Questions and Answers
When does P's coverage become effective if he completes an application for a $10,000 life policy but does not pay the initial premium?
What is the aviation exclusion?
A student pilot can pay regular premium costs with the addition of a specific exclusion for aviation activities.
When did the coverage become effective for the policy delivered on January 26?
Coverage became effective on January 26.
Under the USA Patriot Act, insurers are required to report receipt of cash payments greater than $______.
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When will a policy become effective if an agent gives a conditional receipt after collecting the initial premium?
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What should an agent do if a customer wants to apply for an insurance policy?
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What happens if an incomplete life insurance application is submitted to an insurer?
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When will coverage become effective if the application was approved but the check was never signed?
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Who is NOT required to sign a life insurance application?
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What is a representation in insurance terms?
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When does a life insurance contract become effective if the initial premium is not collected during the application process?
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What can consumer reports requested by an underwriter during the application process determine?
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What action should P take if five questions on a life application are not answered?
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What should a producer do if the initial premium is NOT submitted with the application?
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Study Notes
Life Insurance Policy Basics
- Coverage becomes effective when the policy is delivered and the initial premium is collected.
- An applicant may fill out an application without the initial premium, but coverage will only begin once payment is received.
Aviation Exclusion
- Insurance policies may include aviation exclusions, impacting premium costs for student pilots.
Premium Payment Reporting
- Under the USA Patriot Act, insurers are mandated to report any cash payments exceeding $10,000 to combat money laundering.
Conditional Receipts
- Conditional receipts indicate that specific conditions must be met for coverage to commence after the initial premium payment.
Application Submission Process
- Agents should ensure applications are complete and review all information with clients before submission to the insurance company.
Application Return Protocol
- Incomplete applications are typically returned to the writing agent by the insurance company for corrections.
Effective Date of Coverage
- Coverage is effective when the agent delivers the policy, collects the initial premium, and obtains a good health statement, even if the initial check is unsigned.
Beneficiary Requirements
- Beneficiaries do not need to sign the life insurance application, unlike other parties involved.
Representation in Applications
- A representation is a statement made by the insured that must be truthful and becomes part of the insurance contract.
Contract Effectiveness Without Initial Payment
- A life insurance contract becomes effective only after the initial premium is collected, not merely during the application process.
Consumer Reports for Underwriting
- Consumer reports help underwriters assess an applicant's likelihood of making timely premium payments based on character, finances, and lifestyle factors.
Addressing Unanswered Application Questions
- Producers should schedule meetings with applicants to resolve any unanswered questions on the life insurance application, ensuring accuracy before submission.
Actions Without Initial Premium
- If an initial premium is not included with the application, producers should still forward the application to the insurer but note that policy validity awaits the premium collection.
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Description
Test your understanding of life insurance policies, including how coverage begins, premium payment requirements, and application processes. This quiz also covers aviation exclusions and reporting mandates under the USA Patriot Act. Improve your knowledge of essential terms and conditions in life insurance policies.
