Ch. 7 - Life Underwriting

The reason for backdating a policy is

a. to avoid being considered a substandard risk due to a recent cancer diagnosis

b. to obtain a premium rate based on an earlier age

c. to decrease the face amount

d. to decrease the Contestable period

In what situation could an insurance policy's coverage be modified?

a. applicant is a preferred risk

b. applicant is a substandard risk

c. applicant is a standard risk

d. applicant is uninsurable

Field underwriting by a producer

a. is used to reduce costs to the insurer

b. involves conducting a physical examination of the applicant

c. may result in the disclosure of hazardous activities of the applicant

d. is illegal in most states

What must be given to a life insurance applicant when the agent receives an application and the initial premium?

a. agent's report

b. conditional receipt

c. commission disclosure

d. good health statement

When does the producer give a premium receipt for a life insurance application?

a. when the application has been approved

b. when the initial premium has been paid with the application

c. during the medical exam

d. when the completed application has been collected

Insurable interest in one's life is legally considered as

a. illegal in most states

b. limited

c. generally unlimited

d. contingent on future earnings

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

a. consumer report

b. eye examination

c. urine sample

d. blood sample

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

a. good credit history

b. living in a rural area

c. good health history

d. being a nonsmoker

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

a. insurer is not obligated to take any action

b. insurer is obligated to verify that the producer is in compliance

c. give notice, explain, and allow opting out

d. provide the proper NAIC paperwork

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?

a. binding receipt

b. good health statement

c. agent's report

d. MIB disclosure

K 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?

a. the date the sales appointment was made

b. the date the application was submitted to the insurance company

c. the date of application

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

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

a. a false statement could lead to loss of coverage

b. premiums refunds are not allowed

c. the policy is guaranteed to be issued

d. the premium quoted by the agent is final

When must a producer provide disclosure about information practices to an applicant?

a. during the medical examination

b. upon policy delivery

c. prior to or at the time of signing the application

d. immediately after signing the application

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?

a. premium will be refunded with interest and no death benefit paid

b. premium received by insurer is considered to be unearned

c. proceeds are prorated to 1/12th to the full amount

d. beneficiary receives $50,000 income tax-free

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

a. policy issue

b. application

c. policy delivery

d. physical examination

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

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

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

c. it is typically forwarded to the insurer by the applicant

d. the producer pays it from any commissions received

Which of these is NOT used as selection criteria in the underwriting process of a life insurance application?

a. credit report

b. national origin

c. age of applicant

d. sex of applicant

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

a. applicant can determine which items in the report to leave out

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

c. fee for the report is typically paid by the applicant

d. applicant has a right to receive a copy of the report

Which of these is NOT an underwriting responsibility of a life insurance agent?

a. asking relevant questions concerning an applicant's avocations

b. requesting an attending physician's report (APR)

c. ordering an inspection report

d. determining the final rate classification

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

a. credit report

b. consumer report

c. MIB report

d. agent's report

The Medical Information Bureau consists of members from which group?

a. doctors

b. hospitals

c. insurance companies

d. underwriters

Mike applied for life insurance and was issued a conditional receipt. He is later found to be insurable and is issued a policy. When does his coverage become effective?

a. date of issuance of the conditional receipt

b. date the policy was approved

c. date of policy delivery

d. date the insurer received the application

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

a. producer

b. insurer

c. underwriter

d. fiduciary

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

a. collecting additional medical information if needed

b. promptly sending the completed application to the insurance company

c. forwarding any material personal observations to the insurer

d. selecting the final approval date

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

a. when the policy is issued

b. the date of policy delivery

c. when the conditions of the receipt are met

d. the date the sales appointment was set

After an insurance application has been originated, the producer normally

a. can change the policy provisions

b. determines whether a claim will be paid

c. is the major personal contact to the insured

d. conducts a physical examination

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

a. backdating

b. coverage is not offered

c. premium charges

d. back-end charges

All of these are duties that a producer may be required to perform when delivering an insurance policy EXCEPT

a. acquire a statement of good health signature

b. gather the initial premium

c. review policy with applicant

d. leave a conditional receipt with client

The principal source of information concerning an applicant's identity, age, and marital status is found in the

a. MIB

b. credit report

c. policy summary

d. completed application