When must the policy summary for a life insurance policy be delivered to the policy owner?
At the time of policy delivery
What are the three types of risk rating classifications in life insurance?
Standard, Substandard, and preferred
When does an insurance policy go into effect?
When the policy is delivered and the premium is paid
In health insurance contracts, the insured is not legally bound to any particular action; however, the insurer is obligated to pay for losses covered bu the policy. What contract element does this describe?
Unilateral
Whose responsibility is it to determine that all the questions on an insurance application are answered?
The agent's
How can heath insurance policies be delivered to the insured?
Personally delievered by the agent or mailed
What entities make up the Medical Information Bureau?
Insurers
How is the information obtained for an investigative consumer report?
Through interviews with the applicant's associates, friends and neighbors
What risk classification would typically qualify for lower premiums?
preferred risk
What report is used to assess risk associated with a health insurance applicant's lifestyle and character?
Investigative consumer report
Health Insurance contracts are unilateral. What does that mean?
only one party makes a legally enforceable promise
What documents describe the specific information about a policy?
Policy Summary
What two elements are necessary for a life insurance contract to have a legal purpose?
Insurable interest and consent
What is the warranty in an insurance contract?
An absolute true statement upon which the validity of the insurance contract is based
During which stage in the insurance process do insurers evaluate Information that identifies adverse selection risks?
Underwriting
What is adverse selection?
People who are more likely to submit insurance claims are seeking insurance more often than preferred risks.
What type of report provides information about the applicant's hobbies, habits and financial status?
inspection report
In forming an insurance contract, when does an acceptance usually occur?
When the insurer approves a prepaid application
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
What is insurance underwriting?
The process of risk selection and classification
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
What is a policy replacement?
A new policy is issued while an existing policy is terminated or reissued with a reduction in cash value
Who is a field underwriter?
Agent/Producer
What is the name of the process that insurance companies use to determine whether or not an applicant is insurable?
Underwriting
What is the best way to handle incomplete insurancr applications?
Return the application to the applicant for the completion
When would a misrepresentation be considered material?
When it may alter the underwriting decision
Who must have insurable interest in the insured?
Policyowner
If an applicant does not receive his or her insurance policy, who would be held responsible?
agent
When must insurable interest exist in a life insurance policy?
At the time of application
What are the three main instances when insurable interest exists in life insurance?
Insuring your own life, the life of a family member, or the life of a business partners or someone who has a financial obligation to the policyowner
What is the purpose of the agent's report during the application process?
The agent's report discusses the agent's personal observations about the proposed insured that may help in the underwriting process
When would a misrepresentation on an insurance application be considered fraud?
When it is intentional and material
If an applicant for a life insurance policy and the potential insured are two different people, what would be the underwriter's main concern?
The existence of insurable interest between the applicant and the insured
What is the main responsibility of a company's underwriting unit?
Risk Selection
In insurance, when is the offer usually made on a contract?
When the insurance application is submitted
What law protects consumers from the circulation of inaccurate or obsolete information?
Fair Credit Reporting Act
What do individuals use to transfer their risk of loss to a larger group?
insurance
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)
What are the four elements of an insurance contract?
Agreement (offer and acceptance), consideration, competent parties, and legal purpose
What term describes the fee a person pays an insurance company to receive coverage?
premium
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
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.
Insurance is a contract that protects the insured from what?
risk
What is the purpose of conditional receipt?
It is intended to provide coverage on a date prior to the policy issue
What is the basic information used by the company in the risk selection process?
Application
If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?
5 days