Completing the Application, Underwriting, and Delivering the Policies 14%

Paramedical Report

A medical examination completed by a paramedic or registered nurse

Attending Physician's Report

A report from a medical practitioner who treated the applicant for a prior medical problem.

Consequences of Incomplete Information

All questions on an application must be answered. The Insurer must return to the agent any incomplete applications to be completed. If the Insurer accepts the incomplete application, the insurers cannot decline claims due to unanswered question or incomplete information gathered.

Declined Risks

Applicants rejected due to being uninsurable. Potential for loss is so great they can opt meet the definition of Insurance

Required Signatures

BOTH THE AGENT AND THE INSURED MUST SIGN THE APPLICATION

Buyer's Guide

Contains Generic information about Life Insurance policies. Must also be delivered to the policyowner which explains to the insured how they should go about choosing the amount and type of insurance to buy.

Consideration

Each party gives something of value to the other.

Consumer Reports

Includes written or orally gathered information regarding the consumer's credit, character, reputation, or habits, collected by reporting agencies from employment records, credit reports, and other public sources.

Preferred Risk

Ind, that meet certain requirements and qualify for lower premiums than standard risks. They have superior health and lifestyle and habits.

Warranties

Is an absolutely true statement upon which the validity of the insurance policy depends. Breach of Warranties can be considered grounds for voiding the policy or a return of premium.

Intentional Misrepresentation

Is considered fraud.

Stranger-Originated Life Insurance

Is insurance arrangement where a person with no relationship to the insured, (a stranger) purchases a life policy on the insured's life with the intent of selling the policy to an investor for profit when the insured dies. This breaches the LAW of Insurable Interest.

Contracts of Adhesion

Is prepared by one party and accepted or rejected by the other. They're offered on a take it or leave it basis.

Underwriting

Is the risk selection and classification process. It determines whether or not an applicant is Insurable and if so, what premium to charge.

Unilateral Contract

Only one of the parties is legally bound to do anything.

Conditional Contract

Requires that certain conditions be met by the applicant/policyowner and the company in. Order for the contract to be executed.

Field Underwriter

The Agent is the Field Underwriter and is responsible for: 1. Helping prevent adverse selection 2. The proper solicitation of applicants 3. Completing the application 4. Obtaining the required signatures 5. Collecting the initial premium 6. Delivering and explaining the policy.

Risk Classification

The Underwriting Department will look at the applicants past medical history, present physical condition, occupation, habits, and morals to determine the risk classification for the applicant and determine the amount of premium.

Explanation of the Policy, Provisions, Riders, and Exclusions & Ratings

The agent explains the policy, provisions, riders, exclusions and rating to the insured.

Aleatory Contract

There is an exchange of unequal amounts or values.

Elements of a Contract

To be legally binding all contract must have 4 essential elements: 1. Agreement - offer and acceptance 2. Consideration 3. Competent Parties 4. Legal Purpose

Disclosure Authorization Notice

When insures plan to seek and gather information regarding the applicant a WRITTEN Disclosure Authorization Notice must be provided first. THE Disclosure Authorization Notice will: 1. Inform the insured of the insurers practice of collection and use of the personal information 2. Must be written in plain language 3. Must be approved by the Department of Insurance

Coverage Begins

When the policy has been approved, signed and delivered to the applicant.

Anti-Money Laundering (AML)

Any suspicious financial activity must be reported. The AML Program consists of the following minimum requirements: 1. Assimilate policies and procedures for in-house risk assessment. 2. File SARS Suspicious Activity Reports with FEderal authorities 3. Appoint qualified compliance officer responisible for administering the AML program 4. Continual Training 5. Allow for indecent testing of the program on a regular basis.

Standard Risks

Are applicants entitled to insurance protection w/o extra rating or special restrictions., They are average risks.

HIV Consent

For an HIV Test to be requested, an insurer must FIRST: 1. Disclose the use of testing to the applicant 2. Obtain written consent from the applicant on the approved form 3. Insurer must establish written policies and procedures of the internal dissemination of the test results among producers, and employees to ensure confidentiality.

Part 1 of the Application: The General Information

Gather general information about applicant as well as determine: 1. If other policies exist 2. If this contract will replace them. 3. Identifies type of policy applied for. 4. Amount of coverage 5. Information regarding beneficiary if needed or required.

Investigative Consumer Reports

Information gathered through investigations and interviews with associates, friends, and neighbors of the consumer. The reports cannot be made UNLESS the consumer has been notified in writing about the report within 3 days of the date the report was requested. Consumers must be advices end that they have the right to request additional indoor action concerning the report. The insurer or reporting agency must provide the repost to the consumer in 5 days.

