Completing the App, Underwriting , and Delivering Policy

Question 1

Insurance _____ the risk of loss from an individual or business entity to an insurance company, which in turn spreads the costs of unexpected losses to many individuals

Answer 1

transfers

Question 2

The process of issuing a life insurance policy begins with

Answer 2

Solicitation

Question 3

Solicitation of insurance means

Answer 3

an attempt to persuade a person to buy an insurance policy, can be done orally or in writing

Question 4

Every application for a life insurance policy must be given a _______that provides basic information about the cost and coverage of the insured being solicited

Answer 4

written disclosure statement

Question 5

Written disclosure statement must be given to the applicant no later than the time the application for insurance is

Answer 5

signed

Question 6

______ will help the applicants to make more informed and educated decisions about their choice of insurance

Answer 6

Disclosure Statements

Question 7

A _______ provides basic, generic information about life insurance policies that contains, and is limited to, language approved by the Department of Insurance. This document explains how a buyer should go about choosing the amount and type of insurance to buy, and how a buyer can save money by comparing the costs of similar policies.

Answer 7

Buyer’s Guide

Question 8

Insurers must provide a buyer’s guide to all applicants prior to accepting their

Answer 8

initial premium

Question 9

If the policy contains an unconditional refund provision of at least _____, a buyer’s guide can be delivered with the policy.

Answer 9

10 days(free look period)

Question 10

A policy summary is a written statement describing the ______ and _____ of the policy being issued. It must include the name and address of the agent, the full name and home office or administrative office address of the insurer, and the generic name of the basic policy and each rider.

Answer 10

features and elements

Question 11

A policy summary will also include premium, cash value, dividend, surrender value and _____ for specific policy years.

Answer 11

death benefit figures

Question 12

Policy summary must be provided when the policy is

Answer 12

delivered

Question 13

The term _____ means a presentation or depiction that includes nonguaranteed elements of a policy of individual or group life insurance over a period of years.

Answer 13

illustration

Question 14

A life insurance illustration must do the following:

Answer 14

1) Distinguish between guaranteed and projected amounts
2) Clearly sate that an illustration is not a part of the contract
3) Identify those values that are not guaranteed as such

Question 15

An agent may only use the illustrations of the insurer that have been ____, and may not change them in any way

Answer 15

approved

Question 16

The agent is the company’s front line, and is referred to as a _______ because the agent is usually the one who has solicited the potential insured.

Answer 16

field underwriter

Question 17

As a field underwriter, the agent has many important responsibilities during the underwriting process and beyond, including the following:

Answer 17

1) Proper solicitation of applicant
2) Helping prevent adverse selection
3) Completing the application
4) Obtaining the required signatures
5) Collecting the initial premium and issuing the receipt, if applicable
6) Delivering the policy

Question 18

______ is the starting point and basic source of information used by the company in the risk selection process.

Answer 18

The Application

Question 19

Although applications are not uniform and may vary from one insurer to another, they all have the same basic components:

Answer 19

Part 1- General Information

Part 2-Medical Information

Question 20

General information of the application includes the general questions about the applicant, such as:

Answer 20

name, age, address, dob,

gender, income, marital status, occupation

Question 21

Part 1 identified the type of policy applied for an the amount of coverage, and usually contains information concerning the

Answer 21

beneficiary

Question 22

_______ of the application includes information on the prospective insured’s medical background, present health, any medical visits in recent years, medical status of living relatives, and causes of death of deceased relatives.

Answer 22

Medical Information

Question 23

If the amount of insurance is relatively small, the agent and the proposed insured will complete all of the medical information.

Answer 23

That would be considered a nonmedical application

Question 24

It is the agent’s _____ to make certain that the application is filled out completely, correctly, and to the best of the applicant’s knowledge.

Answer 24

responsibility

Question 25

The agent’s (producer’s) ____ provides the agents personal observations concerning the proposed insured

Answer 25

report

Question 26

The agent’s report does not become a part of the entire contract, although it is part of the

Answer 26

application process

Question 27

Both the agent and the proposed insured must ___ the application

Answer 27

sign

Question 28

When an answer to a question on the application needs to be corrected, agents have the option, depending on which insurer they represent, of correcting the information and have the applicant _______ or complete new app

Answer 28

initial the change

Question 29

Before a policy is issued, all the questions on the application must be

Answer 29

answered

Question 30

If a policy is issued with questions left unanswered, the contract will be interpreted as if the insurer ______ its right to have an answer to the question.

Answer 30

waived

Question 31

The insurer will not have the right to deny coverage based on any information that the __________ might have contained

Answer 31

unanswered question

Question 32

Whenever the agent collects premiums, the agent must issue a

Answer 32

premium receipt

Question 33

The most common type of receipt is a _________, which is used only when the applicant submits a prepaid application

Answer 33

conditional receipt

Question 34

The conditional receipt says that coverage will be _____ either on the date of the application or the date of the medical exam, whichever occurs last

Answer 34

effective

Question 35

A ____ is an absolutely true statement upon which the validity of the insurance policy depends

Answer 35

warranty

Question 36

_____ are statements believed to be true to the best of one’s knowledge, but they are not guaranteed to be true

Answer 36

Representations

Question 37

Untrue statements on the application are considered ________ and could void the contract

Answer 37

misrepresentations

Question 38

A ________ is a statement that, if discovered would alter the underwriting decision of the insurance company.

Answer 38

material misrepresentation

Question 39

If material misrepresentations are intentional, they are considered

Answer 39

fraud

Question 40

___ is the risk selection process

Answer 40

Underwriting

Question 41

The underwriter’s responsibilities include selecting only those risks that are considered ______ and meet the insurer’s underwriting standards.

