Worksheets5-LIFE INSURANCE UNDERWRITING AND POLICY ISSUE
Total questions: 45
Worksheet time: 23mins
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?
Binding receipt
Conditional receipt
Warranty receipt
Backdated receipt
A student pilot can pay regular premium costs for her life insurance policy with the addition of which of the following?
Guaranteed insurability rider
Aviation exclusion
Impairment rider
Accidental death benefit rider
Which factor are taken into consideration when an insurance company determines the premium rate for a Whole Life policy on an applicant
Geographical location
Source of income
Risk classification
Marital status
Why is an applicant’s signature required on a life insurance application?
To attest that the statements on the application are accurate to the best of the applicant’s knowledge
To attest that the statements on the application are warranties
To give power of attorney to the producer if needed
To attest that all statements on the application are guaranteed to be true
A statement made by an insured in an insurance application that must be true to the best of one’s knowledge and which becomes a apart of the contract is known as:
An insuring agreement
A mutual assent
A warranty
A representation
What is the initial source of underwriting for an insurance policy?
Application containing statements from the insured
MIB report (Medical information Report)
Credit report
Medical exam
A(n)______ contained in a life insurance policy stated that the policy will NOT cover certain risks.
Elimination
Exclusion
Limitation
Curtailment
A life insurance application may be rejected on the basis of all of these factors EXCEPT
Medical history
Hobbies
Gender
Weight
In order for a coverage on a non-medical insurance application to take effect the same day, the producer must collect a signed application and
A medical information report
The initial premium
Forward it immediately to the insurer
Attending physician statement
A medical information report (MIB) report may disclose which of the following:
Prior preferred rating
Prior use of marijuana
Prior lapsing of policy
Prior bankruptcy judgment
T cash surrenders a recently-issued whole life policy. He also requests that the proceeds be payable to an unrelated third party. T would likely be red-flagged for violation of
Glass-Steagall Act
Anti-money laundering rules
FINRA regulations
NAIC law
The underwriting process involves all of these, EXEPT for:
Credit report
Policy loan
Risk classification
Application
All are true statement regarding the underwriting process, EXEPT:
Signed consent from the applicant must be provided in order to test for AIDS and HIV virus
AIDS and HIV virus exams can be conducted in a discriminatory fashion
The cost of any examination is paid for the insurer
The original application is the primary source of information used in the underwriting process
The reason for backdating a policy is
To avoid being considered a substandard risk due to a recent cancer diagnosis
To obtain a premium rate based on an earlier age
To decrease the face amount
To decrease the Contestable period
K is an agent who takes an application for individual life insurance and accepts a check from the client. He submits the application and check to the insurance company, however the check was never signed by the applicant. If the application is approved, when will coverage be effective?
The date the sales appointment was made
The date the application was submitted to the insurance company
The date of application
The date the agent delivered the policy, collected the initial premium, and obtained a good health statement from the insured
T is given a receipt after completing a life insurance application and paying the initial premium. Under this situation, T’s coverage is
Guaranteed, no matter what is found during the underwriting process
Effective upon completion of the Free-Look period
Conditional, depending on the insurer’s underwriting guidelines
Effective upon delivery of the policy
Which of these do NOT constitute policy delivery?
Policy mailed to applicant
Policy mailed to agent
Policy delivered to the applicant by the agent
Policy issued with a rating
The USA Patriot Act was enacted in:
2001
2002
2003
2004
Consumer reports requested by an underwriter during the application process of a life insurance policy can be used to determine
Driving history
Probability of making timely premium payment
If applicant is a tobacco user
Overall health of the applicant
D the agent met with a prospect and ended up selling an insurance policy. While filling out the insurance application, D makes a mistake, In this situation, D MUST
Correct the information with no further action from prospect necessary
Receive a verbal acknowledgement from prospect of the mistake made
Request that the insurer issue the policy with a rating
Correct the information and have the prospect initial the change
Which of the following correctly explains the actions an agent should take if a customer wants to apply for an insurance policy?
Have the customer sign a blank application, then take the application back to his office to complete prior to sending it off to the insurance company
Complete the application over the phone with the customer, sign the application for the customer, then send the application off to the insurance company
Complete the application and review the information with the customer prior to obtaining the customer’s signature, then send the application off to the insurance company
Have the customer fill out the application and send it to his office for him to sign, then send it off t the insurance company
M completes an application for life insurance but does not pay the initial premium. All of these actions must occur before M’s policy goes into effect, EXEPT:
Policy is delivered
Free-look period has expired
Insurance company issues policy
Initial premium is collected
An Agent gives a conditional receipt to a client for an insurance policy after collecting the initial premium. When will the policy become effective?
