NJ Life Insurance Exam Correct answers
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Adverse Selection
insuring of risks that are more prone to losses than the average risk
lapse
policy termination due to nonpayment of premium
Insurance
transfers risk of loss from an individual or business entity to an insurance company which in turn
spreads the costs of unexpected losses to many individuals
Life Insurance
protects against loss associated with an insured's death, and pays a death benefit to beneficiaries
upon death of the insured
solicitation of Insurance
an attempt to persuade a person to buy an insurance policy
Buyers Guide
provides basic, generic information about life insurance policies that contains language approved by
the Department of Insurance
- Explains how a buyer should go about choosing the amount and type of insurance to buy
- Explains how a buyer can save money comparing the costs of familiar policies
Policy Summary
a written statement describing the features and elements of the policy being issued
Must provide:
- name and address of agent
- full name and home office or administrative office of the insurer
- generic name of the basic policy
- each rider
Illustrations
a presentation or depiction that includes non guaranteed elements of a policy of individual or group
life insurance over a period of years
Life Insurance Illustration
Distinguish between guaranteed and projected amounts
- clearly state that an illustration is not a party of the contract
- identify those values that are not guaranteed as such
Field Underwriter
An insurance agent who conducts an initial policy solicitation and application. (The company's front
line of underwriting)
,Application
starting point and basic source of information used by the company in the risk selection process
Application Part 1- General Info
includes general questions about the applicant such as name, address, age, birth date, gender,
income, marital status, and occupation
- inquires about the existing policies and if the proposed insurance will replace them
Application Part 2- Medical Info
includes information on the prospective insureds medical background, present health, any medical
visits in recent years, medical status of living relatives and causes of death of deceased relatives
Non-Medical Appplication
if the amount of insurance is relatively small, the agent and the proposed insured will complete all of
the medical information
Agents Report
provides the agents personal observations concerning the proposed insured.
Required Signatures
Both the agent and the proposed insured (usually the applicant) must sign the application.
Consequences of Incomplete Applications
If the insurer receives an incomplete application, the insurer must return it to the applicant for
complete
Consequences of Incomplete Applications
If a policy is issued with questions left unanswered, the contract will be interpreted as if the insurer
waived its rights to have an answer to the question
Consequences of Incomplete Applications
the insurer will not have the right to deny coverage based on any information that the unanswered
question might have contained
Premiums with the application
Agents attempt to collect the initial premium and submit to insurer. Collecting initial premium at the
time of the application increases the chance that the applicant will accept the policy once issued.
Premium Receipt
Receipt given to the applicant by the producer or insurer, as proof of a premium payment.
Conditional Receipt
used only when the applicant submits a prepaid application
Warranty
, An absolutely true statement upon which the validity of the insurance policy depends.
Representations
statements believed to be true to the best of one's knowledge, but they are not guaranteed to be true
Misrepresentations
Untrue statements on the application
Material Misrepresentation
A statement that, if discovered, would alter the underwriting decision of the insurance company.
Underwriting
The risk selection process
Insurable Interest
To purchase insurance, the policy owner must face the possibility of losing money or something of
value in the event of loss.
