Life & Health Insurance Ch. 2

Question 1

Policyowner

Answer 1

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

Question 2

Death Benefit

Answer 2

Paid upon the death of the inusred

Question 3

Third Party Ownership

Answer 3

Policy is owned by someone else
Ex. spouse or parent

Question 4

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

Answer 4

At the time of application

Question 5

Notice of Information

Answer 5

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

Question 6

HIPPA Privacy Rules

Answer 6

All individually identifiable health information must remain confidential

Question 7

Policy Replacement

Answer 7

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

Question 8

Conservation

Answer 8

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

Question 9

Primary source of information

Answer 9

The application

Question 10

Required signatures

Answer 10

Both the producer and applicant

Question 11

Changes in application

Answer 11

Applicant must initial any changes

Question 12

Incomplete application

Answer 12

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

Question 13

Initial premium

Answer 13

Premium paid at the time of application

Question 14

Conditional Receipt

Answer 14

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

Question 15

Binding Receipt

Answer 15

Provides immediate coverage if premium is paid at time of application

Question 16

Trial Application

Answer 16

application submitted without a premium

Question 17

Trial Application is also called

Answer 17

Collect on Delivery (CoD)

Question 18

Underwriting

Answer 18

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

Question 19

What is the purpose of underwriting?

Answer 19

To detect any adverse selections

Question 20

6 Sources of Underwriting

Answer 20

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

Question 21

The Application

Answer 21

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

Question 22

Medical/Physical Exam

Answer 22

Doctor conducts a check up at insurer’s expense

Question 23

Attending Physician Statement (APS)

Answer 23

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

Question 24

Medical Information Bureau (MIB)

Answer 24

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

Question 25

Inspection Report

Answer 25

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

Question 26

Agent's Report

Answer 26

Personal statement about the applicant from the producer

Question 27

Underwriting Factors

Answer 27

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

Question 28

Standard Risks

Answer 28

Normal human, average life expectancy

Question 29

Preferred Risks

Answer 29

Individuals who qualify for a lower premium Above average life expectancy

Question 30

Substandard Risks

Answer 30

Individuals with poor health

Question 31

What are substandard risks issued?

Answer 31

Rated policies or Surcharges

Question 32

What can be the frequency of premium payments?

Answer 32

Monthly. quarterly, semi-annually, or annually

Question 33

What is the cheapest way to pay?

Answer 33

Annually

Question 34

What is the most expensive way to pay?

Answer 34

Monthly

Question 35

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

Answer 35

Producer

Question 36

Legal Delivery or Constructive Delivery

Answer 36

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

Question 37

Substandard Contract

Answer 37

Insurer may "counteroffer" the applicant based off reports

Question 38

Statement of Good Health

Answer 38

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

Question 39

Survivor Protection

Answer 39

Providing funds for surviving spouses and dependents

Question 40

Estate Creation

Answer 40

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

Question 41

Estate Conservation

Answer 41

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

Question 42

Cash Accumulation

Answer 42

Amount of cash accessible to the policyholder

Question 43

Liquidity

Answer 43

Immediate funds available upon death of the insured