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What are some universal key concepts to keep in mind when considering post-issue policy changes

1. contractural vs. non-contractual policy provisions
2. change in amount at risk
3. insurability
4. anti-selection
5. customer/producer company.


Do typical optional riders that can be purchased at time of application which can permit port-issue changes go through underwriting?

yes, they are ususally excisied without underwriting evidence.


What are some examples of post-issue changes that are non-contrictural that a life incusrance company will do, but are not legally required to provide?

Face amount increases, SM changes and reconsideration of rating.

* typically require u/w


Are there uniformity of opinions among US based copanies to where these policy changes are or are not permissible



What is the difference between a change in face amount and amount at risk.

Change in faceb amount may not results in a change of risk. Ie contractural rights to convert term to perm. Since the amount of risk is less, there is little to no u/w typically required.


How is insurabiliuty a key element in the consideration of policy changes?

Less concerns with change in age over changes in health.


What is anti-selection?

the adverse impact upon insurers that occurs when insureds select insurance coverage for only those risks that are likely to generate losses.


Why would customer/producer/company impact relation vary amount insureres?

1. demographics of the market the insurer may target
2. type of producer relationship
3. business structure of the insuere
4. company philosophy


How is the underwriters impact on policy-changes important?

1. underwriters deside the requirements
2. they make the deicsion and reflect the business
3. u/w and producer relationship can be affected.


What two important factors sould be considrred by the company when there is a policy change request?

1. with the exception of policy increases or adding a rider benefit, most post-issue policy changes will not result in additional premium income to the insuere and can even result in lesser premiums as when rating reductions are allowed.
2. for non-contractural policy changes, philosophies can differ from one insurer to another as to just how accomodating they should or should not be.


What is a contestability period?

with few exceptions, life insurance policies have a two-year contestability period, during which the validity of the policy contract can be contested by the insuere for material misrepresentations.


What are material misrepresentations?

statements made that are false which, has the truth been disclosed, would have resulted in a less favourable risk class than was issued. The underwriter has the nurden of adequately investigating issues or questions that can arise during the underwriting process so that an appropritate risk classification can be made and so that nothing that should have been investigated during u/w is lt to be done when a claim is filed.


how are contestability periods affected with policy changes

1. new applications can shed light to hx that was not previously disclosed.
2. if the policy change occurs after the two-year contestable preriod, a new contestable period can start with respect to the current transaction.


What would be the reinsurance implications on policy changes?

1. for business that is fully retained there is no reinsurance concers
2. if there is shared risk, consideration to RI must be given.


What is a reinsurace lead?

if there is more than one reinsurer often one of the participating pool reinsurers have been designated as the lead to streamline, the deicsion making process.


What are typical requirements on post-issue policy change requests?

there is none.

likely should resemble NB requirements for same faceamounts.


What are conversion rights?

typically most term policies have included a provision permitting converions to perm products without evidence. If the request is wihtin a certain time frame.
- usually if there is non change in the risk (no increase risk request) there is usually no evidence


Besides an request for an increase in risk, what other senerio would you see that can warrant evidence of insurability on a conversion?

when converting from an individual term policy to a survivor life or second-to-die policy.


What are "re-entries"

are term insurance policies that have reached the end of their period of specifed coverage and are being considered for renewable term.
- premium relfects the now older age of the insurerd, and the fact there is no current u/w.


How do insurance companies handle re-entry policies?

typically permit the insurerd to provide current evidence of insurability in order to qualify for more favourable premium.


What do you call a renewal that can be completed without evidence?

a guaranteed renewable term.


What is 1035 internal exchanges? ie what does the internal revenue service allow you to do in the U.S.?

exchange an insurance policy that you own for a new life insurance policy insuring the same person wihtout paying tax on the investment gains earned on the OG contract.
This is governed by 1035 of the internal revenue Code,


What are one of the requirements of the 1035 internal exchanges tax provisions?

no gain or loss shall be recognized on the exhange of a contract of life insurance for another contract of life insurance.


what is the insured's and producers perspecctive of the 1035 exchange policy laws?

the company is already at risk for the life insurered under a 1035 exchange policy , if the new coverage will be the same amount as the policy being replaced due to the requirements of a 1035 exachange, they can believe there should be little or no need for evidence


What is a company's perspective on the 1035 exchange?

there are severeal increased risks, despite the
no change in faceamount.
1. new policy= new COIs will reflect full u/w risk assessment without actually being reviewed.
2. new premium needed to carry the policy can be less than the premium on the existing policy despite the now older age.
3. if the health has changed, in the interim, the exchange can present a greater risk.


Do internal exchanges require the same evidence as NB

but know ordering this evidence is expensive, and can damage the relationship with the client. u.w typically will review an application then determine require evidence to keep cost low


What is a reinstatement?

the process by which a life insurance company puts back in force a life insruance policy that has either 1) been terminated because of nonpayment of renewable permiums, or 2) has been continued under the extended term or reduced paid-up insurance non-forfeiture option.


How do the laws differ between canada and the united states in terms of reinstatements?

1. in the US between different states the minimum period of time during which an insere must offer the prospect of reinstatement to the policy holder are between 2-3 years. the insurers can provide a longer period that is required by law.


How does one complete a reinstatement?

1. complete application
2. additional evidence is at the discretion of teh u.w unless RI.
3. Contestability period will begin anew, although only with respect to misstatements that have been made in the reinstatement application


What are some requirements to consider with reinstatements?

1. whether or now policy was FAC shopped by RI
2. policy face amount
3. current policy values
4. age of the proposed insurerd.
5. duration the policy has been inforce
6. duration it lapsed
7. whether or now there have been prior lapses and reinstatements of this same policy
8. disclsoed health hx on the reapplication.