Partners or owners involved?
because of the number of life insurance policies in files and when there are more than a few parties involved in entity plan may be more appropriate
expain participating life insurance
commonly used by Mutual insurance companies, the policy owner is eligible for policy dividends declared by the insurance company.
if two business owners purchase life insurance on each other to buy out the other's family upon their death, what is this called?
cross purchase buy-sell agreements
buy-sell agreement creates an obligation for the sale purchase of a ______ it does not provide the funding . that is done separately in life insurance is ideal product for that when life insurance is brought to provide the funds to support a buy-sell agreement , the arrangement is called an
deceased owner's share of the business/ insured buy-sell agreement
what is true about premium payment modes?
higher frequency equates to higher premiums
what is a producer's responsibilities?
how producers conduct business reflects upon the insurance company and producers have a fiduciary duty to their clients. Producers must always ethically and professionally in all dealings with the policyowners and Future policy on Earth
what are the two methods for determining the amount of life insurance which may be required & how do they differ?
human life value approach and the needs approach human life value approach is based on the economic value of a human life. needs approach is based on a detailed review of a person's specific situation.
for an insurance contract to be valid, the policy applicant must have what in the person or property that is to be insured?
insurable interest
what is an insured buy-sell agreement?
is one in which a person, group of people, or entity agrees to buy a business owners interest in the business upon the owner's death or permanent disability.
what is the most common reason for a life settlement?
is that the owner no longer has a need for the insurance or the premium cost have risen so maintain the policy is no longer appropriate
what is the main purpose of life insurance?
is to pay a death benefit to the beneficiary when the insured person dies
what does the needs approach involve?
it examines personal and family income, liabilities, and assets to calculate the appropriate amount of life insurance which would be needed by your family to allow them to meet the expenses and financial obligations upon your death. It is the most common method used today
what is insurable interest?
it is the financial interests someone has in property or a person's life. It represents the financial impact on a policyowner due to the loss of property or person.
funding _____ coverage is another common business use of Life Insurance. . under key person or key employee insurance plan, a business ____for, owns, and is the beneficiary of the policy covering the life of a _____. bf
key person / supplies / key employee
in my life settlement how do you avoid any appearance that involves stranger originated life insurance? is this legal or illegal in most States?
life settlement providers typically require that the policy being purchased be past its contestability., STOLI is illegal
what documents must be provided to an applicant during replacement?
notice regarding replacement form
in most cases who are the vehicle settlements available to?
only two people whose policies are beyond the contestable.
explain Survivor protection
people by personal life insurance most often to protect survivors against the loss of income resulting from the insurance death. The Survivors are typically the named beneficiaries of a life insurance policy. and not working spouse may also cause financial hardship for the family
in group insurance to cover an individual (such as employees or Association members) are not _____ nor are they parties to the contract. Group insurance coverage is evidenced by individual ______ each participant receives from the plan sponsor
policy owners/certificates of coverage
In a participating policy, the insurer charges ______than necessary in order to have a margin for Extraordinary operating expenses or _______, and justified by the fact that is the excess premium is not needed it will be returned to the owner in the form of a ______.
premium higher/ mortality costs/ dividends
what are two important features of permanent life insurance?
premiums and the accumulation element within the policy, known as the cash value
the insurer must keep copies of an illustration used in _____, and statements _______ when illustration for not used, for ______ the _____ expires
selling a policy / confirming / 3 years after /policy
what basic information does an illustration contain? and what is it clearly labeled?
should be "labeled life insurance illustration" •Name of insurer •name & business address of agent or insures authorized representative, if any •name, age & sex of proposed insured • underwriting or writing classification upon which the illustration is based • generic name of policy, the company product name, if different, and form number • initial death benefit • dividend option election or application of non guaranteed elements, if applicable
what is a key benefit of group life insurance?
that all eligible individuals are automatically covered regardless of any medical issues.
what is a basic requirement for Group Insurance qualification?
that the group cannot be formed for Express purpose of purchasing Group insurance .
Anna entity buy-sell agreement if the owner dies who does the policy proceeds pay to? what do they do with it ?
they are paid to the business. The business and uses the money to buy the deceased ownership shares for the deceased heirs or estate
what is the insured in a life insurance policy?
they are the party on Whose life the contract is based on. When the owner and the insured are different parties, the owner must prove insurable interest. When the insured dies the insurance policy proceeds are paid out to the beneficiary
what are the two most common cost comparison methods?
traditional net cost method interest adjusted net cost
what information is gathered for a needs approach?
