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Life & Health Insurance > Life & Health Insurance Ch. 2 > Flashcards

Life & Health Insurance Ch. 2 Flashcards

Memorize

1
Q

Policyowner

A

Purchaser of the life insurance policy but does not have to be the insured one

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2
Q

Death Benefit

A

Paid upon the death of the inusred

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3
Q

Third Party Ownership

A

Policy is owned by someone else
Ex. spouse or parent

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4
Q

When must producers provide the Buyer’s Guide and Policy Information

A

At the time of application

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5
Q

Notice of Information

A

Applicant must be notified and given written consent for info sent to a third party

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6
Q

HIPPA Privacy Rules

A

All individually identifiable health information must remain confidential

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7
Q

Policy Replacement

A

Any transaction in which a new life policy or annuity is to be purchased and the producer knows the contract will either:
Lapse, reduce, amended, or reissued

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8
Q

Conservation

A

Act of saving the current policy and preventing it from being replaced

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9
Q

Primary source of information

A

The application

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10
Q

Required signatures

A

Both the producer and applicant

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11
Q

Changes in application

A

Applicant must initial any changes

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12
Q

Incomplete application

A

Producers responsibility to make sure application is filled out
anything not filled out will be returned

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13
Q

Initial premium

A

Premium paid at the time of application

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14
Q

Conditional Receipt

A

Says when the coverage will begin
Longer of the 2
date of application or date of completion of and medical exams

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15
Q

Binding Receipt

A

Provides immediate coverage if premium is paid at time of application

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16
Q

Trial Application

A

application submitted without a premium

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17
Q

Trial Application is also called

A

Collect on Delivery (CoD)

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18
Q

Underwriting

A

Process of selection, classification, and rating
Determining if someone is insurable essentially

19
Q

What is the purpose of underwriting?

A

To detect any adverse selections

20
Q

6 Sources of Underwriting

A

Application
Medical Exams
Attending Physician’s Statement
Medical Information Bureau
Inspection Report
Agents Report

21
Q

The Application

A

Underwriter confirms insurable interest exists
Part 1: General information
Part 2: Medical background/history

22
Q

Medical/Physical Exam

A

Doctor conducts a check up at insurer’s expense

23
Q

Attending Physician Statement (APS)

A

Used when an applicant or medical report reveal conditions that need more information

24
Q

Medical Information Bureau (MIB)

A

Used to collect adverse medical information about an applicant’s health
Applicant cannot be declined because of this report

25
Q

Inspection Report

A

General report of the applicant’s finances, moral, work, hobbies etc

26
Q

Agent’s Report

A

Personal statement about the applicant from the producer

27
Q

Underwriting Factors

A

Age, gender, job, physical condition, tobacco use, health history

28
Q

Standard Risks

A

Normal human, average life expectancy

29
Q

Preferred Risks

A

Individuals who qualify for a lower premium
Above average life expectancy

30
Q

Substandard Risks

A

Individuals with poor health

31
Q

What are substandard risks issued?

A

Rated policies or Surcharges

32
Q

What can be the frequency of premium payments?

A

Monthly. quarterly, semi-annually, or annually

33
Q

What is the cheapest way to pay?

A

Annually

34
Q

What is the most expensive way to pay?

A

Monthly

35
Q

Who’s responsibility to deliver the policy and collect premiums?

A

Producer

36
Q

Legal Delivery or Constructive Delivery

A

Only happens when the premium was paid at the time of application

37
Q

Substandard Contract

A

Insurer may “counteroffer” the applicant based off reports

38
Q

Statement of Good Health

A

Used if premium isn’t paid at time of application
says the applicant remained in good health

39
Q

Survivor Protection

A

Providing funds for surviving spouses and dependents

40
Q

Estate Creation

A

Life insurance proceeds paid in one lump sum to create an immediate estate that the insurer can pass on

41
Q

Estate Conservation

A

Provides money to pay any estate taxes or loans upon the death of the insured

42
Q

Cash Accumulation

A

Amount of cash accessible to the policyholder

43
Q

Liquidity

A

Immediate funds available upon death of the insured

Life & Health Insurance (2 decks)

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