Answer 41

insurable

Question 42

The purpose of underwriting is to protect the insurer against ______

Answer 42

adverse selection

Question 43

The primary criteria an underwriter will use in assessing the desirability of particular candidate for life insurance includes the applicant’s

Answer 43

Health
Occupation
lifestyle
Hobbies and Habits

Question 44

Underwriter will use many different sources of information in determining the insurability of the

Answer 44

individual risk

Question 45

To purchase insurance, the policyowner must face the possibility of losing money or something of value in the event of loss. This is called

Answer 45

insurable interest

Question 46

In life insurance, insurable interest must exist between the policyowner and the insured

Answer 46

at the time of the application

Question 47

A valid insurable interest may exist between the policyowner and the insured when the policy is insuring any of the following:

Answer 47

1) Policyowner’s own life
2) The life of a family member
3) the life of a business partner, key employee, or someone who has financial obligation to the policyowner

Question 48

Insurable interest is not required of

Answer 48

beneficiaries

Question 49

Insurable interest must exist

Answer 49

at the time of application

Question 50

An insurance application is the ______ underwriters use for information about the applicant

Answer 50

key source

Question 51

To supplement the information on the application, the underwriter may order an inspection report on the applicant from an independent investigating firm or

Answer 51

credit agency

Question 52

Companies that use inspection reports are subject to the rules and regulations outlines in the

Answer 52

Fair Credit Reporting Act

Question 53

Insurer may only request a _____ which is completed by a paramedic or a registered nurse

Answer 53

paramedical report

Question 54

Underwriter may require an _________ from a medical practitioner who treated the applicant for a prior medical problem

Answer 54

Attending Physician’s Statement (APS)

Question 55

In addition to an attending physicians report, the underwriter will usually request a

Answer 55

Medical Information Bureau

Question 56

MIB is a membership corp. owned by member insurance companies. It is a _________ which receives adverse medical information from insurance companies and maintains confidential medical impairment information on individuals

Answer 56

nonprofit trade organization

Question 57

MIB can be used only as an aid in helping insurers know what areas of impairment they might need to investigate further. An applicant cannot be _____ simple because of some adverse information discovered

Answer 57

refused

Question 58

If an insurer request a medical examination, the ______ is responsible for the costs of the exam

Answer 58

insurer

Question 59

Following laws and regulations for insurers requiring an applicant to submit to an HIV test

Answer 59

1) The insurer must disclose the use of testing to the applicant and obtain written consent from the applicant
2) The insurer must establish written policies and procedures for the internal dissemination of test results among its producers and employees to ensure confidentiality.

Question 60

______ is a federal law that protects health information

Answer 60

Health Insurance Portability and Accountability Act (HIPAA)

Question 61

HIPAA regulations provide protection for the privacy of certain individually identifiable health information (such as demographic data that relates to physical or mental health condition) referred to as

Answer 61

protected health information

Question 62

Under the ______, patients have the right to view their own medical records, as well as the right to know who has accessed those records over the previous 6 years

Answer 62

Privacy Rule

Question 63

The _______, however allows disclosures without individual authorization to public health authorities authorized by law to collect or receive the information for the purpose of preventing or controlling disease

Answer 63

Privacy Rule

Question 64

The _________ establishes procedures that consumer-reporting agencies must follow in order to ensure that records are confidential, accurate, relevant, and properly used

Answer 64

Fair Credit Reporting Act

Question 65

Fair Credit Reporting Act also __________ against the circulation of inaccurate or obsolete personal and financial information

Answer 65

protects consumers

Question 66

An individual who _____ violates the Fair Credit Reporting Act is liable in the amount equal to the loss to the consumer, as well as any reasonable attorney fees incurred in the process

Answer 66

unkowingly

Question 67

An individual who ______ violates this Act enough to constitute a general pattern or business practice will be subject to a penalty of up to $2500

Answer 67

willfully

Question 68

A prospective insured may be rates as one of the 3 classifications:

Answer 68

1) standard
2) substandard
3) preferred

Question 69

______ are those individuals who meet certain requirements and qualify for lower premiums than the standard risk. These applicants have superior physical condition, lifestyle and habits

Answer 69

Preferred risks

Question 70

__________ are persons who, according to a company’s underwriting standards are entitled to insurance protection without extra rating or special restrictions.

Answer 70

Standard risk

Question 71

________ applicants are not acceptable at standard rates because of physical condition, personal or family history of disease, occupation, or dangerous habits

Answer 71

Substandard (High Exposure) risk

Question 72

Applicant who are rejected are considered _____. Risks that the underwriters assess as not insurable are declined.

Answer 72

Declined risk

Question 73

If the initial premium is not paid with the application, the agent will be required to collect the premium

Answer 73

at the time of policy delivery

Question 74

_____ is a practice of terminating an existing policy or letting it lapse and obtaining a new one

Answer 74

Replacement

Question 75

To keep in compliance with the Do Not Call rules, organizations must consult the registry every _____

Answer 75

31 days

Question 76

Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?

Answer 76

3 days

Question 77

The Federal Fair Credit Reporting Act

Answer 77

Regulates consumer reports

Question 78

Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report

Answer 78

Must be informed of the source of the report

Question 79

Standard risk is _______ of the majority of people

Answer 79

representative

Question 80

_______ include written and/or oral information regarding a consumer’s credit, character, reputation,, or habits collected by a reporting agency from employment records, credit reports, and other public sources

Answer 80

Consumer reports

Question 81

Investigative Consumer reports cannot be made unless the consumer is advised in writing about the report within ______ of the date the report was requested

Answer 81

3 days

Question 82

Premiums are paid in

Answer 82

advance