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62 Cards in this Set

  • Front
  • Back
What is insurance
The transfer of financial resposibility associated with a potential loss(risk)
What is an angency contract?
a contract that is held between an insurer and an agent/producer, containing the expressed authority given to the agent /producer, and the duties and responsibilities the principal. An agent who is in violation og the agency contract may be held personally liable to the insurer.
What is agent/producer?
a person who acts for another person or entity known as the principal with regaed to contractual arrangements with 3rd parties; a legal representative of an insurance agency.
What is an applicant or proposed insurere?
a person who requests or seeks insurance from an insurere.
What is a beneficiary?
the person who recieves the benifits from the policy of insurance
What is a death benefit?
face amount/face) value/coverage) the amount paid when a clain is issued against a policy of insurance.
What is an insurance policy?
a contract between a policyowner(and/or insured) and an insurance company which agress to pay the insured or the benificiary for loss caused by specific events.
Who is the insured?
the person covered by the policy of insurance who may or may not be the applicant or policyowner
Who is the insurer (principal)?
the company who issues a policy of insurance
What is Life Insurance?
a coverage upon a persons life, and granting , purchasing or disposing of annuties.
Who is a policy owner?
the person who is entitled to exercise the rights and privelages in the policy and who may or may not be the insured.
What is a premium?
The money paid to the insurance company for the policy of insurance.
What are the agents 2 main responsibilities?
1.make sure the application is completely filled out correctly
2. Make sure the application is filled out to the best of the applicant's knowledge.
What should the agent do if he feels that there could be some misrepresentation?
He/she must inform the insurance company.
What is underwriting?
the process in which an insurance company determines whether or not a particular applicant is insurable, and if so, what premium to charge.
What is a field underwriter?
usually what the agent is called because the agent usually is the one that has solicited the potential insured.
What are the 6 resposibilities of the agent as a field underwriter?
1.Helping prevent adverse selection
2.the proper solicitation of applicants
3.completing the application
4.obtaining the required signatures
5.collecting the intial premium and issuing the receipt, if applicable
6.delivering the policy
What is the application?
the starting point and basic source of information used by the company in the risk selection process.
What are the 3 basic sections in an application?
1. General Info
2. Medical Info
3. The agents report
What the agent's (producer's) report purpose?
it is used by the agent to discuss his or her personal observations concerning the proposed insured.
What signatures are required?
Both the agent and the proposed inusred (usually the applicant). If the proposed insured and the policyowner are not the same person, such as a buisness purchasing insurance on an employee, then the policy owner must also sigh the application.
What signatures are required?
Both the agent and the proposed inusred (usually the applicant). If the proposed insured and the policyowner are not the same person, such as a buisness purchasing insurance on an employee, then the policy owner must also sigh the application.
What should an agent do if there is a change in the application?
1. they can have the applicant correct the information and intial the change
2. complete a new application
NO WHITEOUT EVER!!
What happens if any questions are left unanswered?
the contract will be interepted as if the insurer waived its right to have an anwer to that question. They would later be barred from any right of denying coverage based on any info that the unanswered might have developed.
Where is the application sent after it is completed?
The insurance company's home office where the company underwriters have the final say as to the acceptablitity of the applicant.
What is the main resposibilities of the underwriter?
They are responsible for protecting the insurer against adverse selection.
What is adverse selection?
risks which are more likely to suffer a loss.
What are the 4 primary criteria and underwriter will use in assesing the desirability of a particular candidate for life insurance?
1.applicants health (current and past)
2.occupation
3.lifestyle and hobbies
4.habits
What is insurable interest?
the possibility of the policy owner losing money or something of value in the event of a loss.
True or False
Insurable interest does not have to exsist at the time of application.
FALSE!!!!
What are the 3 recognized areas in which insurable interest exists?
1. An applicant insuring his or her own life
2. An applicant insuring the life of a family memeber (relative or spouse)
3. An applicant insuring the life of a business partner, key employee, or someone who has a financial obligation to them.
When can an underwriter require a medical examination?
