Help
Options
Didn't know it?
click below
click below
Knew it?
click below
click below
Don't Know
Remaining cards (0)
Know
retry
shuffle
restart
0:00
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.
Normal Size Small Size show me how
Normal Size Small Size show me how
Chapter 7
| Adverse selection | The tendency of higher-risk individuals to seek insurance coverage. Sound underwriting practices help insurers identify and manage this risk to maintain fair premiums for all policyholders. |
| Attending Physician Statement (APS) | A report from an applicant's doctor providing detailed medical information requested by underwriters when the application reveals conditions requiring further investigation. |
| Conditional Receipt | A document provided when premium is collected with an application that establishes when coverage begins, subject to the applicant proving insurability. Coverage is typically effective as of the application date or medical exam date. |
| Field Underwriter | The agent or producer who initiates the underwriting process by completing the application, collecting information, and submitting it to the home office underwriter. |
| Fiduciary Capacity/Responsibility | The legal obligation of insurance producers to act in the best interest of their clients when collecting premiums and providing advice. |
| Free-Look Period | A minimum 10-day period (30 days for mail-order policies) after policy delivery during which the owner can return the contract for a full premium refund if dissatisfied. |
| Insurable Interest | A financial or emotional relationship between parties that justifies one owning life insurance on another. Insurable interest must exist at policy issue and is automatically presumed in certain relationships (spouses, parents, children, business partners) |
| Medical Information Bureau (MIB) | A service organization that collects and shares medical data on insurance applicants among member companies to help detect undisclosed health conditions and prevent fraud. |
| Representations | Statements made by applicants on insurance applications that are considered substantially true to the best of their knowledge. Unlike warranties, representations must only be materially accurate, not absolutely true in every detail. |
| Risk Classification | The categorization of applicants based on their risk profile, typically as preferred, standard, or substandard risks. Classification determines premium rates and insurability |
| Underwriting | The process of evaluating applicants to determine insurability and appropriate risk classification. Underwriting involves analyzing information from various sources to decide whether to issue coverage and at what premium rate. |
| Field underwriter | Agent who initiates underwriting by completing application and collecting information |
| Fiduciary responsibility | Legal obligation to act in client's best interest |
| Errors and Omissions | Unintentional errors or honest mistakes (torts) made by producers |
| When should insurable interest exist? | during policy inception |
| Applicant | Person requesting insurance and completing application |
| Proposed insured | Person whose life is to be insured |
| policy owner | Person who retains policy rights and options |
| Payor | Person responsible for premium payments |
| producer/Agent | Completes application, collects premium, delivers policy |
| underwriter | Reviews application, classifies risk, determines premium rates |
| Part one application process | General applicant information (name, age, address, policy details, etc.) |
| Part two application process | II: Medical and health history of proposed insured and family |
| Part three application process | Agent's report/statement (confidential communication with insurer) |
| Statement on applications are | representations, not warranties |
| who must sign a application? | applicant and agent |
| application | Primary source for personal, medical, and financial information |
| Medical information bureau | Shared database of medical information to detect undisclosed conditions |
| attending physician statement | Detailed medical information from applicant's doctor |
| medical examination | Objective verification of health status (for higher face amounts) |
| special questionnaires | Details on aviation, avocation, foreign residence, etc. |
| inspection reports | Information on character, finances, and lifestyle |
| credit reports | Financial stability and responsibility |
| motor vehicle reports | Driving history and risk behaviors |
| prescription drugs database | Medication history |
| Fair credit reporting | Establishes procedures for collecting and disclosing consumer information |
| HIPAA | Requires privacy notices when collecting personal health information |
| USA PATRIOT Act | Requires anti-money laundering programs |
| preferred risk | Better than average mortality expectation, lower premiums |
| Standard risk | Meets insurer's guidelines without special restrictions |
| substandard risk | Below standard guidelines, may require higher premiums |
| declined risk | Uninsurable due to excessive risk |
| what are prohibited underwriting factors | Sexual orientation, religion, and geographical location |
| Conditional receipt | Coverage effective as of application date or medical exam date if applicant proves insurable |
| Binding receipt | Coverage effective immediately when premium is collected, until formal rejection |
| Temporary insurance agreement | Limited coverage between application and policy issue |
| Free-look period | minimum 10 days to return policy for full refund |
| required disclosures | life insurance buyer’s guide, policy summary |
Created by:
Lupe12