Chapter 6 - Underwriting
An attending physician's statement would be appropriate for which life insurance purpose? - Attending physician's statements are mandatory during the application process - At the request of the applicant to assist in the underwriting decision - At the request of the producer to assist in the underwriting decision - At the request of the insurer to assist in the underwriting decision
At the request of the insurer to assist in the underwriting decision
An applicant intentionally lying to an insurance company on an application in order to obtain a cheaper premium is an example of - Rebating - Coercion - Fraud - Twisting
Fraud
Statements made by an insurance applicant on an application are considered to be - Irrevocable - Warranties - Representations - Guarantees
Representations
Which of the following describes a person who is NOT acceptable by an insurer at standard rates because health history, occupation, or hobbies? - Standard risk - Preferred risk - Unacceptable risk - Substandard risk
Substandard risk
Which scenario would most life insurance policies exclude coverage for? - A tourist traveling abroad on a major airline carrier - An individual who has a hobby racing cars once a month - An airline pilot who flies for a commercial carrier - A soldier on leave at home
An individual who has a hobby racing cars once a month
A change in an insurance application requires - An initial made by the producer - An initial made by the applicant - Approval by the insurer - Submitting a new application
An initial made by the applicant
Underwriters can acquire information from all of the following sources EXCEPT - Medical Information Bureau (MIB) - Consumer reports - Attending physician's statement - Genetic testing
Genetic testing
The principle of insurable interest, in regards to a life insurance contract, is accurately described in which statement? - An agent establishes insurable interest - An individual does not have insurable interest on his or her own life - Insurable interest only pertains to business arrangements - Insurable interest can be based on the love and affection of individuals related by blood or law
Insurable interest can be based on the love and affection of individuals related by blood or law
In regards to a life insurance contract, which of the following statements is NOT true regarding the concept of insurable interest? - Individual are assuming to have insurable interest in themselves - Insurable interest is established by a court of law - Insurable interest can be established sufficiently by sentimental attachment alone - Insurable interest must exist at the time of the application
Insurable interest can be established sufficiently by sentimental attachment alone
Which of the following signatures is not required on an individual insurance application? - Producer - Applicant - Insured - Insurer
Insurer
An applicant's character and personal habits can be obtained for underwriting purposes from which source? - Investigative consumer report - Attending physician's statement - Medical Information Bureau (MIB) - Credit report
Investigative consumer report
All of these are considered key factors in underwriting life insurance EXCEPT - Tobacco use - Health history - Age - Marital status
Marital status
A person who is a nonsmoker, of average weight, and in excellent heath would most likely be in which risk classification? - Standard - Substandard - Acceptable - Preferred
Preferred
An insurance applicant with a below-average likelihood of loss is typically considered to be a - Preferred risk - Subpar risk - Declined risk - Standard risk
Preferred risk
An insurance producer is often responsible for underwriting during the application process. All of the these are possible field underwriting roles EXCEPT - Providing disclosure information to the applicant - Collecting initial premium - Policy delivery - Providing commission information to the applicant
Providing commission information to the applicant
When does a life insurance policy typically become effective? - When the policy is issued - When the initial premium is collected and policy is issued - When the application is completed and signed - When the completed application is signed and initialed premium is collected
When the initial premium is collected and policy is issued
Which of the following statements is CORRECT regarding an individual applying for life or health insurance? - The applicant waives all privacy rights - The applicant's family medical history is always required - The applicant's medical history is irrelevant - The applicant's medical history may be analyzed and reported
The applicant's medical history may be analyzed and reported
What is the purpose of the Medical Information Bureau (MIB)? - To accept or decline insurance applicants - To see the premium rates for the insurers - To help underwriting evaluate risk - To perform physical examinations on applicants
To help underwriting evaluate risk
Which of the following pertains to the analysis of an applicant's personal information and determining whether insurance should be issued or declined? - Adverse calculation - Underwriting - Risk classification - Actuarial determination
Underwriting
How many months can a life insurance policy normally be backdated from the date of the application? - 3 - 6 - 8 - 12
6
Upon policy delivery, which of the following must a producer have an applicant sign if no initial premium was collected with the life insurance application? - A waiver of premium - A replacement form - A good health statement - An exclusion
A good health statement
An underwriter's primary responsibility to an insurer is to protect against - Natural selection - Inverse selection - Adverse selection - Risk selection
Adverse selection