When the applicant has a higher amount of coverage, or if the application raised additional questions concerning the prosepective's health.
What are the 2 options for a medical exam?
1. The insurer may only request a paramedical report which is completed by a paramedic or a registered nurse.
2.The underwriter may require an attending physician's statement (APS) from a medical practitioner who treated the applicant for a prior medical problem.
What is will the underwriter usually request in addition to the paramedical report and the attending physicians report?
A Medical Information Bureau Report (MIB)
True or False
The Medical Information Bureau is a nonprofit trade organization.
TRUE!!!!
What is the rating classification?
the risk in deciding whether or not the applicant should pay a higher or lower premium
What are the 3 risk classifications?
1.Standard
2.Substandard
3.Preferred
What are standard risks?
persons who are according to a company's underwriting standards, are entitled to insurance protection without extra rating or special restrictions.
What are substandard risks?
applicants that are not acceptable at standard rates because of physical condition, personal or family history of disease, occupation, or dangerous habits.
What is another name for substandard risks?
High exposure risks
Why are substandard policies referred to as "rated"?
Because they can be issued with a premium rated-up, resulting in a higher premium
What are preferred risks?
those induviduals who meed certain requirements and qualify for a lower premiums that standard riks. These applicants have a superior physical condition, lifestyle, and habits. DUH!!
When does the agent deliver the policy to the inusred?
Once the underwriting process has been completed and the company issues the policy
What is the best method for delivering a policy?
Personal delivery!!!
What is a constructive delivery?
when the insurer relinquishes control of the policy by mailing it to the policyowner, legally the policy is considered delivered.
True or False
Mailing a policy directily to the policy owner is not legal.
FALSE!!!
When should the initial premium be collected if it is not collected during application?
At the time of policy delivery.
What is a statement of good health?
a statement from the applicant at the time of policy delivery that verifies that the insured has not suffered any injury or illness since the application date. This is obtained when the premium is not collected upon application.
What is a buyer's guide?
generic info about life insurance policies that contains, and is limited to, language approved by the commissioner or director.
What is a policy summary?
a written statement decscribing the features and elements of a policy.
What is an illustration?
a presentation or depection that includes non-guarenteed elements of a policy of induvidual or group life insurance over a period of years.
What is replacement?
any transaction in which new life insurance or new annuity is to be purchased and it is known or should be known to the proposing producer that by reason of transaction, existing life insurance or annuties.
Who is relpalcing insurer
the company that issues the new policy
Who is the exsisting insurer?
the company whose policy is being replaced
What does the policyholders protection act not apply to?
1.Credit Life Insurance
2.Group life insurance or group annuity policies
3.contacts for employee benifits or welfare plans as defined by ERISA
4.Purchase or additional insurance under guaranteed insurablility or conversion options
5.Short-term nonrenewable life policies written for less than 31 days
6.An exisiting less than 5 year non-renewable, nonconvertible term life policy
7. Replacing life insurance under a conditional receipt issued by the same company
True or False
Every insurer operating in Oklahoma must inform its agents about the replacement regulations.
TRUE!!!
How many days must an insurer review each statement before beginning the underwriting process to determine whether the policy is a replacement?
No later than 5 days after the insurer recieves teh application.
How is the replaced insurer notified if the applicant signs a statement indicating that they replaced insurer needs to be notified and how many does should this occur?
A written notification to the home or office of each replaced insurer within 5 days of reciept of the application.
What 5 things must a written notification include?
1. Name of the applicant
2.Name of the insured
3.Number of the policy being replaced
4.Generic name and face amount to the replacing policy
5. Legal name of the insurers
How long must the replacing insurer maintain copies of the notice, statement, and notification to the replaced insurers?
At least 3 years!!
Holy crap!
How many days does the policy owner have to return the policy for a full refund of premiums paid?
20 daysof delivery
True or False
The insurer does not have to inform the policy owner that the have the right to return the policy within 20 days for a full refund of premiums paid.
FALSE!!!
You must inform them!!!