Adverse Selection

• The tendency of a disproportionate number of poor risks to seek or buy insurance or to maintain existing insurance in force.

• The process of evaluating the risk of insuring a person or asset.

• The practice of insurers denying coverage to high-risk individuals.

• The method of calculating premiums based on the average risk of a group.

Fair Credit Reporting Act

• A federal law allowing insurers to receive additional information regarding applicants. Applicants must be informed of the report's purpose.

• A state law regulating the use of credit scores in lending decisions.

• A federal law that prohibits discrimination based on credit history.

• A guideline for consumers to dispute inaccuracies in their credit reports.

Inspection Report

• Contains general information regarding the health, habits, finances, and reputation of an applicant. Developed by specialized firms.

• A document that outlines the physical condition of a property and its compliance with safety standards.

• A summary of an applicant's previous employment history and references.

• A financial statement detailing an applicant's income and expenses.

Credit Report

• A detailed account of an individual's employment history.

• A summary of an insurance applicant’s credit history, including credit score, debt levels, and repayment history. Obtained from major credit bureaus.

• A record of an individual's medical history and treatments.

• A list of all bank accounts and their balances.

Field Underwriter

• The agent or producer who completes the applicant’s application for insurance.

• A person who evaluates insurance claims.

• An individual responsible for marketing insurance products.

• A representative who manages customer service inquiries.

Underwriting

• The process of evaluating risks to determine insurance eligibility.

• The method of calculating premiums based on market trends.

• The analysis of information from various sources to determine whether insurance should be issued as requested.

• The procedure for settling claims after an insurance event.

Policy Summary

• A document that outlines the claims process for an insurance policy.

• Summarizes the basic terms of an insurance policy, including conditions, coverage limitations, and premiums.

• A detailed report of the insurance company's financial status.

• A list of all the agents available for customer service.

Insurable Interest

• The financial or emotional relationship justifying one owning a life insurance policy on another. Must exist at the time of policy issue.

• A legal requirement for insurance policies that ensures the policyholder has a stake in the insured's life.

• The amount of money that an insurance company is willing to pay out in the event of a claim.

• The process of evaluating the risk associated with insuring a person or entity.

Proposed Insured

• The person requesting that her life be insured, typically the applicant.

• A person who is covered under an insurance policy.

• An insurance agent who sells policies.

• A beneficiary designated to receive the insurance payout.

Rated Policy (Rating Up)

• A policy with an additional charge to the standard premium due to higher-than-average risk.

• A policy that offers a discount on the standard premium for low-risk individuals.

• A policy that has no additional charges and is standard for all clients.

• A policy that is only available for high-net-worth individuals.