Insurance Underwriting Quiz & Flashcards for Policy Issues

Questions and Answers

A Medical Information Report (MIB) report may disclose which of the following?

Prior use of marijuana (correct)

Prior lapsing of policy

Prior bankruptcy judgment

Prior preferred rating

What will happen to an incomplete life insurance application submitted to an insurer?

Application will be returned to the writing agent

A life insurance application must be signed by all of these EXCEPT?

The agent

The policyowner

Beneficiary (correct)

The insured (if an adult)

What is a statement made by an insured in an insurance application that must be true to the best of one's knowledge?

A representation Signup and view all the answers

Which term accurately defines an underwriter's assessment of information on a life insurance application?

Risk classification Signup and view all the answers

M completes an application for life insurance but does not pay the initial premium. All of these actions must occur before M's policy goes into effect EXCEPT?

Free-look period has expired Signup and view all the answers

What can a student pilot pay regular premium costs for her life insurance policy with the addition of?

Aviation exclusion Signup and view all the answers

Why is an applicant's signature required on a life insurance application?

To attest that the statements on the application are accurate to the best of the applicant's knowledge Signup and view all the answers

Which component of the contract is required before a life insurance policy is issued?

Applicant's signature on application Signup and view all the answers

What is the purpose of a Policy Summary?

It highlights the critical parts of the policy issued Signup and view all the answers

In order for coverage on a non-medical insurance application to take effect the same day, what must the producer collect?

The initial premium Signup and view all the answers

When did the coverage become effective for an application filled out on January 8 and delivered on January 26?

January 26 Signup and view all the answers

P's coverage for a $10,000 life policy becomes effective when?

P receives the policy and pays the premium Signup and view all the answers

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

The applicant 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

What may a policy be issued with if the underwriter determines an applicant's risk should be recategorized due to a health issue?

Exclusion for the medical condition Signup and view all the answers

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

Detect and deter terrorism Signup and view all the answers

Upon delivery of a rated life insurance policy, what must the producer obtain EXCEPT?

Signed HIPAA disclosure Signup and view all the answers

When will an insurance policy become effective after a conditional receipt is given?

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

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

Applicant's physician Signup and view all the answers

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

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

What should P do if he notices 5 questions on a life application were not answered?

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

Under the USA Patriot Act, insurers are required to report receipt of cash payments in excess of?

$10,000 Signup and view all the answers

Which action should a producer take when submitting an insurance application to an insurer?

Inform the insurer of relevant information not included on the application Signup and view all the answers

What would the Medical Information Bureau (MIB) identify?

Testing positive for marijuana use from a previous screening 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

Which parts of a life insurance policy are guaranteed to be true?

Warranty Signup and view all the answers

At what time must a policyowner have insurable interest on the insured for the life policy to be valid?

At the time of application Signup and view all the answers

When is a signed statement of good health typically requested upon policy delivery?

The application was submitted without the initial premium Signup and view all the answers

What action must an agent take if he makes a mistake while filling out the insurance application?

Correct the information and have the prospect initial the change Signup and view all the answers

What must insurers advise applicants in writing according to the Fair Credit Reporting Act?

Investigative consumer report may be conducted Signup and view all the answers

When does coverage go into effect for a completed life insurance policy application if the initial premium is not collected?

When the applicant receives the policy and pays the initial premium Signup and view all the answers

All are true statements regarding the underwriting process, EXCEPT:

AIDS and HIV virus exams can be conducted in a discriminatory fashion Signup and view all the answers

The entity whose sole purpose is sharing medical data among its member companies is called the?

Medical Information Bureau (MIB) Signup and view all the answers

Study Notes

Underwriting and Policy Issue Notes

A Medical Information Bureau (MIB) report can reveal prior drug use, such as marijuana.
Incomplete life insurance applications will be returned to the writing agent for completion.
All life insurance applications must be signed by the policyowner, agent, and insured (if an adult); beneficiaries do not need to sign.
Statements in an application, referred to as representations, must be true to the best of the applicant's knowledge.
An underwriter's evaluation of a life insurance application is termed risk classification.
A life insurance policy does not go into effect until the initial premium is collected, even if the free-look period has expired.
A student pilot can add an aviation exclusion to their life insurance policy for regular premium costs.
The applicant's signature on the application confirms the accuracy of the statements made within.
The applicant's signature is a required component before issuing a life insurance policy.
A Policy Summary provides an overview of critical policy details.
Non-medical insurance applications require a signed application and initial premium for same-day coverage effectiveness.
Coverage becomes effective when the policy is delivered and the first premium is collected.
For a life policy to become effective, the policyowner must have insurable interest at the time of application.
If a policy is delivered without the initial premium, a signed statement of good health may be required.
Failure to include an application question allows the insurer to waive certain legal rights.
Concerns about cash surrendering a Universal Life policy may indicate potential Anti-Money Laundering violations.
Gender cannot be a basis for denying life insurance applications.
A policy issued with a rating does not count as delivery to the applicant.
Underwriting information sources include inspection and medical reports; rating services do not qualify.
Consumer reports help assess an applicant's likelihood to pay premiums on time.
Inspection Reports contain details from phone conversations with the applicant.
The USA Patriot Act, enacted in 2001, aims to deter terrorism.
Coverage is only effective post-insurance approval with proper initial premium collection.
Workers must inform the insurer about relevant information omitted from the application during submission.
The Fair Credit Reporting Act enables insurers to obtain inspection reports on applicants.
Any changes made on an insurance application must be initialed by the applicant for verification.
Applicants must be notified of the potential for an investigative consumer report in line with the Fair Credit Reporting Act.
Conditional receipts indicate coverage begins immediately upon application approval.
The quality of underwriting ignores marital status, but considers factors like occupation and avocation.
Medical Information Bureau (MIB) aids in sharing medical data among member insurance companies.
A good health statement is necessary if initial premium payment was skipped during application.
Corrections on the application must be initialed by the applicant to ensure mutual agreement.
Coverage for a life insurance policy begins only when the initial premium is paid upon delivery.
The underwriting process does not permit discriminatory practices regarding AIDS and HIV testing.

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Description

This quiz covers key concepts in underwriting and the policy issue process within life insurance. It details important procedures, including the role of medical reports, application verification, and the significance of signatures. Test your knowledge on these essential topics related to life insurance applications and classifications.

Insurance Underwriting and Policy Issues