• current income • accumulated assets and liabilities • current (& expected ) expenses •risk profile
what are the two types of buy-sell agreements?
•cross purchase plans •entity plans
the business itself is not involved in the cross persons agreement. When life insurance is used to fund a cross purchase agreement, each _____ or ______ buys life insurance on the lives of the other partners or shareholders and names himself or herself the policy's ______. Upon death of a partner or shareholder, the death proceeds are payable to the ______ through the policy each holds on the deceased owner's. the Survivor uses the money to buy the _____ nterest in the business.
partner / shareholder / beneficiary / survivor / deceased's
explain individual insurance
people who buy life insurance for personal protection typically do so with individual policies. With individual coverage an insurance policy coverage one individual (or at most two in the case of joint life insurance) it is possible for the owner and the insured to be two different people most individual policies do involve medical underwriting
explain variable life insurance
premiums are invested in investment sub-accounts managed by the insurer. The insurer guarantees a minimum death benefit, usually the face amount of the policy at issue. But the cash value and the death benefit rise and fall based on the sub accounts investment performance. Then sure does not guarantee a right of return on the cash value infested. Instead policy owner assumes all the risk for the performance of the policys Investments over time.
what four types of personal relationships are automatically deemed to represent insurable interest?
• individuals have insurable interest in themselves • spouses have insurable interest in each other • parents have insurable interest in their minor children • children have insurable interest in their parents or grandparents ( or another on whom a child might be financially dependent)
a certain amount of money is needed at death to cover a mediate expense is that must be addressed at once a lump sum of cash may be needed to do what things?
• play final medical and funeral expenses • pay state taxes in other states settlement • pay off any debts the insured may have incurred additional reasons •create a phone for emergencies •fund a trust to provide dependent care and or pay for children's education •fund any bequest the the owner may have
what does the policy summary include?
• producers name and address (or a mean through which to obtain answers to questions about the summary) • Insurance name and home office address • generic name of policy and every Rider • annual premium for the policy and each optional Rider • death benefit • cash surrender value at Year's End • cash dividends payable at Year's End • policy loan interest rate, if applicable
what are the 3 Premium factors in life insurance ?
•mortality •interest •expenses
what are the three parties involved in every life insurance policy?
•owner •insured •beneficiary
in Deferred Compensation Plan the business owns the _____ that is used to informally fun the plan and may use the policy's ______ as a source of the funds to pay the executive _____ or if the executive dies before retirement, the employer receives to death benefit, it may pay compensation to the _______ executive Survivor in accordance with the plan by using the policies death benefits. the __________ often provides that if the executive leave for a reason other than death disability or retirement he forfeits all of the funds differed unlike qualified retirement plans, which must be offered to all ________, deferred compensation plans may be offered only to selected individuals.
life insurance/ cash value / deferred compensation / deceased/ deferred compensation Arrangements / eligible employees
what does the buyer's guide do?
it helps prospective buyers determine what kind of insurance they need, how much insurance they should buy and how they can find a policy that best suits their needs and objectives
the insurer shall provide a ______ guide prior to accepting the applicants initial ______ or premium deposit however it's a policy for which the application is made contains an unconditional refund provision of at least ____days no, the _____ guide may be delivered with the policy or prior to the delivery of the policy.
buyers / premium/ 10 (free look period )/ buyers /
what is an insurer required to provide to a prospective buyers before accepting the initial premium, unless the buyer has a free look period Of at least how many days? and that case they both must be delivered with the policy or before it. the insurer must also give a ___and _____ to any prospective buyer upon request
buyers guide & policy summary/ 10 days / guide & summary
as permanent life insurance policies mature they accumulate a ______ that represents a ____ to the policy owner. the longer the permanent life insurance policy stays and force the greater its ____ is available to policyowners through a policy loan, withdrawal or Surrender and it may be used for virtually any purpose
cash value / "living benefit " cash value
explain term life insurance
coverage is temporary, applying only for a limited time or term at the end of that time the policy expires. The policy pays a death benefit only if the insured dies during the term . no money accumulates in the policy that is there is no cash value, so at the end of the term the insurer has no payment or refund to the policy owner
make sure it's fine comfort in knowing their life insurance proceeds are paid ____ to the posses beneficiary and are generally exempt from the claims of creditors. Under South Carolina law there are however three exceptions to this general rule, what are they?
