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insurance
completing the application, underwriting and delivering the policy
| Question | Answer |
|---|---|
| What is the name of the process that insurance companies use to determine whether or not an applicant is insurable? | Underwriting |
| What are the three main instances when insurable interest exists in life insurance? | Insuring your own life, the life of a family member, or the life of a business partners or someone who has a financial obligation to the policy owner. |
| When a change needs to be made on the application for insurance, which is the best method for correcting the information? | Complete a new application or ask the applicant to initial the correction on the original application. |
| What is the purpose of the agent’s report during the application process? | The agent’s report discusses the agent’s personal observations about the proposed insured that may help in the underwriting process. |
| When would a misrepresentation be considered material? | When it may alter the underwriting decision. |
| What is the main responsibility of a company’s underwriting unit? | Risk selection |
| What two elements are necessary for a life insurance contract to have a legal purpose? | Insurable interest and consent |
| What is policy replacement? | A new policy is issued while an existing policy is terminated or reissued with a reduction in cash value. |
| When would a misrepresentation on an insurance application be considered fraud? | When it is intentional and material. |
| In health insurance contracts, the insured is not legally bound to any particular action; however, the insurer is obligated to pay for losses covered by the policy. What contract element does this describe? | Unilateral |
| If an insurer needs to obtain information about the applicant from investigators, what is the insurer required to do? | Provide the applicant a disclosure authorization notice. |
| What term describes the fee a person pays an insurance company to receive coverage? | Premium |
| Whose responsibility is it to determine that all the questions on an insurance application are answered? | The agent’s |
| What is a warranty in an insurance contract? | An absolutely true statement upon which the validity of the insurance contract is based. |
| How is the information obtained for an investigative consumer report? | Through interviews with the applicant’s associates, friends and neighbors. |
| What are the three types of risk rating classifications in life insurance? | Standard, substandard and preferred |
| During which stage in the insurance process do insurers evaluate information that identifies adverse selection risks? | During which stage in the insurance process do insurers evaluate information that identifies adverse selection risks? |
| Health insurance contracts are unilateral. What does that mean? | Only one party makes a legally enforceable promise. |
| Who is a field underwriter? | Agent/producer |
| If an applicant does not receive a copy of the new insurance policy, who would be held responsible? | The agent |
| In forming an insurance contract, when does an acceptance usually occur? | When the insurer approves a prepaid application. |
| Health contracts are prepared by insurers and must be accepted by the insured on an as is basis. This describes what aspect of a health insurance contract? | Contract of adhesion |
| If an agent fails to obtain the applicant's signature on the insurance application, what must the insurer do? | Send the application back to the applicant for signature. |
| What risk classification would typically qualify for lower premiums? | Preferred risk |
| At what point does coverage begin when an agent issues a conditional receipt for a life insurance policy? | Either on the date of the application or the date of the medical exam (whichever occurs last) |
| What law protects consumers from the circulation of inaccurate or obsolete information? | The fair credit reporting act |
| When does an insurance policy go into effect? | When the policy is delivered and the premium is paid. |
| What is adverse selection? | People who are more likely to submit claims are seeking insurance more often than preferred risks. |
| In insurance, when is the offer usually made on a contract? | When the insurance application is submitted. |
| Insurance is a contract that protects the insured from what? | Loss |
| If an applicant for a life insurance policy and the potential insured are two different people, what would be the underwriter's main concern? | The existence of insurable interest between the applicant and the insured. |
| What do individuals use to transfer their risk of loss to a larger group? | Insurance |
| What entities make up the Medical Information Bureau? | Insurers |
| What type of report provides information about the applicant's hobbies, habits and financial status? | Investigative consumer report |
| What is the best way to handle incomplete insurance applications? | Return the application to the applicant for completion. |
| What is insurance underwriting? | The process of risk selection and classification. |
| How can health insurance policies be delivered to the insured? | Personally delivered by the agent or mailed. |
| What are the four elements of an insurance contract? | Agreement (offer and acceptance), consideration, competent parties, and legal purpose. |
| Who must have insurable interest in the insured? | The policyowner |
| When must the policy summary for a life insurance policy be delivered to the policyowner? | At the time of policy delivery. |
| What report is used to assess risk associated with a health insurance applicant's lifestyle and character? | Investigative consumer report |
| When must insurable interest exist in a life insurance policy? | At the time of application. |
| What document describes the specific information about a policy? | Policy summary |
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