Questions and Answers
When an applicant applies for insurance, the process by which the insurer determines whether to issue a policy is called?
How does a conditional receipt differ from a binding receipt?
Most U.S. life insurance companies belong to the?
Which of the following risk classifications charges the lowest premium?
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Which of the following is NOT a risk classification that an underwriter would use?
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Which of the following is NOT an important reason for a life insurance application?
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What are members of the Medical Information Bureau (MIB) required to report?
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An applicant has revealed conditions that require more information. Which of the following is needed next?
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The risk selection process is primarily given to which insurance company department?
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The objective of underwriting is to?
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When an insurance company requests an attending physician's report, the request must be accompanied by a?
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Which of the following types of information is NOT required for a life insurance application?
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Which of the following risk classifications charges the highest premium?
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The Medical Information Bureau consists of?
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A report which is based on creditworthiness and personal characteristics that influences an insurance applicant's eligibility for life and health insurance is called a(n)?
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What must an applicant do in order to authorize the release of an attending physician report?
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Study Notes
Insurance Application and Underwriting
- Underwriting is the process insurers use to determine if they'll issue a policy to an applicant.
- Binding receipts provide insurance coverage starting from the receipt date, while conditional receipts do not guarantee coverage until certain conditions are met.
- Almost all U.S. life insurers are members of the Medical Information Bureau (MIB).
Risk Classifications
- The preferred classification offers the lowest premium, while substandard classifications charge the highest premiums.
- Underwriters utilize classifications such as standard, preferred, and substandard; "dividend risk" is not a recognized classification.
Importance of Life Insurance Applications
- A life insurance application confirms key parties involved: applicant, insured, owner, payor, and beneficiary.
- The beneficiary's signature is not required for policy issuance.
- Medical ailments discovered during underwriting must be reported to the MIB.
Underwriting Process and Methods
- An attending physician's statement (APS) is required when an application reveals concerning conditions.
- The underwriting department is responsible for risk selection, deciding to accept or reject applications.
- The main objective of underwriting is to avoid an imbalance of bad risks.
Reports and Authorizations
- Requests for an APS must include written authorization from the applicant.
- Key information for life insurance applications includes health history, occupation, and hobbies; ethnicity is not required.
- A consumer report evaluates an applicant's eligibility based on creditworthiness and personal traits.
Guidelines for Applicants
- To authorize an attending physician's report, an applicant must sign a consent form; verbal consent is insufficient.
- The risk classification system ensures that premiums align with the risk level posed by the insured.
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Description
Test your knowledge of key concepts in insurance with these flashcards. This quiz focuses on underwriting processes and the differences between conditional and binding receipts. Enhance your understanding of policy issuance and insurance terminology.