directly • if the insured declares bankruptcy and dies within two years creditors may be able to access some of the policies death benefit • if the owner attempts to defraud his creditors by putting extra funds into his life insurance policy which the creditors are entitled to collect • if there is a valid assignment. policyowners May assign some of the cash in the policy as collateral for a loan in order to obtain a better financing rate from A lender. Under the "collateral assignment" the lender is entitled to collect only up the amount owed on a loan for which the policy assignments collateral
life insurance is a financial vehicle that can create an _____. in this context it is all that a person owns at the time of death upon the insured's death, a specific sum of ____ is immediately made available to a ___ running that can be used for ______ when you create an estate in a Life insurance policy what does it equal?
instant estate/ money/ named beneficiary or the insured's estate / any purpose to the face amount of the policy
what is a life settlement?
involves the sale of an existing life insurance policy for more than its cash value but lessons death benefit, it is not required to be terminally or chronically ill
what is an entity buy-sell agreement?
is one in which the business itself is a party to the agreement. And this plan the business ties to deceased Partners or shareholders interest in the business. The business can be a partnership or a close corporation.
what is life insurance commonly used as in deferred compensation plan?
the funding instrument
how is a life settlement different from a viatical settlement?
they are very similar but unlike but I had a cool settlement to a life settlement does not require the insurer to be terminally or chronically ill. The most common reason for a life settlement transaction is that the owner no longer has a need for the insurance or the premium cost have risen so maintaining the policy is no longer appropriate. the purpose of a viatical settlement is to provide a chronically or terminally ill insured a sum of money that might be needed to pay medical expenses or to enhance quality of life
if a producer uses an illustration to sell a life insurance policy what should the producer do?
they should send a copy of the illustration to the insurer with the policy application, and another copy to the applicant.
explain non-participating life insurance
this policy issued by stock insurance companies, there are no policy dividends paid as policy ownership grants no rights to profits. Any company profits may be paid out to stockholders
under an insured executive bonus plan an employer agrees what?M
to pay some of all of the premium on a life insurance policy purchase for a company executive, who is designated the policy owner . the employer can deduct the premium payment as a compensation paid to an employee
what is the purpose of a viatical settlement?
to provide a chronically or terminally ill insured has some of money that might be needed to pay medical expenses or to enhance quality of life. It can provide terminally or chronically ill people a timely method for receiving needed funds.
with a viatical settlement how many days after the settlement agreement has been signed can a person provide the funds that they need? how can you achieve this?
usually within 30 to 45 days the policy owner, call divider, so the life insurance policy to a third party, known as a viatical settlement provider
explain group insurance
with group coverage what Master policy covers multiple people from a few as ten to hundreds or more. the policies issued to and on by the organization most (commonly an employer) that represents the group and sponsors the coverage
in fixed life insurance , investing conservatively, the insurers are able to make _____ that are the foundation of life insurance. The insurer also assumes all risk for making enough profit to cover the prophecies promised _____
important guarantees / benefits
how is the number of life insurance policies required to fund a cross purchase buy-sell agreement determined?
it is determined by the number of Partners/owners
what is liquidity?
it refers to the ease at which which an asset can be converted 2 cash
what are some qualifications to purchase Group Insurance?
•employers •labor union • trade and professional association groups
what are the four premium payment modes?
•monthly •quarterly •semiannually •annual
what does the traditional net cost method do & what Is it also referred to as ?
it is referred to as surrender cost index method, and it identifies the cost of funding the Pure Insurance portion of a life policy over a specific. (Typically 10 or 20 years)
what is a Deferred Compensation Plan?
it is a non-qualified benefit plan under which an employee, normally a senior executive, agrees to defer a portion of his or her or some element of his or her compensation until a future date (typically retirement)
a key provision of a viatical settlement is that the insured must be diagnosed as terminally ill or chronically ill. A person who has a life expectancy of ______ is generally considered terminally ill for purposes of a viatical settlement. The provider determines ______ baster principally on the insured
48 to 60 months / life expectancy / medical records
in an entity buy-sell agreement if the business is a closed Corporation?
