7 - Life Insurance Underwriting and Policy Issue

Kevin is an agent who takes an application for individual life insurance and accepts a check from the client. He submits the application and check to the insurance company, however the check was never signed by the applicant. If the application is approved, when will coverage be effective?

date of sales appointment

date application was submitted

date of application

date the agent delivered the policy, collected the initial premium, and obtained a good health statement from the insured

date the agent delivered the policy, collected the initial premium, and obtained a good health statement from the insured

An insurance policy may be issued with a preferred insurance premium in all of these situations EXCEPT

good credit history

living in a rural area

good health history

being a nonsmoker

living in a rural area

When an applicant applies for a large amount of life insurance coverage, which of the following would likely NOT be an underwriting requirement

consumer report

eye examination

urine sample

blood sample

eye examination

When the disclosure of an insured's nonpublic information is involved, what is the insurer obligated to do?

insurer is not obligated to take any action

insurer is not obligated to verify that the producer is in compliance

give notice, explain and allow opting out

provide the proper NAIC paperwork

give notice, explain and allow opting out

Which report contains information regarding an individual's general reputation and credit standing?

credit report

consumer report

MIB report

agent's report

consumer report

An agent gives a conditional receipt to a client for insurance policy after collecting the initial premium. When will the policy become effective?

when the policy is issued

the date of the policy delivery

when the conditions of the receipt are met

the date the sales appointment was set

when the conditions of the receipt are met

The Medical Information Bureau (MIB) consists of members from which group?

doctors

hospitals

insurance companies

underwriters

insurance companies

An applicant submits a life insurance application where an investigative consumer report is used in the underwriting process. Which of these statements is true?

applicant can determine which items in the report to leave out

insurer can obtain a copy of this report without the applicant's knowledge

fee for the report is typically paid by the applicant

applicant has a right to receive a copy of the report

applicant has a right to receive a copy of the report

The initial premium for a life insurance policy is typically paid in what way?

the applicant mails it to the insurer after the policy has been approved

it is typically obtained by the producer and forwarded to the insurer

it is typically forwarded to the insurer by the applicant

the producer pays it from any commissions received

it is typically obtained by the producer and forwarded to the insurer

After an applicant reads and signs an insurance application, he/she should be conscious of the fact that

a false statement could lead to a loss of coverage

premium refunds are not allowed

policy is guaranteed to be issued

the premium quoted by the agent is final

a false statement could lead to a loss of coverage

In what situation could an insurance policy's coverage be modified? Applicant is a:

preferred risk

substandard risk

standard risk

uninsurable

substandard risk

A policyowner pays the first annual premium for a $50,000 life insurance policy and dies one month after the policy effective date. Which of these statements is normally true?

premium will be refunded with interest

premium received by insurer is considered to be unearned

proceeds are prorated to 1/12th of the full amount

beneficiary receives $50,000 income tax free

beneficiary receives $50,000 income tax free

Which of these is NOT considered the responsibility of a producer during the underwriting process?

collecting additional medical information

promptly sending the completed application to the insurance company

forwarding any material personal observations to the insurer

selecting the final approve date

selecting the final approve date

A signed good health statement may be requested by a life producer at the time of

policy issue

application

policy delivery

physical examination

policy delivery

When a producer submits an application that discloses personal information regarding the applicant, who supplies the privacy notice?

producer

insurer

underwriter

fiduciary

producer

An insured may be required to sign which document at policy delivery to ensure there has not been any adverse medical conditions since the time of the application?

binding receipt

good health statement

agent's report

MIB disclosure

good health statement

Which of these is NOT used as selection criteria in the underwriting process?

credit report

national origin

age of applicant

sex of applicant

national origin

Where is the difference between a standard and a substandard risk?

backdating

coverage is not offered

premium charges

back-end charges

premium charges

Insurable interest in one's own life is legally considered as

illegal

limited

generally unlimited

contingent on future earnings

generally unlimited