When the policy is issued
The date of policy delivery
When the conditions of the receipt are met
The date the sales appointment was set
ABC Insurance Company has accepted a life insurance application which contains unanswered questions. The company then makes the application part of the life contract. In this situation, the insurer has
Waived one of its legal rights
Issued a voidable policy
Committed an act of fraud
Assigned the risk to a reinsurer
Which parts of a life insurance policy are guaranteed to be true?
Rating
Representation
Statement
Warranty
On January 8, an applicant filled out an application for a life insurance policy but did not include the initial premium. The insurance company approved the application on January 14 and issued the policy January 15. The producer delivered the policy on January 26 and collected the first premium. When did the coverage become effective?
January 8
January 14
January 15
January 26
Before a life policy is issued, which of these contract elements is necessary?
A signed application by the prospect
A minimum amount of coverage
A beneficiary’s signature on an application
A binding receipt
Who is NOT requires to sign a life insurance application?
Adult insured
Policyowner
Agent
Beneficiary
P is a producer who notices 5 questions on a life application were not answered. What action should P take?
Mail incomplete application to applicant to be completed and returned to the agent
Submit the application as-is to the insurer
Call the applicant and complete application over the phone
Set up a meeting with the applicant to answer the remaining questions
Information obtained from a phone conversation to the proposed insured can be found in which of these reports?
Agent’s report
MIB report
Inspection report
Attending physician’s report
K is an agent who takes an application for individual life insurance and accepts a check from the client. He submits the application and check to the insurance company, however the check was never signed by the applicant. If the application is approved, when will coverage be effective?
The date sales appointment was made
The date the application was submitted to the insurance company
The date of application
The date the agent delivered the policy, collected the initial premium, and obtained a good health statement from the insured
An applicant’s medical information received from the Medical Information Bureau (MIB) MAY BE furnished to the
Agent
Applicant’s spouse
National association of insurance commissioners (NAIC)
Applicant’s physician
An incomplete life insurance application submitted to an insurer will result in which of these actions?
Application will be returned to the writing agent
Application will be approved with restrictions
Application will be pending until a MIB report is sent to the insurer
Application will be automatically declined
On August 6, D submitted an application for $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
Collect initial premium along with a signed health statement
Explain to the applicant the policy is no longer in effect due to change in health condition
Collect initial premium and leave a binding receipt
In order for coverage on a non-medical insurance application to take effect the same day, the producer must collect a signed application and
A Medical Information Report
The initial premium
Forward it immediately to the insurer
Attending Physician Statement
Life insurance companies are required to establish and maintain an anti-money laundering compliance program according to which federal regulation?
Federal Reserve Act
USA Patriot Act
Fair Credit Reporting Act
Dodd-Frank Act
Under the USA Patriot Act, insurers are required to report receipt of cash payments in excess of:
10,000
7,500
5,000
2,500
Consumer reports requested by an underwriter during the application process of a life insurance policy can be used to determine:
Driving history
Probability of making timely premiums payments
If applicant is a tobacco user
Overall health of the applicant
Any changes made on an insurance application requires the initials of whom?
Insured
Agent
Applicant
Beneficiary
At what time must a policyowner have insurable interest on the insured in order for the life policy to be valid?
After the Contestable period
When the policy proceeds are paid
At the time of application
When the insured dies
When an insurance application is taken by a producer, which of these statements is true?
The applicant should have an attorney present during the application process
Any changes made on the application require the applicant’s initials
Any changes made on the application can later be initialed by the producer if the applicant is unavailable
The producer has the discretion to ask or not to ask any of the following listed on the application
A life insurance application must be signed by all of these, EXEPT:
The policyowner
The Agent
The insured (if an adult)
Beneficiary
Before a life insurance policy is issued, which of these components of the contract is required?
Applicant’s signature on application
Beneficiary’s signature
A conditional receipt
Attending Physician Statement (APS)
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 to J instead of the insurance company. What action should J take?
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
Cross off 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 check in to his personal account, use the funds to purchase a cashier’s check, and send the new cashier’s check back to the insurance company
Which Federal law allows an insurer to obtain an inspection report on a potential insured?
Medical Information Bureau Act
Freedom of information Act
Fair Credit Reporting Act
Medical Information Act