a stock Redemption agreement
what is a cross purchase buy-sell agreement?
it is a contract between individual Partners or shareholders. And this agreement, the partners or shareholders agrees to buy the interest of the others in the event the individual dies or withdrawals from the business.
in life insurance what does mortality do?
it reflects the insurance risk of death. This creates the pool of money from which death benefits are paid. At its base the mortality factor is drawn from mortality statistics compiled by National Association of insurance Commissioners into a set of rate called the Commissioners standard ordinary table
which Life insurance policies are recognized as very liquid assets?
permanent life insurance policies
what is an illustration in life insurance?
simply I document created to show how a life insurance policy would perform in the future under a certain set of assumptions such as isolated interest rate and, with an assumed number of predetermined premium payments and a current and guaranteed cost of insurance and expenses
what are insured by so Agreements are most common with?
small business such as partnership for close corporation ( a close corporation is one that is privately held ,its stock is not openly traded) the intent is to enable the business to continue to operate after the owner's death of disability
why does insurable interest exist in a variety of business relationships?
so we can cover the lives of their key employees or owners. The intent is to make up for a financial loss that might occur when a key employee or owner dies
explain the expenses in life insurance
sometimes the loading charge, is added to the premium calculation. The load factors reflect the cops other than mortality that the insurer expects to incur on the policy and a margin a profit it wants to earn on his operations. It is essentially each policy share of the company's operating expenses
without an insurable interest, an insurance policy becomes little more than a _____ and that's it by the policy owner. Is this insurable or not?
speculative / speculative risks are not insurable
what is crucial that the policy owner understands about the cash value?
that the cash value is also an integral part of the policies death benefit and that withdrawing cash value from the policy will result in a reduction in the death benefit
if the life insurance funds an entity plan who pays for the premiums?
the business buys, owns and pays the premium for life insurance policies on the life of each owner. if there are four Partners there are four policies that are purchased
When selecting the most suitable life insurance policy for their needs, applicants may ask their ages for help comparing what?
the cost of two or more policies under considerationp
explain fixed life insurance
the insurer guarantees a fixed death benefit and a minimum rate of return interest crediting on the policy's cash value. Premiums are invested in the company's general account.
what is the similarities and differences between a buy-sell agreements?
the similarity is that the deceased business interest is bought from his or her heirs. The difference between the plans lies and who actually buys it to see his business interests in one that plan the owners buy the interest and the other plan the business buys interest
what does the human life value approach involve?
it involves estimating a person's net future earnings ( after taxes and living expenses) each year to retirement, and then discounting that sum to a present lump sum value using a reasonable interest right. The result is the economic value that person represents to his or her dependence and a starting point for determining how much life insurance to buy. it does not consider a family's actual needs
explain the Life and Accident and health insurance Guaranty Association
it is a non-profit entity and was created to maintain public confidence in the promises of ensures by providing a mechanism for protecting policyowners, Insurance, beneficiaries, annuitants, payees, and as signees of life insurance policies, accident and health insurance policies, and annuity contracts in case and ensure is not able to meet its financial obligations it is also run by a board of directors and headed by the director of insurancep
what's life insurance what is insurable interest based on?
it is based on a relationship between the person applying for insurance and the person whose life is to the insured.
explain permanent life insurance
it is designed to provide life insurance protection for the insurance entire life. Coverage is provided until the insured dies or reaches age of hundred whichever comes first. As long as premiums are paid, the insurance stays in force and in most cases is guarantee to pay the policy face amount. If the insured is still living at age of hundred, the policy matures, and no more premiums are us. The insurer pays the face amount to the policyowners
why is life insurance popular in estate planning?
it provides a sum of money exactly when it's needed and also when the beneficiary designation is properly established, death benefit payments also bypass the probate process and are made directly to the named beneficiary. This makes it possible to set up special cash bequest that are outside the terms of insurance will and therefore bypass the time and expense of probate
what is the beneficiary in a life insurance policy?
they are the party who benefits and receive the death benefit from the insurance policy when the insured dies. The beneficiary does not have to have insurable interest in the insured. As a matter of fact, there is no legal requirement that a beneficiary be named. If the insured dies without a beneficiary the insurance proceeds are paid into the insureds estate.
what are the 4 ways to classify life insurance policies?
