Solicitation and Sales Representatives
The process of issuing a life insurance policy begins with...
Solicitation of insurance
An attempt to persuade a person to buy an insurance policy, and it can be done orally or in writing
Buyer's Guide
document or pamphlet that provides basic information about life insurance policies that contains, and is limited to, language approved by the Department of Insurance
Policy Summary
Summarized key details of the policy, a written statement describing the features and elements of the policy being issued
Underwriting
Is the risk of selection and classification process
Health(current and past), occupation, lifestyle, and hobbies or habits
What is the criteria that an Underwriter will use in assessing the desirability of a particular candidate for life insurance are?
Field Underwriter
The agent
Helping prevent adverse selection
The increased risk of death due to poor health, have to prevent this
The application
Is the starting point and basic source of information used by the company in the risk selection process, should always fill it out
Part 1- General Information
Of the application includes the general questions about the applicant,such as name, age, address, birth date, gender, income, marital status, and occupation
Part 2- Medical Information
Of the application includes information on the prospective insured's medical background, present health, any medical visits in recent years, medical status of living relatives, and causes of death of deceased relatives
Agents Report
Observations that will help support the client
The agent's personal observations concerning the proposed insured
The agent's report provides?
Required signatures
Three required signatures
Both the agent and the proposed insured(usually the applicant)
Who must sign the application?
Changes on the application
Crossed out with single line and initial of the person
Consequences of Incomplete Application
Doesn't get processed
All of the questions on the application must be answered
Before the policy is issued...?
Premium receipt
Whenever the agent collects the premium, the agent must issue a? A proof of purchase, has to fill out
Conditional receipt
The most common type of receipt, is used only when the applicant submits a prepaid application, effective the date of coverage
1. Money is given with application
2. Applicant has to do medical exam
3. Issued as applied for(if you applied for 100,000)
What are the steps of receiving a conditional receipt?
Application for sources of underwriting information?
Main sources of underwriting information for the company
Agent's report
Allows the agent to communicate with the underwriter and provide information about the applicant known by the agent that may assist in the underwriting process
Medical examination
For policies with higher amounts of coverage or if the application raised additional questions concerning the prospective insured's health, what will the underwriter may require?
Paramedical report
The insurer may only request, is completed by a paramedic or a registered nurse
Attending Physicians Statement(APS)
The underwriter may require, from a medical practitioner who treated the applicant for a prior medical problem
Medical Information Bureau(MIB)
Holds medical reports on all of us, the underwriter may also request this
Nonprofit trade organization
Received adverse medical information from insurance companies and maintains confidential medical impairment information on individuals
Investigative Consumer Report(Inspection)
The underwriter may order this on the applicant from an independent investigating firm or credit agency, which covers financial and moral information, are general reports of the applicant's finances, character, work, hobbies, and habits
Fair Credit Reporting Act
Established procedures that consumer-reporting agencies must follow in order to ensure that records are confidential, accurate, relevant, and properly used
The circulation of inaccurate or obsolete personal or financial infor
Protects consumers against what?
Consumer reports
Looks into your reports
Investigative Consumer Reports
Life insurance can interview people around you, are similar to consumer reports in that they also provide information on the consumer's character, reputation, and habits
Will be subject to a a penalty of up to $2,500
An individual who willfully violates this Act enough to constitute a general pattern of business practice will...?
Has the right to know what was in the report
The consumer has the right to?
Prohibited information
Includes bankruptcies more than 10 years old, civil suits, records of arrests or convictions of crimes, or any other negative that is more than 7 years old. As defined by the Act, negative information includes information regarding a customer's delinquenc
Health Insurance Portability and Accountability Act(HIPPA)
A federal law that protects health information. Regulations provide protection for the privacy of certain individually identifiable health information( such as demographic data that that relates to physical or mental health condition, or payment informati
Privacy Rate
Patients have the right to view their own medical records, as well as the right to know who has accessed those records over the previous 6 years
Use and Disclosure or Insurance Information
It will state the insurer's practice regarding collection and use of personal information
Risk Classification
In classifying a risk, the Home Office underwriting department will look at the applicant's past, medical history, present physical condition, occupation, habits and morals
Rating classification
To be used in describing whether or not the applicant should pay a higher or Lower premium
Standard, substandard, or preferred
A prospective insured may be rated as one of the three classifications:
Standard
People who have average health, covered at a standard rate, persons who according to a company's underwriting standards, are entitled to insurance protection without extra rating or special restrictions
Preferred
Healthy people, pay a lower premium
Substandard(High Exposure) risk
Individuals who have high risk exposures, pay a higher premium, applicants are not acceptable at standard rates because of physical condition, personal or family history of disease, occupation, or dangerous habits
Premium rated-up
Resulting in a higher premium
Declined risks
Does not qualify at all, applicants who are rejected
There is no insurable interest, the applicant is medically unacceptable, the potential for loss is so great it does not meet the definition of insurance or insurance is prohibited by public policy or is illegal
A risk may be declined for one of the following reasons:
Stranger-oriented life insurance(STOLI)
Is a life insurance arrangement in which one person with no relationship to the insured (a "stranger") purchases a life policy on the insured's life with the intent of selling the policy to an investor and profiting financially when the insured dies
STOLIs violate the principle of insurable interest
Which is in place to ensure that a person purchasing a life insurance policy is actually interested in the longevity rather than the death of the insured
Investor-owned life insurance (IOLI)
Is another name for STOLI, where a third-party investor who has no insurable interest is insured initiates a transaction designed to transfer the policy ownership rights to someone with no insurable interest in the insured and who hopes to make a profit u
Premium determination
Once the company determines that an applicant is insurable, they need to establish an appropriate policy premium
For the month of coverage you are going into
Premiums are paid in advance for...?
Premium payment mode
The frequency the premium is paid
Higher premium
Higher frequency equals?
Monthly> Quarterly> Semi-annual> Annual
...
Refund any unearned premium along with the policy proceeds
If the insured dies during a period of time for which the premium has been paid, the insurer must...
Explaining the policy
Can use policy summary to explain, personal delivery of the policy allows the agent an opportunity to make sure that the insured understands all aspects of the contract
Effective date of coverage
Have to get the money,
The agent will be required to collect the premium at the time of policy delivery
If the initial premium is not paid with the application...
Statement of good health
The agent may also be required this from the insured, must be signed by insured, and verifies that the insured has not suffered injury or illness since the application date
The policy coverage would generally coincide with the date of application
If the full premium was submitted with the application and the policy issue was requested, then...