Show Terms in this set (92)Victor, age 59, calculated last year's gross income to be $100,000. When reviewing the cost of his various personal insurance policies, he found that his disability income policy annual premium was $3,500, his long-term care insurance annual premium was $4,000, and the total annual cost of his individual Medical insurance premiums and out-of-pocket medical expenses came to $5,500. Based on this information, he could deduct ______ from his taxable income for that year. Sets with similar terms
Terms in this set (81)Producer Responsibilities - Completing a Notice Regarding Replacement - Obtaining information regarding any existing policies, including the names of the existing insurers and policy numbers (this must be provided to the replacing insurer) policyowner - The purchaser of a life insurance policy third-party ownership If the policy is owned by a person other than the insured beneficiary one who benefits from something; a person who is left money or other property in a will or the like Insurable Interest something of value that, if lost, would cause you financial harm Examples of insurable interest include a spouse, other immediate family members, business partners, or creditors of the insured. Insurance Producer - are tasked with educating consumers and helping them meet their needs - assess the potential client's financial information, goals, and objectives to calculate the appropriate amount of insurance needed - initial point of contact for most insurance transactions Transacting Insurance Conducting insurance business, such as soliciting or negotiating to buy or sell an insurance policy. four different phases in the sale of products 1. solicitation 2.negotiation 3.execution of a contract 4. handling matters subsequent to a contract HIPAA's privacy rules are implemented to Protect the privacy of all individually identifiable health information Buyer's Guide A generic brochure developed by the NAIC to assist prospective buyers of life insurance. Descriptions of all basic types of life insurance as well as comparative costs of each are included Policy Summary a written statement describing the features and elements of the policy being issued individually identifiable health information Documents or bits of information that identify the person or provide enough information so that the person could be identified. Replacing Insurer responsibilities Notifying the existing insurer of the planned replacement upon receiving proper notification with the new application Maintaining copies of the information regarding replacement for a specified period of time replacement s any transaction in which a new life policy or annuity is to be purchased, and the producer knows, or should know, that existing contract(s) will be: conservation the act of saving or keeping the existing policy and preventing it from being replaced. Existing Insurer The insurer who issued the policy to be replaced Replacing Insurer the insurer responsible for issuing the new policy that will replace the existing policy Binding Receipt (Unconditional) Provides coverage as soon as premium is received (before approval) Trial Application one submitted without a premium C.O.D., or collect on delivery Underwriting the process of selection, classification, and rating the process of determining if someone is insurable, classifying the risk, and determining the rate or premium to be charged Source of underwriting include the application, medical exams, an Attending Physician's Statement, the Medical Information Bureau (MIB), an inspection report, and the agent's report Adverse Selection unhealthy or high risk applicants, and to insure only those risks that meet certain criteria Application - primary source of underwriting Attending Physician Statement (APS) used in cases in which the individual application and/or medical reports reveal conditions for which further information is necessary to determine insurability APS Attending Physician Statement (APS) MIB Medical Information Bureau
Medical Information Bureau Report collect adverse medical information about an applicant's health and act as an information exchange - member- owned corporation example MIB's underwriting services used exclusively by member life and health insurance companies to assess an individual's risk and eligibility during the underwriting of life and health policies - services "alert" underwriters to fraud, errors, omissions or misrepresentations made on insurance applications, and the MIB may help lower the cost of life and health insurance for consumers MIB's coded reports represent general medical information and other conditions (typically hazardous hobbies and adverse driving records) affecting the insurability of the applicant Inspection Report general report of the applicant's finances, character, morals, work, hobbies, and other habits - aka Consumer Investigative Report - inspection report will confirm and elaborate on information provided on the application - information collected over phone interview and may be extended to character references (neighbors or coworkers) Agent's Report a personal statement submitted by the producer, to the insurer, regarding the applicant's financial condition, any personal knowledge of the applicant - one purpose: to provide information in order for the insurer to determine insurability Underwriting Factors Nature of the risk Age Rating Applicants classification to be used in the calculation of the premium Standard Risks Individuals who have the same health, habits, sex/gender, and occupational characteristics as those reflected in the mortality table. Individuals in this category have an average life expectancy. Preferred Risk Individuals who meet certain requirements and qualify for lower premiums - this category have a longer than average life expectancy Substandard Risks (Higher Risk Exposure) Individuals who are not acceptable at standard rates because of poor health, bad habits or occupational hazards. - this category are issued "rated policies," known as surcharges -If a policy is not approved as applied for and is issued as substandard, the insurer may make a "counteroffer" to the applicant Declined not a rating classification, but a decision that the risk is one for which the insurer refuses to issue insurance. - applicant is deemed uninsurable Classification of Risks Standard, Preferred, Substandard Factors in Premium Determination