Underwriting – Lesson 6 Flashcards

0
Q

When using a nonmedical application for life insurance, what is a common practice?

A

If the answers given in the health statement do not meet the insurers underwriting standard, a medical examination can be requested by the underwriter.

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1
Q

The applicant, insured, and policy owner could be how many persons?

A

As many as three

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2
Q

What act was passed in 1970 to safeguard consumers and gave consumers the right to dispute incorrect information?

A

The Fair Credit Act

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3
Q

Which is NOT a way for insurance companies to charge more for a substandard risk?

A

Reduced paid up

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4
Q

An applicant for insurance may pay initial premium and receive a document from the agent indicating the policy is issued as requested, coverage begins on the date of the document. What is this document called?

A

Binding receipt

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5
Q

What is used to establish life insurance rate?

A
  1. Mortality
  2. Interest
  3. Expenses
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6
Q

A person could be rated as a substandard risk based on what?

A
  1. Physical condition
  2. Hazardous avocation
  3. Hazardous occupation
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7
Q

What act was passed in 1970 in order to protect consumers?

A

Fair credit act

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8
Q

The applicant and a policyowner are required to be the same person. True or false?

A

False

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9
Q

An agent is not required to disclose to insurer material information disclosed to him by the applicant that is not specifically asked on the application form. True or false?

A

False

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10
Q

Regarding the medical information bureau: insurers can deny coverage based solely on information obtained from an MIB report. True or false?

A

False

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11
Q

Ernie apply for nonmedical life policy. He filled out all paperwork and paid the premium. He received a binding receipt from the agent. Ernie then suffers a fatal accident. Underwriting determines Ernie to be an uninsurable risk. What will happen?

A

The company will pay the death benefit.

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12
Q

What is the purpose of a cost comparison index?

A

To try to determine which of two similar policies is less costly.

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13
Q

Why should an Agent convince an applicant to pay the premium at the time of application?

A

If the applicant is found to be an insurable risk, the policy will go into force sooner.

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14
Q

What is considered to be actually delivery of the policy?

A

Delivery of the policy to the insured by the agent.

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15
Q

A premium that takes into consideration the insurance company’s cost is:

A

A gross premium

16
Q

Paying annually for a policy requires a smaller dollar outlay than a quarterly premium payment mode. True or false?

A

True

17
Q

Many companies will not require a medical examination if the policy has a small face amount; what is that face amount?

A

$50,000 or $100,000

18
Q

Are applicants required to be informed in writing that the insurer may report health information to the MIB?

A

Yes

19
Q

What are the three acceptable risks?

A
  1. Preferred risks
  2. Standard risks
  3. Substandard risks
20
Q

Does the flat extra premium has any effect on the growth of cash values in the policy?

A

It does not

21
Q

What are the two major types of receipts given to the insureds?

A

Conditional and binding

22
Q

What is the maximum amount of insurance coverage offered under the binding receipt?

A

$100,000

23
Q

Mailing the policy to the policy owner is considered what type of delivery?

A

Constructive delivery.

24
Q

Starting in 2014, insurers can charge older people how many times more than the amount charged for younger adults?

A

No more than three times.