What document describes the specific Information about a Policy?
policy Summary
In insurance, when is the offer usually made on a contract?
When the insurance application is submitted.
When must insurable interest exist in a life insurance policy?
At the time of application.
How can health insurance policies be delivered to the insured?
Personally delivered by the agent or mailed.
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.
Health insurance contracts are unilateral. What does that mean?
Only one party makes a legally enforceable promise.
What report is used to assess risk associated with a health insurance applicant's lifestyle and character?
Investigative Consumer report
In health insurance contracts, the insured is not legally bound to any particular actions; however, the insurer is obligated to pay for losses covered by the policy. What contract element does this describe?
unilateral
When must the policy summary for a life insurance policy be delivered to the policy owner?
at the time of policy delivery.
what is a warranty in an insurance contract?
An absolutely true statement upon which the validity of the policy depends
What risk classification would typically qualify for lower premiums?
Preferred risk
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
During which stage in the insurance process do insurers evaluate information that identifies adverse selection risks?
Underwriting
Who must have insurable interest in the insured?
The policy owner.
What are the three types of risk rating classifications in life insurance?
Standard
Substandard
preferred
how is the information obtained for an investigative consumer report?
Through interviews with the applicants associates, friends, and neighbors.
if an applicant does not receive his or her insurance policy, who would be held responsible?
The Agent.
What do individuals use to transfer their risk of loss to a larger group?
insurance
What is adverse selection?
insuring of risks that are more prone to losses than the average risk.
what is the best way to handle incomplete insurance applications?
Return the application to the applicant for completion.
What is policy replacement?
A new policy is issued while an existing policy is terminated or reissued with a reduction in cash value
When does an insurance policy go into effect?
When the policy is delivered and the premium is paid
What term describes the fee a person pays an insurance company to receive coverage?
Premium
what is the name of the process that insurance companies use to determine whether or not an applicant is insurable?
Underwriting
Insurance is a contract that protects the insured from what?
loss
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.
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.
When would a misrepresentation on an insurance application be considered fraud?
when it is intentional and material.
What are the 4 elements of an insurance contract?
Agreement (offer and acceptance), consideration, competent parties, and legal purpose
Whose responsibility is it to determine that all questions on an insurance application are answered?
The Agent.
What law protects consumers from the circulation of inaccurate or obsolete information?
The Fair Credit Reporting Act
What are the 3 main instances when insurable interest exists in life insurance?
Your own life, the life of a family member, or the life of a business partner.
If the applicant for a life insurance policy and the potential insured are 2 different people, what would be the underwriters main concern?
The Existence of insurable interest between them.
What is the main responsibility of a companies underwriting unit?
Risk Selection
When would a misrepresentation be considered material?
When it may alter the underwriting decision.
What is insurance underwriting?
The process of risk selection and classification
What 2 elements are necessary for a life insurance contract to have a legal purpose?
Insurable interest and consent
who is a field underwriter?
Agent/Producer
in forming an insurance contract, when does an acceptance usually occur?
when the insurer approves a prepaid application
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 is the purpose of the agents report during the application process?
The agents report discusses the agents personal observations about the proposed insured that may help in the underwriting process.
What entities make up the Medical Information Bureau?
insurers
What type of report provides information about the applicant's hobbies, habits and financial status?
Inspection Report