Insurance Course 6 Flashcards

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Questions and Answers

When an applicant applies for insurance, the process by which the insurer determines whether to issue a policy is called?

Underwriting (correct)

Regulation

Adverse selection

Issuance

How does a conditional receipt differ from a binding receipt?

Binding receipts always provide insurance which starts from the date of receipt (correct)

Conditional receipts always require an initial premium payment

Conditional receipts always provide insurance which starts from the date of receipt

Binding receipts always require an initial premium payment

Most U.S. life insurance companies belong to the?

Medical Information Bureau (correct)

Underwriting Information Bureau

FINRA

National Association of Insurance Commissioners

Which of the following risk classifications charges the lowest premium?

Preferred Signup and view all the answers

Which of the following is NOT a risk classification that an underwriter would use?

Dividend risk Signup and view all the answers

Which of the following is NOT an important reason for a life insurance application?

The beneficiary must sign the application before the insurer will issue the policy Signup and view all the answers

What are members of the Medical Information Bureau (MIB) required to report?

Medical ailments discovered during the underwriting process Signup and view all the answers

An applicant has revealed conditions that require more information. Which of the following is needed next?

Attending physician's statement Signup and view all the answers

The risk selection process is primarily given to which insurance company department?

Underwriting Signup and view all the answers

The objective of underwriting is to?

Avoid selecting a disproportionate number of bad risks Signup and view all the answers

When an insurance company requests an attending physician's report, the request must be accompanied by a?

Copy of the signed authorization Signup and view all the answers

Which of the following types of information is NOT required for a life insurance application?

Ethnicity Signup and view all the answers

Which of the following risk classifications charges the highest premium?

Substandard Signup and view all the answers

The Medical Information Bureau consists of?

Life and health insurance companies Signup and view all the answers

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)?

Consumer report Signup and view all the answers

What must an applicant do in order to authorize the release of an attending physician report?

Sign a consent form Signup and view all the answers

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.