Completing the Application

collecting the premium

-ADVANTAGES: 1. helps solidify sale 2. coverage begins IMMEDIATELY

replacement

-defined as a transaction in which a new life insurance policy will be purchased -IT IS KNOWN TO THE PRODUCER OR INSURER THAT AN EXISTING LIFE POLICY IS TO BE: -lapsed, forfeited, surrendered, terminated -reduced in value by non-forfeiture options -reduction in benefits -collateral loan for AMOUNT TOTALING MORE THAN 25% OF POLICY'S LOAN VALUE

replacement definitions

-existing insurer: insurance company whose policy is to be changed or replaced -existing life contract: policy that is to be replaced -replacing insurer: insurance company that issues a new policy replace existing

required signatures on the application

-insured and policy owner (if different) -producer -a parent or adult if insured is a minor

changes on the application

-once signed, NO CHANGES CAN BE MADE BY PRODUCER OR INSURER -CHANGES MUST BE MADE, initial change or start a new application

duties of the producer with replacement

-present to the applicant - NO LATER THAN WHEN TAKING APPLICATION - Notice Regarding Replacement of Life Insurance or Annuity -list contract numbers to be replaced -BOTH MUST SIGN NOTICE OF REPLACEMENT -SUBMIT NOTICE, NOTICE OF PROPOSED REPLACEMENT, AND NEW APPLICATION TO REPLACING INSURER

consequences of incomplete applications

-producer responsibility to obtain full and accurate applications from insured -NOT COMPLETE: can delay issuance of a policy -may REQUIRE A STATEMENT OF GOOD HEALTH OR MEDICAL EXAMINATION

duties of replacing insurer

-require producers to comply with regulations -furnish a copy of BUYERS GUIDE to applicant -withing 3!!! working days of receiving notice, MUST FORWARD TO EXISTING INSURER THE NOTICE -maintain a file of REPLACEMENT NOTICE FOR AT LEAST 3 (THREE!!!!) YEARS or NEXT MARKET CONDUCT EXAM

warranty

-statement made by applicant -GUARANTEED TO BE TRUE -FOUND TO BE UNTRUE - can revoke contract

representation

-statement made by applicant -HE/SHE BELIEVES TO BE TRUE -usually, CONTRACT DEEMS ALL STATEMENTS AS THESE -INSURER BEARS THE "BURDEN OF PROOF"

receipts

1. conditional insurability: coverage effective the date signed or date of medical exam ON THE CONDITION THE APPLICANT PROVES TO BE INSURABLE 2. condition approval: MORE RESTRICTIVE; provides the coverage effective THE DATE THE APPLICATION IS APPROVED 3. binding (temporary insurance agreement): COVERAGE GUARANTEED EVEN IF NOT PROVEN TO BE INSURABLE UNTIL: -insurer issues the policy -rejects application -initial premium must be paid -medical required: completion of this exam -no material misrepresentations AND death must not result from suicide

exceptions

1. credit life 2. group life/annuities 3. connection with pension, profit-sharing, etc. 4. non-convertible/renewable term life that EXPIRES IN FIVE YEARS OR LESS 5. total cash surrender is LESS THAN 500 6. sum of face accounts is LESS THAN 5000

type of statements

1. warranty 2. representation