• group vs. individual insurance • permanent vs. term (temporary) insurance • participating vs. non-participating life insurance • fixed vs variable life insurance
what are the three important goals that the agent has to meet when completing an application?
1. accuracy 2. thoroughness 3. clarity
when doing an investigative Consumer Report ( inspection report) how how many days do they have to notify the consumer of the notice?
3 days of the date of the request
in addition to the application and an APS the underwriter may want to view more information about the applicant lifestyle and or finances what May the insurer order? what does this do ?
and inspection report , it helps evaluating applicants lifestyle, most typically done with applicants seeking very high amounts of life insurance or if there may be doubts about an insurable interest
with replacement life insurance policies must provide a free look period Of at least ______ after the policy is delivered to the policy owner. However if the policy replaces another, the policy owner is entitled to a free look period Of at least _____following delivery of the policy. if I die right response in sure so the policy without using a producer, the policy owner is entitled to a free look period Of how many days? in every case, the policy owner can return the policy within the _____ For an immediate refund of the entire ______
10 days / 20 days / 31 days / free look period / premium paid
explain uninsurable (declined) risk classification what is the percentage of the declined?
applicants with a very high substandard risk rating are declined coverage altogether. Generally only about 2% of life insurance applicants are rejected as uninsurable
when the initial premium is submitted with the application the insurer is entitled to what? what does it determine?
a conditional receipt or a temporary insurance agreement which determines the date that coverage is effective
when submitting an application to an insurer for a life insurance policy or annuity contract, the producer is required to provide what ? if the app doesn't have these things then what is the producer required to do?
a statement signed by the agent and the applicant that indicates whether the applicant already has an existing insurance or annuity contract. If the applicant is not have any of these do producers not required to do anything more
what will the notice regarding replacement list?
all life insurance policies or annuity contracts that would be replaced by the new policy or contract and why didn't find the name of the insurer, the insurer new attendant and the new policy or contract. This notice will also State whether each policy or contract will be replaced or whether policy would be used to fund a new process your contract
producers must collect _____ that are due in the policy is delivered. When premium is paid at that time, insurers _____ require that the policy owner ______ that the insured is alive and the insurance Health has not _____ since submitting the application what is this called?
all premiums / almost always /sign a statement/ changed statement of good health
explain Preferred Risk classification what qualifies them & what premium rates do they pay?
an applicant who presents a very low risk of loss to the insurer is classified as a Preferred Risk. A person typically qualifies as a Preferred Risk if he or she • enjoys excellent health (blood pressure etc) • does not have any risky habits (smoke etc) • Works in a low-risk job • has a family history of heart disease or cancer at an early age with a preferred risk rating pay lower than standard premiums
explain substandard risk classification how can someone receive this ? what premiums do they pay it what is their premiums called?
an applicant who represents a high risk of loss to the insurer is classified as a substandard risk. An applicant can receive this writing for a number of reasons , including poor health, bad habits, a dangerous job, engaging and hazardous pastimes or a history of early major illness in the family applicants with a substandard risk rating pay higher premiums for the amount of coverage issued this is also called a "rated" case with the premium increased or "rated up "
explain standard risk classification what premium rates do they pay ?
an applicant with this is one who meets the insurers guidelines as an acceptable risk. A policy in this category does not require special conditions or higher rates based on the proposed Insurance Health, habits, job , or family applicants rated as a standard risk pay what premium rates?
what is the first source of information and underwriter reviews and what does it do?
application and it furnishes crucial information about the applicant and the insured, the requested insurance coverage, and the insured's health
if an insured is not insurable for coverage applied for then ____ is not effective instead, the insurer May issue another policy at a new ______ if the applicant except the insurance alternate policy, coverage becomes effective as of the ____ and submit the additional premium, which usually occurs upon___
conditional receipt coverage/ higher premium rate / State the applicant except the policy/ delivery
withconditional receipt if the insured were to ____ after the date of the application and medical exam, whichever is later, and if the insured would have issued the policy as applied for, then the _______ as of the date of the application and a ______ would be paid. If the applicant proves to be ______ as of the date of the application, then no coverage takes effect and the insurer would refund the ______if the applicant proves to be a ______ which would increase the premium, then the policy is not in effect until the additional _______ in any case of temporary coverage is _____ until after any require medical exam !
