Questions and Answers
In which of the following relationships would there NOT be an insurable interest?
What is the purpose of the Medical Information Bureau (MIB)?
To help underwriters evaluate risk
An underwriter's primary responsibility to an insurer is to protect against?
Adverse selection
Which law do all insurers and their producers need to comply with when obtaining personal information from a third party concerning an applicant?
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An attending physician's statement would be appropriate for which life insurance purpose?
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An insurance producer is often responsible for field underwriting during the application process. All of these are possible field underwriting roles EXCEPT?
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Which of the following would be a valid reason why a policy premium would be higher than the standard premium?
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Field underwriting performed by the producer involves?
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Which of the following does a life insurance policy summary normally include?
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All of these are considered key factors in underwriting life insurance EXCEPT?
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What happens when an insurance policy is backdated?
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What is involved when a life insurance policy has been backdated?
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An insurer has a right to screen applicants for HIV in which of the following ways?
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Preferred risk policies with reduced premiums are issued by insurance companies because the insured has?
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Study Notes
Insurable Interest
- Insurable interest is required in insurance relationships, such as between the business owner and the business itself; however, it does not exist between a business owner and a business customer.
Medical Information Bureau (MIB)
- The purpose of the MIB is to aid underwriters in evaluating risk associated with applicants seeking insurance coverage.
Underwriter's Responsibilities
- An underwriter's primary duty is to safeguard the insurer against adverse selection, ensuring that risks are accurately assessed.
Compliance with Laws
- Insurers and their representatives must adhere to the Fair Credit Reporting Act when collecting personal information about applicants from third parties.
Attending Physician's Statement
- An attending physician’s statement is utilized to assist insurers in the underwriting process as needed.
Field Underwriting Roles
- Insurance producers perform field underwriting tasks during the application process, but providing commission information to the applicant is not a part of these responsibilities.
Premiums and Underwriting Standards
- A policy premium may exceed the standard amount if the insured fails to meet the established underwriting criteria.
Field Underwriting Responsibilities
- Field underwriting by the producer involves the completion of the insurance application and the collection of the initial premium.
Life Insurance Policy Summary
- A life insurance policy summary typically includes details such as the policy's cash value, which indicates the savings component of the policy.
Key Underwriting Factors
- Significant factors in life insurance underwriting include health status and lifestyle, but marital status is generally not considered a key factor.
Backdating Insurance Policies
- When an insurance policy is backdated, its effective date is set to an earlier time than the present, which can benefit the insured.
Implications of Backdating
- Backdating a life insurance policy means it is made effective on a date prior to the signing of the application.
HIV Screening by Insurers
- Insurers have the right to screen applicants for HIV through methods such as blood tests.
Preferred Risk Policies
- Insurers may issue preferred risk policies with lowered premiums to individuals who exhibit better than average mortality or morbidity experiences, reflecting a lower risk profile.
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Description
This quiz covers essential concepts related to insurance underwriting, including insurable interest, the role of the Medical Information Bureau, and the responsibilities of underwriters. It's designed to test your knowledge on the processes and regulations involved in insurance applications and risk assessment.
