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Questions and Answers
When does a life insurance contract become effective if the initial premium is not collected during the application process?
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
Who is NOT required to sign a life insurance application?
Who is NOT required to sign a life insurance application?
Beneficiary
A life insurance application must be signed by all of these EXCEPT?
A life insurance application must be signed by all of these EXCEPT?
Beneficiary
An applicant's medical information received from the Medical Information Bureau (MIB) may be furnished to the?
An applicant's medical information received from the Medical Information Bureau (MIB) may be furnished to the?
Which of these actions should a producer take when submitting an insurance application to an insurer?
Which of these actions should a producer take when submitting an insurance application to an insurer?
Which Federal law allows an insurer to obtain an inspection report on a potential insured?
Which Federal law allows an insurer to obtain an inspection report on a potential insured?
What kind of receipt was used when K is given a receipt by the agent stating coverage begins immediately if the application is approved?
What kind of receipt was used when K is given a receipt by the agent stating coverage begins immediately if the application is approved?
What action should the producer take after delivering the life policy to D, who had chest pains?
What action should the producer take after delivering the life policy to D, who had chest pains?
If an underwriter determines that an applicant's risk should be recategorized due to a health issue, what may be issued?
If an underwriter determines that an applicant's risk should be recategorized due to a health issue, what may be issued?
Which factors do NOT play a role in the underwriting of a life insurance policy?
Which factors do NOT play a role in the underwriting of a life insurance policy?
When an insurance application is taken by a producer, any changes made on the application require the applicant's initials.
When an insurance application is taken by a producer, any changes made on the application require the applicant's initials.
What item is given to T when told by the producer that coverage is bound from the date of application?
What item is given to T when told by the producer that coverage is bound from the date of application?
What is being delivered during a policy delivery?
What is being delivered during a policy delivery?
Which parts of a life insurance policy are guaranteed to be true?
Which parts of a life insurance policy are guaranteed to be true?
Before a life insurance policy is issued, which components of the contract is required?
Before a life insurance policy is issued, which components of the contract is required?
Which of these do NOT constitute policy delivery?
Which of these do NOT constitute policy delivery?
What will happen to an incomplete life insurance application submitted to an insurer?
What will happen to an incomplete life insurance application submitted to an insurer?
Any changes made on an insurance application require the initials of whom?
Any changes made on an insurance application require the initials of whom?
What actions should P take if he notices 5 questions on a life application were not answered?
What actions should P take if he notices 5 questions on a life application were not answered?
How will the insurer handle Q's returned policy after a free-look period?
How will the insurer handle Q's returned policy after a free-look period?
All of these are considered sources of underwriting information about an applicant EXCEPT?
All of these are considered sources of underwriting information about an applicant EXCEPT?
At what time must a policyowner have insurable interest on the insured for the life policy to be valid?
At what time must a policyowner have insurable interest on the insured for the life policy to be valid?
Why is an applicant's signature required on a life insurance application?
Why is an applicant's signature required on a life insurance application?
Which of these terms accurately defines an underwriter's assessment of information on a life insurance application?
Which of these terms accurately defines an underwriter's assessment of information on a life insurance application?
The underwriting process involves all of these EXCEPT for?
The underwriting process involves all of these EXCEPT for?
Consumer reports requested by an underwriter during the application process can be used to determine?
Consumer reports requested by an underwriter during the application process can be used to determine?
What is the purpose of the U.S. Patriot Act?
What is the purpose of the U.S. Patriot Act?
From what authority does the requirement that an insurance application contains a disclosure stating that an investigative consumer report may be obtained derive?
From what authority does the requirement that an insurance application contains a disclosure stating that an investigative consumer report may be obtained derive?
What action should a producer take if the initial premium is NOT submitted with the application?
What action should a producer take if the initial premium is NOT submitted with the application?
All of these actions must occur before M's policy goes into effect EXCEPT?
All of these actions must occur before M's policy goes into effect EXCEPT?
In order for coverage on a non-medical insurance application to take effect the same day, what must the producer collect?
In order for coverage on a non-medical insurance application to take effect the same day, what must the producer collect?
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Study Notes
Life Insurance Contracts
- A life insurance contract becomes effective when the initial premium is collected during policy delivery.
- Beneficiaries are not required to sign the life insurance application.
Application Requirements
- All parties, except beneficiaries, must sign the life insurance application.
- An applicant’s medical information from the Medical Information Bureau (MIB) may be provided to the applicant's physician.
Producer Responsibilities
- Producers should inform the insurer of any relevant information not included on the application when submitting.
- If a life insurance application is incomplete, it will be returned to the writing agent for completion.
Federal Laws
- The Fair Credit Reporting Act allows insurers to obtain inspection reports for potential insureds.
- Disclosure in applications must inform applicants that an investigative consumer report may be obtained, as per the Fair Credit Reporting Act.
Policy Receipts
- A conditional receipt allows coverage to begin immediately upon application approval, provided the initial premium is submitted.
- If initial premium is not paid, the application can still be submitted to the insurer but without the premium.
Policy Delivery
- Delivering a policy consists of giving the insurance contract to the proposed insured along with collection of the initial premium and a signed health statement if necessary.
- A policy issued with a rating does not constitute policy delivery.
Underwriting Process
- Underwriters may classify risks, potentially issuing policies with exclusions for specific medical conditions.
- Factors excluding marital status are considered in the underwriting process.
Required Components
- The applicant's signature on the application is mandatory before policy issuance.
- Any changes made on the application must be initialed by the applicant.
Free-Look Period
- A policy returned within the free-look period will result in a full refund of the premium if the insured is dissatisfied.
Insurable Interest
- Insurable interest must exist at the time of the application for the life policy to be valid.
Risk Classification
- An underwriter’s assessment of an applicant's information is known as risk classification.
- Consumer reports help determine the likelihood of timely premium payments from applicants.
U.S. Patriot Act
- The purpose of the U.S. Patriot Act is to detect and deter terrorism.
General Rules
- If no initial premium is submitted with an application, the producer should forward the application to the insurer without it.
- For non-medical applications to take effect the same day, a signed application and the initial premium must be collected.
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