Underwriting
risk selection and classification process used to determine acceptability of applicants for insurance (is applicant insurable, and if so, what premium to charge)
The agent
company's front line/field underwriter; responsibilities include: helping prevent adverse selection, proper solicitation of applicants, completing the application, obtaining the required signatures, collecting the initial premium and issuing the receipt,
The application
submitted to insurer for approval by person applying for insurance; one of the main sources of underwriting information for the company in the risk selection process; 2 basic components: general info, medical info
Agent's report
agent's personal observations concerning the proposed insured; doesn't become part of entire contract, but crucial part of application process
Required signatures
agent and proposed insured must sign application; if 3rd party insurance, policy owner must also sign; exception would be an adult (parent or guardian) applying for insurance of a minor
Backdating
sometimes it's possible to lower the premium rate by backdating an application for insurance; if applicant chooses to do this, the policy may be backdated for no more than 6 months before the date of application or medical exam- whichever is later; all pr
Medical info
for applicants of higher coverage or if application raised additional questions concerning prospective insured's health, underwriter may require medical exam with 2 options: insurer may only request paramedical report, completed by a paramedic or register
Medical info bureau (MIB)
in addition to an APS, the underwriter will usually request a MIB report; MIB is a membership corporation owned by member insurance companies; nonprofit trade organization, which receives adverse medical info from insurance companies and maintains confide
Fair credit reporting act of 1970
established procedures that consumer-reporting agencies must follow in order to ensure that records are confidential, accurate, relevant, and properly used
Risk clarification
standard, substandard, and preferred, declined
Conditional Receipt
says that coverage will be effective either on the date of the application or the date of the medical exam, whichever occurs last, unless coverage is declined or rated, or issued with riders excluding specific coverage
Unconditional (binding) receipts
used most often with property and casualty insurance; coverage begins immediately for a specific length of time (usually 30-60 days), until the policy is issued
Policy effective date
if initial premium isn't collected w/ application, agent must collect premium at time of policy delivery; statement of good health may also be necessary signed by insured stating no illness or injury since application date
Policy issue and delivery
once company issues policy, agent will deliver policy to insured; personal delivery is preferred, but mail in is acceptable; advisable to obtain signed delivery receipt
Policy review
personal delivery allows agent to make sure insured understands all aspects of the contract; pointing out provisions or riders that may be different than anticipated, explaining how they affect the contract; explaining rating procedure and possible choice
Statement of goodhealth
usually required by company at time of policy delivery, if insured's health has deteriorated since the application was completed and no money was taken, agent shouldn't accept money or deliver the policy unless directed to do so by the company; even if pr