die /covers take effect / death benefit / uninsurable/ premium payment/ substandard risk/ premium required is collected not valid
tradition net cost method while this method is ______ at comparing the cost of Pure Insurance protection between ______ , it does not recognize the important role of interest in the ultimate funding of a policy. Since ______vary by insurer and are important elements in life and policy _______, this method does not provide an accurate projection of a policy to true cost and it's used in diminishing today.
effective /two or more different polices / interest rates / ultimate costs
a life insurance policy is a contract, ____, between the policy owner in the insurer. The application is the basis of the applicants offer, and a ________ is formed on the basis of information provided on the application. Accordingly the producer must do everything possible to make sure that the application is ________. it is also the _____ duty to protect the insurer which means that there is any doubt as to whether at the applicant may be _______ information or does not understand the question, the producer must probe further. The Producers must inform his ______ if he feels there might be some misrepresentation
enforcable @ law / binding contract / complete & accurate producers / misrepresentating / insurers
the application for the insurance is insures single _____ source of information about the proposed insured. It's filled out by the ____ based on ______
important / producer/ applicants response
as long as the proposed insured is ultimately found to be _____ for the amount and under the terms of the policy as applied for, a conditional receipt makes coverage ____ as of the date of the receipt or the date of a subsequent _____
insurable / effective / medical exam
while insures rely on their Underwriters to determine if an applicant is _____, the process of helping insurers judge and applicants insurability actually begins with the ______. The activities that a producer performs when seeking applications for insurance is called ______ and the producer therefore is considered to be the _____
insurable/ producer/ field underwriting/field underwriter
what is a notice of information practices?
it explains that the insurer May sync information from sources other than the application to get details about the proposed insured.
explain interest adjusted net cost method and what is it also called?
it is also referred to as the net payment cost index and the factors in the interest rate credit to the policy because it counts for the time value of money the interest adjusted net cost method is more widely used today than the traditional net cost method
when does replacement occur?
it occurs when a new life insurance policy or annuity contract is purchased, and the agent or insured knows or should know that with the purchase an existing policy or contract going certain things
how the application is a key source of underwriting information, it also plays an important what?
legal role
in the case of direct response companies, Insurance typically send ______ to the producer for delivery to the customer. The _______ send policies directly to the policyowners. delivering at the policy is both an important responsibility and ______ for the producer and it's the producers _____ to fully explain the policy to confirm it is what the customer _____
newly issued policies / direct response insurance / opportunity/ responsibility / wanted
producers must inform consumers about the practices that companies use during the review in underwriting process typically this process includes giving the applicants a what?
notice of information practices
premium receipts because it represents a key part of the applicants consideration for the contract, the payment of _____ has a direct impact on wu2n coverage becomes _____. If paid with the application, it is possible for coverage to commence when the application is signed the details of this immediate coverage are spelled out in the ______ given to the producer
premiums /effective/ premium receipts
what does a conditional receipt do?
provides for conditional coverage that begins on the date of the application or on the date of a medical exam, if required, whichever is later. The receipt is made on the condition that underwriting determines the insured is insurable. Coverage is then issued any amount applied for
it is the insurers prerogative to accept or _____ an incomplete application. If the missing information is not _____ to determining the applicants ______, the insurer May issue a policy that includes an amendment adding the ______. The owner must _____ the amendment when the policy is delivered. When a life insurance policy is issued subject to an amendment , coverage ____ begin under the policy into the policy is delivered and the proposed ______ the amendment to the application this applies even if the new policy owner submitted the first premium ______ . If a policy is issued with an unanswered question, the insurer has essentially _____ its right to ever ask a question
reject / critical / insurability/ missing info / sign / does not / insured signs / first premium along w/ the application / waived
after receiving a policy from the insurer The Producers first step is to ___ it to make sure it is what the applicant expected . Once asssured the policy is accurate, the next step is to ____as soon as possible to the policy owner while delivery by mail is permitted in Most states, it is generally recommended that policy deliveries be made in _____. Personally delivering the policy let's the agent review the terms of ______ with the new owners. The agent can also answer any questions the owner may have. At the same time, the agent can strengthen the _______
review / deliver it / person /coverage/ client/agent relationship
the interest adjusted net cost method is determined in the ______ as a traditional net cost method, except that the value of premiums and ________ if applicable or accumulated at interest. The interest rate used in the _____ is the right credited by the insurer to its cash values
same manner / dividends / calculations
the application must be ___ by the applicant, the insured (if different from the applicant) and a producer before being ____ to the insurer. The signed application becomes part of the _____ between the insurer and the policy owner
signed/ sent/ contract
when requesting an APS what does the underwriter generally ask for ?
