Field and Home Office Underwriting and Policy Delivery

Question 1

What is the principal tool used in determining an individual’s eligibility for insurance coverage?

Answer 1

The application

Question 2

True or False: The producer issues the insurance policy.

Answer 2

False.

Producers solicit appointments, complete applications, collect premiums, and submit applications for approval.

Question 3

What are Representations?

Answer 3

Statements made by an applicant when answering questions on the application

Question 4

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

Answer 4

On 9/1, the date the policy is approved

Question 5

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

Answer 5

The step-up-in-age rating method

Question 6

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

Answer 6

At time of original application

Question 7

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

Answer 7

Within three days following a request for information

Question 8

Who is a substandard risk?

Answer 8

An individual with higher than average risk

Question 9

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

Answer 9

An approval type conditional receipt

Question 10

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

Answer 10

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

Question 11

True or False: An agent may not make changes to a life insurance application.

Answer 11

True.

Technically, only the applicant may make changes, and only prior to the application being submitted.

Question 12

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

Answer 12

Name, address, date of birth, salary, and occupation of the applicant

Question 13

Where would an agent record personal observations regarding the applicant?

Answer 13

In the agent report

Question 14

What is the primary source of underwriting information?

Answer 14

The original application

Question 15

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

Answer 15

Yes

Question 16

Is coverage provided during the grace period?

Answer 16

Yes

Question 17

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

Answer 17

A standard risk would have a lower premium

Question 18

What individual has better than average risk?

Answer 18

A preferred risk

Question 19

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

Answer 19

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

Question 20

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

Answer 20

Nonmedical

Question 21

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

Answer 21

Receipt

Question 22

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

Answer 22

Policy issue and acceptance

Question 23

What is the purpose of the MIB?

Answer 23

To compare collected health information in order to avoid adverse selection

Question 24

An applicant’s health history is usually found in ____________ of a life insurance policy.

Answer 24

Section II

Question 25

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

Answer 25

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

Question 26

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

Answer 26

No later than time of application

Question 27

Who is the field underwriting agent?

Answer 27

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

Question 28

What methods are used to insure a substandard risk?

Answer 28

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

Question 29

When does the "Notice to the Applicant" regarding the Fair Credit Reporting Act need to be given?

Answer 29

At the time of application

Question 30

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

Answer 30

Earlier

Question 31

A _______ party contract requires three signatures.

Answer 31

Third

Question 32

When may changes to an application be made?

Answer 32

Changes may only be made prior to application submission.

Question 33

What tables predict the probability of death?

Answer 33

Mortality tables

Question 34

Define the term warranty.

Answer 34

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

Question 35

Identify the acronym: APS

Answer 35

Attending Physician's Statement

Question 36

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

Answer 36

The date of the exam itself

Question 37

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

Answer 37

Charging higher premiums

Question 38

When is a Trial Application used?

Answer 38

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

Question 39

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

Answer 39

Appointed

Question 40

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

Answer 40

The free-look provision

Question 41

True or False: Women statistically live longer than men; therefore, they have lower life insurance premiums.

Answer 41

True

Question 42

What is a binding receipt?

Answer 42

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

Question 43

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

Answer 43

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

Question 44

True or False: Anyone may gain access to MIB information.

Answer 44

False. Access is only available to approved company representatives/underwriters.

Question 45

Who pays for the cost of an applicant's medical exams and lab fees?

Answer 45

The insurer underwriting the application

Question 46

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

Answer 46

Statement Regarding Good Health.

Question 47

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

Answer 47

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

Question 48

List some approved policy delivery methods.

Answer 48

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

Question 49

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

Answer 49

A conditional receipt

Question 50

What is another name for an average or ordinary risk?

Answer 50

Standard risk

Question 51

What is a declined risk?

Answer 51

An application for insurance that has been turned down

Question 52

Name some items that affect policy premium.

Answer 52

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

Question 53

When does coverage begin on a conditional receipt policy?

Answer 53

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

Question 54

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

Answer 54

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

Question 55

What are the primary duties of an underwriter?

Answer 55

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

Question 56

What does the Fair Credit Reporting Act allow?

Answer 56

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

Question 57

What is a morbidity table?

Answer 57

A table used to predict the probability of illness or disability

Question 58

The MIB is an intercompany ______ bank that stores information collected from previous ______________.

Answer 58

The MIB is an intercompany DATA bank that stores the information collected from previous APPLICATIONS.

Question 59

How does the Percentage of Normal Rate method work?

Answer 59

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