Chapter 12

Question 1

When does coverage begin if a policy has a conditional receipt based upon insurability?

Answer 1

Coverage begins on the receipt date provided the application is approved as applied for

Question 2

What information may be found in Section 1 of a life insurance policy?

Answer 2

Name, address, DOB, salary and occupation of the applicant

Question 3

What are some of the negative results of submitting an incomplete application?

Answer 3

It’s unprofessional, creates issuance delays, and may result in business lost to competitors or in lost commissions

Question 4

Name the receipt that provides coverage “as long as a specific condition has been met or performed”.

Answer 4

A conditional receipt

Question 5

What are representations?

Answer 5

Statements made by an applicant when answering questions on the application

Question 6

The MIB is an inter company _______ bank that stores information collected from previous ____________.

Answer 6

Data; applications

Question 7

What is a morbidity table?

Answer 7

A table used to predict the probability of illness or disability

Question 8

Define the term warranty.

Answer 8

A statement made by an applicant that is guaranteed to be absolutely true

Question 9

Name some items that effect policy premium.

Answer 9

Age, gender, health, occupation, hobbies, habits, family health, and travel outside of country

Question 10

What does the Fair Credit Rating Act allow?

Answer 10

It gives a consumer or applicant the right to dispute credit reporting information

Question 11

When may changes to an application be made?

Answer 11

Changes may only be made prior to application submission.

Question 12

What does the delivery of a policy to an insured constitute?

Answer 12

Policy issue and acceptance

Question 13

Who is a substandard risk?

Answer 13

An individual with higher than average risk

Question 14

An applicants health history is usually found in ________ of a life insurance policy.

Answer 14

Section 2

Question 15

What type of receipt provides coverage only on the date the application is approved?

Answer 15

An approval type conditional receipt

Question 16

What provision begins in the date a policy is delivered to an insured?

Answer 16

The free look provision

Question 17

What is a binding receipt?

Answer 17

One that provides immediate or unconditional coverage on the date the premium is received

Question 18

If a conditional receipt requires the applicant to take a medical exam, when is the earliest date coverage may begin?

Answer 18

The date of the exam itself

Question 19

In order to represent an insurer, an agent must be ________ by that company.

Answer 19

Appointed

Question 20

A __________ application requires no information other than what is provided by the applicant.

Answer 20

Nonmedical

Question 21

What is a declines risk?

Answer 21

n application for insurance that has been turned down

Question 22

Whenever a premium is paid by an applicant, the agent should provide a __________.

Answer 22

Receipt

Question 23

At policy delivery, what should the agent review with the insured?

Answer 23

Coverage, coverage effective date, provisions, beneficiaries, premium, exclusions, riders, and ownership rights.

Question 24

How does the percentage of normal rate method work?

Answer 24

By simply increasing the premium by a percentage of the standard rate

Question 25

An approval type conditional receipt, dated 6/15, is approved on 9/1 as applied for. When did coverage become effective?

Answer 25

On 9/1, the date the policy is approved

Question 26

Where would an agent record personal observations regarding the applicant?

Answer 26

In the agent report

Question 27

What is the principal tool used in determining an individuals eligibility for insurance coverage?

Answer 27

The application

Question 28

When should an agent review the possibility of various background checks such as credit, MIB, or HIV?

Answer 28

At time of original application

Question 29

List some approved policy delivery methods.

Answer 29

Certified registered mail, first class mail with signed receipt, and personal delivery

Question 30

For applications submitted without premium, applicants must pay premium and complete a ____________.

Answer 30

Statement Regarding Good Health

Question 31

If requested by an applicant, what credit information must be provided to the applicant?

Answer 31

The information report, the source of information, and how to challenge the information

Question 32

What methods are used to insure a substandard risk?

Answer 32

Higher premium, exclusion rider, lower benefit, and lower benefit time frame

Question 33

What is the primary source of underwriting information?

Answer 33

The original application

Question 34

T/F: Anyone may gain access to MIB information.

Answer 34

F; access is only available to approved company representatives/underwriters

Question 35

Identify the acronym: APS

Answer 35

Attending Physicians statement

Question 36

An insurability type conditional receipt, dated 6/15, is approved as applied for in 9/1. When did coverage begin?

Answer 36

6/15. With conditional type receipt, coverage is effective on date of application if policy is issued as applied for

Question 37

If proven untrue, may information obtained through a credit check be used to deny an application?

Answer 37

Untrue information obtained through a credit check may not be used to deny an application

Question 38

T/F: Women statistically live longer than men; therefore they have lower life insurance premiums.

Answer 38

T

Question 39

When should the agent review and collect signatures on a Notice Regarding Replacement form?

Answer 39

No later than time of application

Question 40

A _______ party contract requires three signatures.

Answer 40

Third

Question 41

What is the rating method that increases premiums by increasing the age classification of the insured?

Answer 41

The step up in age rating method

Question 42

When does coverage begin on a conditional receipt policy?

Answer 42

If the application is approved as applied for, coverage is immediately provided

Question 43

When must the applicant be notified that consumer/credit background checks will be performed?

Answer 43

Within 3 days following a request for information

Question 44

Is signed authorization required from the applicant in order to test for the HIV virus?

Answer 44

Yes

Question 45

What individual has fatter than average risk?

Answer 45

A preferred risk

Question 46

The date listed on a receipt will always be a date that is _______ than the policy issue date.

Answer 46

Earlier

Question 47

T/F: the producer issues the insurance policy.

Answer 47

F; producers solicit appointments, complete applications, collect premiums, and submit applications for approval

Question 48

What is another name for an average or ordinary risk?

Answer 48

Standard risk

Question 49

T/F: an agent may not make changes to a life insurance application.

Answer 49

T; technically, only the applicant may make changes, and only prior to the application being submitted

Question 50

When is a trial application used?

Answer 50

When an application is submitted to the insurers without an initial premium

Question 51

When does the “Notice to the applicant” regarding the Fair Credit Reporting Act need to be given?

Answer 51

At the time of application

Question 52

Which would have a lower premium, a standard or substandard risk?

Answer 52

A standard risk would have a lower premium

Question 53

What is the most common method used to insure a substandard risk?

Answer 53

Charging higher premiums

Question 54

What is the purpose of the MIB?

Answer 54

To compare collected health information in order to avoid adverse selection

Question 55

Who is the field underwriting agent?

Answer 55

The agent who determines which risks are desirable and submits them to the underwriting department for approval

Question 56

Is coverage provided during the grace period?

Answer 56

Yes

Question 57

What tables predict the probability of death?

Answer 57

Mortality tables

Question 58

Who pays for the cost of an applicants medical exams and lab fees?

Answer 58

The insurer underwriting the application

Question 59

What are the primary duties of an underwriter?

Answer 59

Assess risks, approve or deny applications, determine premiums, and protect the insurer against adverse selection