specific details about any medical conditions found in the health section of the application the insurer pays for an APS
what does the payment of Premium provision state?
that premiums are payable in advance, ensures generally require an initial modal premium at the time of application
in the addition to the notice regarding replacement what must a producer leave with the applicant ?
the original or copy of all marketing Communications used to solicit and sell the policy or contract
is an example of agent/producer report?
the producer might include information about the applicant's personal character, habits, and or other information if the producer has reason to believe that the applicant may be misrepresenting information on the application
if the initial premium is not submitted with the application what happens?
there is no premium receipt and coverage will not become effective until the initial premium is eventually paid . or, if the policy is issued but they higher premium as applied for "rate it up" then the balance of the premium must be collected at delivery.
if the new house your contract in a replacement will replace an existing one then what is the producer required to give?
they are required to give the applicant no later than at the time of the application ain't "notice regarding replacement" form. That's it and the producer both sign this notice. The producer is to leave a signed copy of the form with the applicant
what is a premium receipt?
they provide interim coverage while the application is being approved and before the policy is issued. Premium receipts are given only when the applicant submits the first premium payment with the application
explain agent/producer report
this report is written from the producers perspective. it includes the information that the producer knows about the client that would be useful to the underwriter that typically does not show up in the rest of the application which might be important to the underwriting.
besides pulling the inspection report for lifestyle or finances what other reasons will they pull the inspection report for ?
to get more information about the applicants occupation and personal habits. These details are obtained by qualified inspectors questioning friends, neighbors, co-workers, and others known to the applicant
when does constructive delivery or constructive receipt occur? what happens at this point? how is the policy delivered?
when the insurer or agent • males the policy to the policyowner • has no conditions that must still be met at this point the insurer has issued the policy and has released it for delivery to the policy on her. The producer can mail or hand-deliver the policy. However if any conditions are attached to delivery of policy, that legal delivery is required
does HIPAA authorize to contact the applicants daughter for an APS?
yes HIPAA authorizes permission to contact applicants dr.
are insuers permitted to test for the presence of HIV will they use it ?
yes they are & they will use it .
what are the duties of the replacing insurance company that the insurer must do?
• confirm receipt of the required forms •notify any existing ensures that may be affected by the proposed replacement within 5 business days of receiving the application (this gives the company the opportunity to conserve (preserve) the policy) • provide a policy summary or other disclosure documents within 5 business days to any existing ensure that ask for them • keep copies of notice regarding replacement for at least 5 years and provide a freely. Of at least 20 days before the date of delivery of the policy or contract
what are the two forms policy delivery occurs in?
• constructive delivery • legal delivery
when the underwriter is reviewing the insurance application and it's risk the underwriter decides what the policy will be what four things?
• issued as a requested & applied for • it seemed as a rated (substandard) policy • issued with a different amount of coverage • declined
during replacement what is going to happen to the contract?
• lapsed, forfeited, surrender to any extent, assigned to the replacing insurer, or otherwise terminated • converted to reduced paid up Insurance, continue to Extended term insurance, or otherwise reduced and value through the use of nonforfeiture benefits • subject to a loan to purchase the new policy • change to reduce the benefits or the term for which covered remains in force or benefits are to be paid • reissued with a reduced cash value
as if you Don the writer the producer has certain responsibilities what do these include?
• properly soliciting the sale of policies (ie. no mis representation, twisting etc) • filling out applications for coverage, asking the underwriter questions in writing down the answers. • disclose information about the insurance underwriting and policy issues • obtaining the appropriate signatures • collecting the initial premium and issuing the receipt • delivering the policy
what are the many sources of information that an underwriter relies on when deciding whether to accept or decline or rate a risk?
• the application • the agent's report • an attending physician statement (APS) • an inspection or Consumer Report • the medical information Bureau (MIB) report • a medical exam
when An medical exams and lab tests are requested they are typically determined by what three things?
• the type or amount of the proposed insurance • the age of the applicant • the health of the applicant