An individual most likely will have an insurable interest in insuring a person's life if - An economic interest exists for the continuance of the insured's life - A financial interest exists at the time of insured's death - There is any blood relationship with the insured - A business relationship exists
An economic interest exists for the continuance of the insured's life
An insurer has a right to screen applicants for HIV in which of the following ways? - Blood test for HIV - Inquiring about risky sexual behavior - Inquiring about sexual orientation - Automatically declining an application due to sexual orientation
Blood test for HIV
Which of the following would be a valid reason why a policy premium would be higher than the standard premium? - The insurer is not a member of the MIB - The agent quoted the wrong price - The insured does not have the necessary financial reserves - The insured does not meet established underwriting requirements
The insured does not have the necessary financial reserves
Which of the following does a life insurance policy summary normally include? - The policy's cash value - Agent's report - Policyowner's MIB report - Stated beneficiary
The policy's cash value
What happens when an insurance policy is backdated? - The policy's elimination period is waived - The time frame for reinstating a lapsed policy is extended - The policy's probation period is earlier than the present - The policy's effective date is earlier than the present
The policy's effective date is earlier than the present
A field underwriter's main task is - Assign a risk classification to the insured - Report medical information to the Medical Information Bureau (MIB) - To ensure an applicant's medical information is accurate and complete - To approve or decline an applicant
To ensure an applicant's medical information is accurate and complete
Which of these is considered to be a document that describes the critical segments of a life insurance policy? - Buyer's guide - Policy summary - Consumer report - Buyer's summary
Policy summary
What guarantees that the statements supplied by an insurance applicant are true? - Assurance - Promise - Representation - Warranty
Warranty
What is involved when a life insurance policy has been backdated? - Setting a policy's effective date prior to a preexisting condition - Redating a policy after it has been issued - Reinstating a lapsed policy - Making a policy effective on an earlier date than the present
Making a policy effective on an earlier date than the present
Which of these is likely to occur when life or health insurance is being applied for? - The Medical Information Bureau (MIB) will determine the risk classification - The agent is required to report all medical information to the Medical Information Bureau (MIB) - Physical examinations are required - Medical history from the insured may be reviewed and reported
Medical history from the insured may be reviewed and reported
Which of these is NOT considered to be a risk factor in life insurance underwriting? - Number or children - Health history - Hobbies - Occupation
Number or children
Signatures for an insurance application MUST be obtained by the producer from all of the following sources EXCEPT - The producer - The insurer - The policyowner - The beneficiary
The beneficiary
Which of the following is a requirement for ANY change in an insurance application? - Change must be initialed by the agent - Change must be initialed by the applicant - Change must be approved by the insurer - Change must be notarized
Change must be initialed by the applicant
What would happen if a life insurance applicant is given a conditional receipt from an insurance agent and then dies the next day? - Claim will be denied by insurer - Claim will be paid if money was received by the insurance company - Claim will be paid if underwriter has received the application - Claim will be paid if application is approved
Claim will be paid if application is approved
Which of the following would be considered an underwriting duty of an agent? - Requesting material information from the Medical Information Bureau (MIB) - Completing all applications and collecting initial premiums - Accepting or declining an application - Assigning a risk classification
Completing all applications and collecting initial premiums
Field underwriting performed by the producer involves - Assigning a risk classification to the insured - Providing commission information to the applicant - Approving or declining an applicant - Completing the application and collection initial premium
Completing the application and collection initial premium
All of these are typically sources of underwriting information for life or health insurance EXCEPT - Consumer reports - Medical Information Bureau (MIB) reports - Disclosure authorization response - Attending physician's statement (APS)
Disclosure authorization response
An insurance company needs to obtain personal information from a third party concerning an applicant. Which law do all insurers and their producers need to comply with? - USA Patriot Act - Personal Information Act - Fair Credit Reporting Act - McCarren-Ferguson Act
Fair Credit Reporting Act
All of these are considered sources of information that can assist an underwriting in determining whether or not to accept a risk EXCEPT - Agent's report - Medical Information Bureau (MIB) - Inspection reports - National Association of Insurance Underwriters
National Association of Insurance Underwriters
Preferred risk policies with premiums are issued by insurance companies because the insured has - A higher face amount than average - A better ability to pay premiums over a long period of time - Worse than average mortality or morbidity experience - Better than average mortality or morbidity experience
Better than average mortality or morbidity experience
