Life Insurance Policies Overview

Questions and Answers

When does a life insurance policy typically become effective? (Select all that apply)

When initial premium is collected and policy is issued (correct)

When the policy is issued

When the application is completed and signed

When the completed application is signed and initial premium is collected

What is the purpose of the Medical Information Bureau (MIB)? (Select all that apply)

To perform physical examinations on applicants

To accept or decline insurance applicants

To help underwriters evaluate risk (correct)

To set the premium rates for insurers

How many months can a life insurance policy normally be backdated from the date of application?

6 (correct)

Upon policy delivery, which of the following must a producer have an applicant sign if no initial premium was collected with the life insurance application?

A replacement form Signup and view all the answers

What is involved when a life insurance policy has been backdated?

Making the policy effective on an earlier date than the present Signup and view all the answers

A change in an insurance application requires?

An initial made by the applicant Signup and view all the answers

Signatures for an insurance application MUST be obtained by the producer from all of the following sources EXCEPT?

The beneficiary Signup and view all the answers

What happens when an insurance policy is backdated?

The policy's effective date is earlier than the present Signup and view all the answers

The principle of insurable interest, in regards to a life insurance contract, is accurately described in which statement?

Insurable interest can be based on the love and affection of individuals related by blood or law Signup and view all the answers

Preferred risk policies with reduced premiums are issued by insurance companies because the insured has?

Better than average mortality or morbidity experience Signup and view all the answers

Which of the following describes a person who is NOT acceptable by an insurer at standard rates because of health history, occupation, or hobbies?

Substandard risk Signup and view all the answers

Which of these is NOT considered to be a risk factor in life insurance underwriting?

Number of children Signup and view all the answers

A field underwriter's main task is?

To ensure an applicant's medical information is accurate and complete Signup and view all the answers

Which of the following would be considered an underwriting duty of an agent?

Completing all applications and collecting initial premiums Signup and view all the answers

In which of the following relationships would there NOT be an insurable interest?

Business owner to business customer Signup and view all the answers

All of these are typically sources of underwriting information for life or health insurance EXCEPT?

Disclosure authorization response Signup and view all the answers

An applicant intentionally lying to an insurance company on an application in order to obtain a cheaper premium is an example of?

Fraud Signup and view all the answers

An insurance producer is often responsible for field underwriting during the application process. All of these are possible field underwriting roles EXCEPT?

Providing commission information to the applicant Signup and view all the answers

Study Notes

Life Insurance Policy Effectiveness

A life insurance policy typically becomes effective when the initial premium is collected and the policy is issued.
It is important for applicants to understand that the exact timing of policy effectiveness can affect coverage.

Medical Information Bureau (MIB)

The MIB assists underwriters in evaluating risk associated with insurance applicants.
This organization plays a crucial role in the underwriting process.

Policy Backdating

Life insurance policies can usually be backdated for up to 6 months from the date of application.
Backdating makes the policy effective on an earlier date than the present, which can have implications for premium calculations.

Policy Delivery Requirements

When delivering a life insurance policy without an initial premium collected, a replacement form must be signed by the applicant.
This is a critical step in the policy issuance process.

Application Changes

Any changes to an insurance application require the applicant's initial.
This emphasizes the importance of the applicant's acknowledgment of changes made.

Signature Requirements

Signatures for insurance applications must be collected from the producer, the insured, and the policyowner.
The beneficiary's signature is not required, which can streamline the application process.

Insurable Interest Principle

Insurable interest in life insurance can stem from love and affection between individuals related by blood or law.
It is a foundational requirement for issuing life insurance policies.

Preferred and Substandard Risks

Preferred risk policies are issued at reduced premiums due to the policyholder having better than average mortality or morbidity experience.
Substandard risk refers to those who are not classified at standard rates due to health or other risk factors.

Underwriting Factors

Underwriting assesses various risk factors, excluding the number of children from consideration.
Factors like health history, occupation, and hobbies significantly affect risk classification.

Field Underwriter Responsibilities

A field underwriter's primary role is to ensure that an applicant's medical information is accurate and complete.
This critical step is vital for accurate risk assessment.

Agent Underwriting Duties

Agents complete all applications and collect initial premiums as part of their underwriting duties.
They may also request information from the MIB as part of the assessment process.

Relationships and Insurable Interest

An insurable interest does not exist between a business owner and a business customer.
Understanding potential insurable interests is essential for proper policy issuance.

Underwriting Information Sources

Typical sources of underwriting information include consumer reports, MIB reports, and attending physician's statements (APS).
Disclosure authorization responses are not included as a standard source of information.

Insurance Fraud

Intentionally providing false information on an insurance application to obtain lower premiums constitutes fraud.
Awareness of such practices is crucial for insurers and applicants alike.

Field Underwriting Roles

Field underwriting roles typically include providing disclosure information, collecting premiums, and delivering policies.
Providing commission information to applicants is not considered a standard role in field underwriting.

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Description

This quiz covers key concepts related to life insurance policies, including effectiveness, the role of the Medical Information Bureau, backdating, and policy delivery requirements. Understanding these elements is crucial for anyone involved in the insurance field.