Insurance Chapter 5 Quiz & Flashcards for Students

Questions and Answers

What is the purpose of a policy summary?

It highlights the critical parts of the policy issued (correct)

It allows the consumer to compare the costs of different policies

It details the commissions earned by the agent

It guarantees a policy will be issued

Any changes made on an insurance application requires the initials of whom?

Insured

Agent

Applicant (correct)

Beneficiary

An applicant's medical information received from the Medical Information Bureau (MIB) may be furnished to the:

Applicant's spouse

Applicant's physician (correct)

National Association of Insurance Commissions (NAIC)

Agent

Which factors are taken into consideration when an insurance company determines the premium rate for a Whole Life Policy on an applicant?

Risk classification Signup and view all the answers

P is a producer who notices 5 questions on a life application were not answered. What actions should P take?

Set up a meeting with the applicant to answer the remaining questions Signup and view all the answers

Which Federal law allows an insurer to obtain an inspection report on a potential insured?

Fair Credit Reporting Act Signup and view all the answers

When does a life insurance contract become effective if the initial premium is not collected during the application process?

When producer delivers policy and collects initial premium Signup and view all the answers

Which of the following statements is CORRECT about an agent who is taking an insurance application?

The agent should have the applicant initial any changes made on the application Signup and view all the answers

Agent J takes an application and initial premium from an applicant and sends the application and premium check to the insurance company. The insurance company returns the check back to J because the check is made out to J instead of the insurance company. What action should J take?

Return to the customer, collect a new check made out to insurance company and send new check to company Signup and view all the answers

What action should a producer take if the initial premium is NOT submitted with the application?

Forward application to insurer without initial premium Signup and view all the answers

What is being delivered during a policy delivery?

Insurance contract to the proposed insured Signup and view all the answers

On August 6, D submitted an application for a $50,000 Life Insurance policy and did not pay the initial premium. On August 18, D went to his doctor complaining of chest pains and some tests were given by the doctor. The life policy was delivered by the producer on August 20 and D explains what had recently taken place with the doctor. What action should the producer then take?

Collect initial premium along with a signed health statement Signup and view all the answers

From what authority derives the requirement that an insurance application contains a disclosure stating that an investigative consumer report may be obtained on an applicant?

Fair Credit Reporting Act Signup and view all the answers

An agent gives a conditional receipt to a client for an insurance policy after collecting the initial premium. When will the policy become effective?

When the conditions of the receipt are met Signup and view all the answers

Upon delivery of a rated life insurance policy, the Producer must obtain each of the following EXCEPT:

Signed HIPAA disclosure Signup and view all the answers

K is an agent who takes an application for individual life insurance and accepts a check from the client. He submits the application and check to the insurance company; however, the check was never signed by the applicant. If the application is approved, when will coverage be effective?

Date the agent delivered the policy, collected initial premium, and obtained a good health statement from the insured Signup and view all the answers

What is the purpose of the U.S.A Patriot Act?

Detect and deter terrorism Signup and view all the answers

A student pilot can pay regular premium costs for her life insurance policy with the addition of which of the following?

Aviation exclusion Signup and view all the answers

What would the Medical Information Bureau (MIB) identify?

Testing positive for marijuana use from previous screening Signup and view all the answers

The reason for backdating a policy is:

To obtain a premium rate based on an earlier age Signup and view all the answers

Study Notes

Policy Summary and Underwriting

A policy summary outlines critical aspects of a policy, including coverage, riders, and exclusions, enabling comparisons of different policies.
The initials of the applicant are required for any changes made on an insurance application.

Medical Information and Privacy

An applicant's medical information from the Medical Information Bureau (MIB) can be shared with the applicant's physician.
The Fair Credit Reporting Act enables insurers to obtain inspection reports on potential insured individuals.
The requirement for disclosing that an investigative consumer report may be obtained comes from the Fair Credit Reporting Act.

Premium Determination and Application Process

Premium rates for Whole Life Policies are primarily influenced by the risk classification of the applicant.
If questions on a life application are unanswered, agents should set up meetings with applicants to resolve them.
When submitting applications, agents must ensure premium checks are made out correctly to the insurance company.

Contract Provisions and Policy Delivery

Life insurance contracts become effective when the producer delivers the policy and collects the initial premium, assuming the initial premium was not paid at the application stage.
Upon delivering a rated policy, agents need to collect a signed amendment, signed statement of good health, and the required premium, but not a signed HIPAA disclosure, as that is completed at the time of sale.

Health Disclosure and Conditions

If an applicant has a change in health status after applying but before policy delivery, the initial premium should be collected along with a signed health statement.
Policies become effective upon meeting the conditions specified in any conditional receipts provided to clients.

Regulatory Framework

The U.S.A Patriot Act is aimed at detecting and deterring terrorism.

Special Provisions and Exclusions

Student pilots may pay regular premiums with an aviation exclusion rider attached to their life insurance policy.
Backdating of policies can occur to secure a premium rate that reflects an earlier age than the current age of the insured.

MIB Reports

The MIB may reveal conditions such as testing positive for marijuana use from past screenings or existing life insurance with other carriers.

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Description

Dive into Life Insurance Underwriting with this set of flashcards focused on Chapter 5. Test your knowledge on policy summaries, coverage details, and more essential concepts related to insurance policies. Perfect for students and professionals looking to strengthen their understanding of insurance underwriting.

Insurance Chapter 5 Flashcards