Changes on The Application

Information on the contract that needs to be correct must either be: 1. CORRECT THE INFORMATION AND HAVING THE APPLICANT INITIAL THE CHANGE 2. START OVER AND COMPLETE A NEW APPLICATION

Investor-Originated Life Insurance (IOLI)

Is a life policy written on seniors usually age 70, by an investor with no Insurable interest in the insured. They're initiated by a third party investor, and the policyowner receives cash or compensation for taking out the life policy. The death benefit is then transferred to the investor and the name of the insured is not required to pay the premium up front as it is loaned by the investor group.

Medical Information Bureau

Is a membership corporation owned by member insurance companies. It's a non-profit trade organization which receives adverse medical information from insurance companies and maintains confidential medical impairment information on individuals.

Material Misrepresentation

Is a statement that, if discovered, could void the contract OR Would alter the the underwriting decision of the insurance company.

Premium Receipt

Must be issued when an agent collects a premium.

Conditional Receipt

Policies can be effective as early as the application date IF the Premium was submitted w/ the application. The Conditional Receipt - says that coverage will be effective either on the sate prof the application or the state of the medical exam. (Whichever Occurs LAST) With a Conditional Receipt the applicant is covered by the insurance as of the date of the application, providing the applicant is approved by the underwriters.

Completing the Application

The application is the starting point of all insurance transactions. It comprises of two major parts. Part 1 - General information- includes Generall information about the client. Such as name, DOB, address, gender, income, marital status, and occupation.

Insurable Interest

The policy must face the possibility of losing money or something of value in the event of loss. Insurable Interest must exist between the policyowner and the insured at the time of the application. Once policy is issued the insurer must pay the benefit whether or not Insurable Interest exists.

Part 2 of the Application: The Medical Information

This part of the application contains information regarding the applicants medical background. Questions will include: 1. Present Health 2. Medical visits in recent years 3. Medical status of living relatives 4. Causes of death of deceased relatives If amounts of insurance is small the agent and proposed insured will complete a non medical application. For larger amounts of insurance the insurer will require that some sort of medical examination be performed by a professional.

Illustration

A presentation or depiction that includes non-guaranteed elements of a policy over a period of years. It MUST do the following: 1. Distinguish between guaranteed and projected amounts 2. Clearly state that an illustration is not a part of the contract 3. Identify those values that are not guaranteed as such 4. Agents may only use them if they are approved by the insurer and may not change them in any way.

USA Patriot Act

Addresses social, economic, and local initiatives to fight and prevent terrorist activities.

Contract Law

A contract is an agreement between two or mroe parties enforceable by law.

HIPAA

A federal law that protects health information.

Substandard Risk (High Exposure)

Are applicants that due to either physical condition, personal or family history of disease, occupation, or dangerous habits, are not given to Standard rates and must pay a higher premium. Referred to as "Rated"

Representations

Are statements believed to be true to the best of one's knowledge. They are not guaranteed to be true.

Competent Parties

Each person in a contract must be capable of entering that contract in the eyes of the law. This requires that all parties are: 1. Of legal age 2. Mentally competent 3. Not under the influence of drugs or alcohol.

Fair Credit Reporting Act

Establishes procedures that consumer reporting agencies must follow for the protection and confidentiality of the consumer. Is a policy of insurance was denied due to the information contained in the report, the consumer MUST BE ADVISED and provided the same information used and has a right to know what was in the report.

Replacement

Is a practice of terminating an existing policy and obtaining a new one. In cases of Replacement - the producer or Agent MUST make every effort to ensure that the new policy is in the BEST INTEREST OF THE APPLICANT SO THAT THE INSURED CAN MAKE AN INFORMED DECISION.

Policy Summary

Is a written statement describing the features and elements of the policy being issued. It MUST INCLUDE: 1. Name of and address of the agent 2. The full name and home office of the address of the Insurer 3. The generic name of the policy and each rider 4. Premium amount 5. Cash value 6. Dividends 7. Surrender Value 8. Death Benefit Figures for specific policy years 9. Must be provided when the policy is delivered.

Agents Report

Provides the agents personal observations concerning the proposed insured. As the field underwriter, the agents report is most important source of information. The agents report is does not become a part of the "Entire Contract" although is a part of the application process.

Disclosure At Point of Sale

The Applicant must be given a written Disclosure Statement. This statement will provide: 1. Basic Information 2. Cost ad Coverage that is being offered 3. Must be given to the Applicant no later than at the time the application for insurance is being signed. 4. The Disclosure Statement will help the insured make an informed decision regarding their choice of insurance

Delivering the Policy

when the underwing process is completed and the company issues the policy the agent will deliver it to the policyowner.