mortality, interest, and expense Mortality - men have higher premium than a female - mortality tables are used Interest - used to calculate premium - reduce the amount of premium needed to fund the future liability of the policy death benefit. Expenses loading amount charged to cover each policy's share of expenses of operation Mode frequency of payment - Premium payments are made either monthly, quarterly, semiannually, or annually Constructive delivery the insurer mails the policy to the producer Legal delivery the producer delivers the policy to the owner or insured Statement of Good Health verifies that the insured has remained in the same health status continuously since the time of the application What is on the face page of the policy? Name of the insurance company Name of the insured and policyowner Face amount of the policy Basic description of the type of policy purchased Policy number and anniversary date The insurance company's promise to pay the death benefit (Insuring Clause) Survivor Protection Providing funds for surviving spouses and dependents Estate Creation Life insurance proceeds paid in a lump sum provide financial assets to create an immediate estate the insured can pass on to survivors Estate Conservation Provides money to pay any estate taxes or loans which must be satisfied upon the death of the estate owner (the insured) preserving the insured's estate Cash Accumulation An amount of cash accessible to the policyowner from within permanent life insurance policies Liquidity Immediate funds available upon death to pay creditors, taxes and final expenses as well as cash values available for policy loans, withdrawals, and full surrenders
J is named in a policy as the individual who is entitled to receive the policy proceeds upon the death of T. Which of the following statements best applies to this scenario? A Based on the information provided, the only assumption that can be made is that T is the insured and J is the named beneficiary. The owner of the policy is not specified and could either be J or T. A life insurance policy is being applied for on Z's life. In order for the contract to be valid, all of the following have an insurable interest and could be the owner of the policy, except: A B C D A Insurable interest is defined as having a relationship which would result in a financial or economic loss if the insured dies. A neighbor is not an example of a party that meets this definition. Information from a third party collected by the insurance company in the application for insurance and during underwriting of the policy may be subject to the jurisdiction of which of the following? A C The Fair Credit Reporting Act has jurisdiction over information collected through a third-party for underwriting purposes. HIPAA's privacy rules are implemented to: A A Which of the following is NOT required to sign a completed application? A B An application for insurance is completed and submitted to an insurance company. In order for coverage to be effective immediately, all of the following conditions must be met, except: A A In order for coverage to be effective immediately, the policy must be issued as applied for. Which
of the following is not true about life insurance applications? B A copy of the application will be included as part of the policy, and is therefore not confidential. All of the following statements regarding sources of underwriting are correct, except: A C Which of these modes would result in the insured paying the least annual outlay for life insurance? D A producer provided a conditional receipt to an applicant on May 5 at the time of an application based on a standard risk. The insurer required a routine medical exam, which was completed on May 15. The policy was issued based on a substandard risk on May 20 and the producer delivered the policy on May 22. The effective date of coverage is: A D
Determine if the following statements occur while the application is being completed,during the underwriting process, or when the policy is delivered. Classification of risk and rating Underwriting Process Policy Delivery Completing the Application Viaticle settlement policy may be purchased by a third party from a terminally ill insured providing immediate cash prior to death example: policyowner going to die in next 24 months and sales the policy to get tax free money Preneed Plan Funds parts of or all of a funeral service and burial. Exemption from creditors benefits payable to a beneficiary are exempt from the insured's creditors Whose signature is not required on a life insurance application? C Which
of the following products provides an immediate lump sum in the event of premature death? D An insurance company must adhere to the __________ when gathering information about an applicant from third parties. D When an insurer requires that an insured be subjected to a medical examination, who pays for the medical exam? A Confidential information shared by the producer to the insurer and does not become part of the policy is the __________. B An agent's report is a personal statement submitted by the producer to the insurer about information the agent would like to share with the insurer on a confidential basis that they may have learned during the application process while at the applicant's home or place of business. All of the following signatures would be required on a life insurance application for an adult, except that of the: C If an applicant is a minor, who signs the application? D
Which of the following is not a factor in premium determination? B All of the following become part of the entire contract, except: A All of the following are acceptable methods of policy delivery, except: D If a home office underwriter obtains MIB codes inconsistent with information provided on the application, what is the underwriter required to do? D A personalized computer-generated illustration detailing premiums, cash values, interest rates, and surrender values is called __________. B If an insured pays a premium that is lower than others that are in the same class, this insured is considered to be rated as? D The person who submits an application for insurance is always referred to as the _______. D
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Which of the following is not considered an underwriting factor when determining insurability for health insurance quizlet?
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