Valid Insurance Interest
1)Policy owner's own Life
2)the life of a family member
3) the life of a business partner, key employee, or someone who has a financial obligation to the
policy owner
Inevestigative Consumer Report
general reports of the applicants finances, character, work, hobbies and habits
Medical Examination Reasoning
1) the insurer may only request a paramedical report which is completed by a paramedic or registered
nurse
2) the underwriter may require an Attending Physicians Statement from a medical practitioner who
treated the applicant for a prior medical problem
Medical Information Bureau
a nonprofit trade organization which receives adverse medical information from insurance companies
and maintains confidential medical impairment information on individuals
Health Insurance Portability and Accountability Act (HIPAA)
A federal Law that protects health information
Privacy Rule
patients have the right to view their own medical records, as well as the right to know who has
accessed those records over the previous 6 years
Disclosure Authorization Notice
latest update
Adverse Selection
insuring of risks that are more prone to losses than the average risk
lapse
policy termination due to nonpayment of premium
Insurance
transfers risk of loss from an individual or business entity to an insurance company which in turn
spreads the costs of unexpected losses to many individuals
Life Insurance
protects against loss associated with an insured's death, and pays a death benefit to beneficiaries
upon death of the insured
solicitation of Insurance
an attempt to persuade a person to buy an insurance policy
Buyers Guide
provides basic, generic information about life insurance policies that contains language approved by
the Department of Insurance
- Explains how a buyer should go about choosing the amount and type of insurance to buy
- Explains how a buyer can save money comparing the costs of familiar policies
Policy Summary
a written statement describing the features and elements of the policy being issued
Must provide:
- name and address of agent
- full name and home office or administrative office of the insurer
- generic name of the basic policy
- each rider
Illustrations
a presentation or depiction that includes non guaranteed elements of a policy of individual or group
life insurance over a period of years
Life Insurance Illustration
Distinguish between guaranteed and projected amounts
- clearly state that an illustration is not a party of the contract
- identify those values that are not guaranteed as such
Field Underwriter
An insurance agent who conducts an initial policy solicitation and application. (The company's front
line of underwriting)
,Application
starting point and basic source of information used by the company in the risk selection process
Application Part 1- General Info
includes general questions about the applicant such as name, address, age, birth date, gender,
income, marital status, and occupation
- inquires about the existing policies and if the proposed insurance will replace them
Application Part 2- Medical Info
includes information on the prospective insureds medical background, present health, any medical
visits in recent years, medical status of living relatives and causes of death of deceased relatives
Non-Medical Appplication
if the amount of insurance is relatively small, the agent and the proposed insured will complete all of
the medical information
Agents Report
provides the agents personal observations concerning the proposed insured.
Required Signatures
Both the agent and the proposed insured (usually the applicant) must sign the application.
Consequences of Incomplete Applications
If the insurer receives an incomplete application, the insurer must return it to the applicant for
complete
Consequences of Incomplete Applications
If a policy is issued with questions left unanswered, the contract will be interpreted as if the insurer
waived its rights to have an answer to the question
Consequences of Incomplete Applications
the insurer will not have the right to deny coverage based on any information that the unanswered
question might have contained
Premiums with the application
Agents attempt to collect the initial premium and submit to insurer. Collecting initial premium at the
time of the application increases the chance that the applicant will accept the policy once issued.
Premium Receipt
Receipt given to the applicant by the producer or insurer, as proof of a premium payment.
Conditional Receipt
used only when the applicant submits a prepaid application
Warranty
, An absolutely true statement upon which the validity of the insurance policy depends.
Representations
statements believed to be true to the best of one's knowledge, but they are not guaranteed to be true
Misrepresentations
Untrue statements on the application
Material Misrepresentation
A statement that, if discovered, would alter the underwriting decision of the insurance company.
Underwriting
The risk selection process
Insurable Interest
To purchase insurance, the policy owner must face the possibility of losing money or something of
value in the event of loss.
Valid Insurance Interest
1)Policy owner's own Life
2)the life of a family member
3) the life of a business partner, key employee, or someone who has a financial obligation to the
policy owner
Inevestigative Consumer Report
general reports of the applicants finances, character, work, hobbies and habits
Medical Examination Reasoning
1) the insurer may only request a paramedical report which is completed by a paramedic or registered
nurse
2) the underwriter may require an Attending Physicians Statement from a medical practitioner who
treated the applicant for a prior medical problem
Medical Information Bureau
a nonprofit trade organization which receives adverse medical information from insurance companies
and maintains confidential medical impairment information on individuals
Health Insurance Portability and Accountability Act (HIPAA)
A federal Law that protects health information
Privacy Rule
patients have the right to view their own medical records, as well as the right to know who has
accessed those records over the previous 6 years
Disclosure Authorization Notice
