Random Definitions of Life Insurance

Question 1

Producer/Agent

Answer 1

They are the same they are legal representatives of the insurance company

Question 2

Insurer/Principle

Answer 2

This is the insurance company that issues the policy

Question 3

Agent Contract

Answer 3

The contract the agent signs when working for an insurance company

Question 4

Insurance Policy

Answer 4

This is a contract between the owner or the insured

Question 5

Insured/Applicant

Answer 5

The insured or the applicant is anything of value if something happens to the insured the policy/insurer will protect it’s family.

Question 6

Seeking and Application

Answer 6

This is considered an offer.

Question 7

When the policy is issued this is considered what?

Answer 7

This is called Acceptance.

Question 8

Consideration

Answer 8

equals MONEY; equals premium payments and also pays for loss of claim

Question 9

Legal Purpose

Answer 9

The contract must be legal it must NOT be against public policy

Question 10

Aleatory Contract

Answer 10

An unequal exchange it pays small premium while the insurance pays large lump sum amounts

Question 11

Application

Answer 11

This constitutes the whole policy.

Question 12

Contract of Adhesion

Answer 12

One person prepares the contract and the other party must accept this is a take it or leave it contract there is no negotiation of this.

Question 13

Risk Selection Classification

Answer 13

The risk is the individual that is trying to get insurance.

Question 14

Underwriting

Answer 14

Is when and insurer determines whether or not an applicant is insurable and what premium to charge.

Question 15

Insurable Interest

Answer 15

1 - When a person buys insurance the policy holder must face the possibility of loosing something of value. 2 - Potential for loss. 3 - Exist between the policy owner and the insurer. 4 - This can be between a family, key employee and your own life.

Question 16

Underwriting Sources

Answer 16

The first source is APPLICATION.

Question 17

Agent Report

Answer 17

The first hand observation the agent writes down everything they have observed.

Question 18

Inspection Report

Answer 18

This is when the agent report raises a RED Flag from observation they are sent into investigate the client.

Question 19

Fair Credit Reporting Act

Answer 19

This protect the consumer / applicant it insures that the records are accurate and confidential. Violation of this is 2YEAR. Knowingly violating this is $2,500 PENALTY.

Question 20

Consumer Report

Answer 20

This is the credit report / public records / reputation / and habits.

Question 21

Investigative Report

Answer 21

The report will allow them to investigate you be asking friends family and neighbors.

Question 22

Medical Information Bureau (MIB)

Answer 22

It give physical examination and this is also a non-profit. The insurance company will use MIB as a source of underwriting to find out about the impermeant medical information on an applicant.

Question 23

Medical Examination

Answer 23

This is a physical examination and an attending physician statement.

Question 24

Medical Examination

Answer 24

The insurance company will pay for the exam cost or the insurer will pay the cost.

Question 25

Indemnity / Indemnified

Answer 25

This is REIEMBURSMENT.

Question 26

HIPPA

Answer 26

Health Insurance Portability and Accountability Act - This is a federal law that protects private health information.

Question 27

Risk Classification

Answer 27

This determines whether the applicant will pay higher or lower premiums.

Question 28

Preferred Risk

Answer 28

This is an applicant at its peek health condition. They have great health condition.

Question 29

Standard Risk

Answer 29

Majority of people.

Question 30

Substandard Risk

Answer 30

People that are more at risk due to family history and pays a higher premium. They make higher payments because the have below average health conditions.

Question 31

Declined Risk

Answer 31

They have NO insurable interest the applicant is deemed unhealthy.

Question 32

(STOLI) Stranger Originated Life Insurance

Answer 32

This is a forbidden policy. If you have an suspicion of this report it ASAP. Someone trying to write a policy on someone that they do not know.

Question 33

(IOLI) Investor Owned Life Insurance

Answer 33

This is the same as STOLI. Major RED FLAG. Report this ASAP.

Question 34

Delivering the Policy

Answer 34

Once the policy is mailed out it is considered DELIVERED. It is advisable to obtain a delivery receipt. Personal DELIVERY is the BEST WAY. Upsell comes with delivering the policy. Also, explain the policy once delivered.

Question 35

Buyers Guide

Answer 35

This is generic and is also general information. You ALWAYS want to explain the buyers guide.

Question 36

Policy Summary

Answer 36

This is an overview of the policy.

Question 37

Policy

Answer 37

Policy will not be in effect until premium is collected. Obtain a statement of good health.

Question 38

USA Patriot Act

Answer 38

This FIGHTS to prevent terroristic activity.

Question 39

AML (Anti-Money Laundering Program)

Answer 39

This prevents FRAUD.

Question 40

Fenced In Program

Answer 40

Another program that prevents FRAUD.

Question 41

SAR (Suspicious Activity Report)

Answer 41

Must report money deposits over $5,000- $10,000 this also prevents money laundering. MUST File within 30 Days of discovering suspicious activity.