Life insurance Underwriting and Policy Issue Flashcards

Which of these actions should a producer take when submitting an insurance application to an insurer?
<> Disclose to the applicant the amount of commissions to be earned on this transaction
<> Inform insurer of relevant information not included in the application
<> Issue a binding receipt to the applicant if no initial premium is submitted
<> Arrange for a copy of the Attending Physician Statement (APS) to be sent to the producer

Inform insurer of relevant information not included on the application
~ One of the actions a producer should take when submitting an application is to advise the insurer of any other relevant information not contained in the application

Which of these terms accurately defines an underwriter's assessment of information on a life insurance application? <> Warranty review <> Inspection report <> Risk classification <> Insurable interest

Risk classification
~ Underwriting, another term for risk selection, is the process of reviewing the many characteristics that make up the risk profile of an applicant to determine if the applicant is insurable and, if so, at standard or substandard rates

Any changes made on an insurance application requires the initials of whom? <> Applicant <> Insured <> Agent <> Beneficiary

Applicant
~ When an applicant makes a mistake in the information given to an agent in completing the application, the applicant can have the agent correct the information, but the applicant must initial the correction

T applies for a life insurance policy and is told by the producer that the insurer is bound to the coverage as of the date of the application or medical examination, whichever is later. Assuming that T is an acceptable risk, what item is given to T? <> Conditional receipt <> Warranty receipt <> Backdated receipt <> Binding receipt

conditional receipt
~ A conditional receipt binds the insurer to coverage as of the date of the application or medical exam, provided the proposed insured is determined to be an acceptable risk

What is being delivered during a policy delivery?
<> Policy summary sheet and disclosure material to the proposed insured
<> Application and initial premium to the insurer
<> Insurance contract to the proposed insured
<> A ending receipt to the proposed insured

Insurance contract to the proposed insured

~ Policy deliver refers to the delivery of the insurance contract to the applicant

From what authority derives the requirement that an insurance application contains a disclosure stating that an investigative consumer report may be obtained on an applicant? <> Life Insurance Buyer's Guide <> Medical Information Bureau <> Part III of the application <> Fair Credit Reporting Act

Fair Credit Reporting Act
~ The Fair Credit Reporting Act requires that an insurance application state that an investigative consumer report may be obtained on an applicant

Upon delivery of a rated life insurance policy, the Producer must obtain each of the following, EXCEPT: <> Signed HIPPA disclosure <> Signed amendment <> Signed statement of Good Health <> The required premium

Signed HIPPA discloser
~ Upon delivery of a rated life insurance policy the Producer must obtain all of these EXCEPT a “signed HIPPA disclosure” the HIPPA disclosure should be taken at the time of sale with the application

On delivery of a policy, a signed statement of good health is typically requested if:
<> The policy contains a guaranteed insurability rider
<> The application was submitted without the initial premium
<> The quarterly premium payment mode was selected
<> A conditional receipt was given to the applicant

The application was submitted without the initial premium
~ On delivery of a policy, a signed statement of good health is typically requested of the application was submitted without the initial premium

On August 6, D submitted an application for a $50,000 Life Insurance policy and did not pay the initial premium. On August 18, D went to his doctor complaining of chest pains and some tests were given by the doctor. The life policy was delivered by the producer on August 20 and D explains what had recently taken place with the doctor. What action should the producer then take?
<> Collect initial premium
<> Explain to the applicant the policy is no longer inn effect due to change in health condition
<> Collect initial premium along with a signed health statement
<> Collect initial premium and leave a binding receipt

Collect initial premium along with a signed health statement

A life insurance application must be signed by all of these, EXCEPT: <> The policy owner <> The agent <> The insured (if an adult) <> beneficiary

~ Beneficiaries are not required to sign an insurance application

A student pilot can pay regular premiums costs for her life insurance policy with the addition of which of the following? <> Guaranteed Insurability rider <> Accidental Death Benefit rider <> Aviation exclusion <> Impairment rider

Aviation exclusion
~ A student pilot can pay standard premium costs for her life insurance policy with the addition of an aviation exclusion

Which of these factor do NOT play a role in the underwriting of a life insurance policy? <> Occupation <> Avocations <> Credit status <> Marital status

~ Marital status does not affect the underwriting of a life insurance policy

What is the purpose of a Policy Summary?
<> It details the commissions earned by the agent
<> It allows the consumer to compare the cost of different policies
<> It highlights the critical parts of the policy issued
<> It guarantees a policy will be issued

It highlights the critical parts of the policy issued
~ A policy summary highlights the critical parts of the policy issued and describes the coverages, riders, and exclusions

Before a life insurance policy is issued, which of these components of the contract is required? <> Beneficiary's signature <> A conditional receipt <> Applicant's signature on application <> Attending Physician Statement (APS)

Applicant’s signature on application

~ A signature on an application is required before a life policy will be issued

The underling process involves all of these, EXCEPT for: <> Application <> Risk classification <> Policy loan <> Credit report

~ A policy loan is not a factor in the underwriting process

When a policy owner cash surrenders a Universal Life insurance policy in it's early years, this may be considered a red flag for a(AN): <> Unfair trade practice violation <> Anti-money laundering violation <> Title 18 fraud violation <> Federal fair credit act violation

Anti-money laundering violation
~ When a policy owner cash surrenders a Universal Life Insurance policy in it’s early years, this may be considered a red flag for an Anti-Money Laundering violation

Which of the following statement is CORRECT about an agent who is taking an insurance application?
<> The agent should avoid asking the applicant questions that may cause embarrassment
<> The agent should have the applicant initial any changes made on the application
<> The application may answer routine questions for the applicant
<> The agent may allow a member of the applicant’s immediate family to sign the application if the applicant is not available

The agent should have the applicant initial any changes made on the application

Agent J takes an application and initial premium from an applicant and sends the application and premium check to the insurance company. The insurance company returns the check back to J because the check is made out to J instead of the insurance company. What action should J take?
<> Cross of his name on the “pay to” portion of the check, write the name of the insurance company, and send the check back to the insurance company
<> Deposit the applicant’s check into his account and make a personal check out to the insurance company from his personal account
<> Return to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company
<> Deposit the check in to his personal account, use the funds to purchase a chasers check, and send the new cashiers check back to the insurance company

Return to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company
~ If an agent receives a check made out to them instead of the insurance company, they should return the check to the customer and collect a new check properly made out to the insurance company