NJ Life Insurance Exam Correct answers latest update

NJ Life Insurance Exam Correct answers 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 states the insurers practice regarding the collection of personal information Fair Credit Reporting Act established procedures that consumer-reporting agencies must follow in order to ensure that records are confidential, accurate, relevant, and properly used Consumer Reports Written and /or oral statements regarding a consumer's credit, character, reputation, or habits collected by a reporting agency from employment records, credit reports, and other public sources. Investigative Consumer Report Similar to consumer reports in that they also provide information on the consumer's character, reputation, and habits. Preferred Risk are those individuals who meet certain requirements and qualify for lower premiums than the standard risk standard risk An applicant or insured who is considered to have an average probability of a loss based on health, vocation and lifestyle. Substandard (High Exposure) Risk applicants are not acceptable at standard rates because of physical condition, personal or family history of disease, occupation, or dangerous habits. Declined Risks applicants who are rejected When coverage begins If the initial premium is not paid with application, the agent will be required to collect the premium at the time of the policy delivery. If the full premium was submitted with application and the policy was issued as requested, the policy coverage would generally coincide with the date of applciation Replacement A practice of terminating an existing policy or letting it lapse, and obtaining a new one. National Do Not Call Registry (2003) Established by the Federal Trade Commission to allow consumers to limit number of telemarketing calls they receive. - Organizations must consul the registry every 31 days Exceptions to the Do Not Call Registry