NJ Life Insurance Exam Correct answers latest update

NJ Life Insurance Exam Correct answers latest update Insurance is the ____ of risk transfer disclosure statements must be given to the applicant no later than the time the application is signed buyer's guide provides general information about the types of life insurance policies available, in language that can be understood by the average person. buyers guide must be delivered by before collecting premium or be delivered with the policy if given at least 10 days free look period policy summary a written statement describing the features and elements of the policy being issued part 1 of the appplication general information about the applicant such as name, age, address, occupation field underwriter The technical name given to the insurance producer of an insurer who does not have binding authority to grant coverage. part 2 of the application medical information and family healthy history is the agent's report part of the entire contract no but it is a part of the application process agent's report A written report from the agent submitted to the insurer along with the application disclosing what the agent knows, observed, or learned about the proposed insured's risks. what signatures are required on the application -agents -insured -policyowner (if different than insured) policy coverage begins on the later of the date of application (if prepaid policy) or the date of the medical exam conditional receipt The producer issues a conditional receipt to the applicant when the application and premium are collected. applicant may be covered as early as the date of the application warranty An absolutely true statement upon which the validity of the insurance policy depends. representations are statements believed to be true to the best of one's knowledge but are not guaranteed to be true material misreprestentation a statement that, if discovered, would alter the underwriting decision material misrepresentations are considered fraud when they are ___ intentional underwriting risk selection and classification process insurable interest An interest in the subject of an insurance policy that is not unduly remote and that would cause the interested party to suffer financial loss if an insured event occurred. insurable interest must exist at the time of the application adverse selection A high-risk person benefits more from insurance, so is more likely to purchase it. what is the key source of information underwriters use for information about the applicant insurance application Investigative consumer report An extensive report that includes information on an individual's character, general reputation, personal characteristics, and mode of living. information is obtained through an investigation and interviews with friends and neighbors can insurers refuse coverage solely on the basis of adverse information on an MIB report no Medical information bureau (MIB) nonprofit trade organization which receives adverse medical information from insurance companies and maintains confidential medical impairment information on individuals MIB protects insurers HIPPA 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 Consumer reports cannot contain certain types of information if the report is requested in connection with a life insurance policy of less than 150,000 prohibited information of consumer reports less than 150,00 bankruptcies more than 10 years old, civil suits, records of arrest, conviction, or other negative info that is more than 7 years old preferred risks applicants with superior physical condition lower premium substandard risk applicant is in poor risk premium rated up=higher premium declined risks risks that are not insured by underwriters due to lack of insurable interest or poor health Fair Credit Reporting Act protects consumers against circulation of inaccurate or obsolete information Three primary factors of premium determination 1) risk 2) interest 3) expense if the initial premium is not paid with the application, the effective date is when premium is collected more frequent premium is paid higher it is (more transaction costs) replacement a practice of terminating an existing policy or letting it lapse, and obtaining a new one. Insurance producers must take special underwriting decisions to help policyowners to make informed decisions Federal Trade Commission National Do Not Call REgistry telemarketers cannot call people before 8am or after 9pm or give threatening or misleading information companies must consult the DNC registry every 31 days elements of a legal contract Agreement Consideration Competent parties Legal purpose consideration premiums and representations on the part of the insured and payment of claims on the part of the insurer aleatory exchange of unequal amounts ahesions one party prepares the contract; other party must accept as is unilateral only one of the parties to the contract is legally bound to do anything pure death protection term life term life provides coverage for a specific period of time, no living benefits, provides greatest amount of coverage for the lowest amount of premium. Three types of term policies level, increasing and decreasding level term insurance most common type of term insurance level premium and death benefit annually renewable term benefit remains level each year, guaranteed renewable each year without proof of insurance, but premium increases each year according to attained age decreasing term level premium death benefit decreases each year commonly used to insure payment of mortgage or other debts increasing term level premiums and increasing death b renewable provision allows the policyowner the right to renew coverage without evidence of insurability. premium is based on current age convertible provision provides the policy owner with the right to convert the policy to a permanent policy without evidence of insurability key characteristics of whole life insurance -level premium -level and guaranteed death benefit -cash value -can loan against cash value cash value accumulates at the end of the third polocy year and grows tax deferred also called nonforfeiture value three basic forms of whole life insurance 1) single premium 2) straight life 3) limited pay whole life straight (ordinary) life level premium for life and level death benefit, cash value increases with time lowest annual premium of whole life policies limited pay life level premium for fixed period (say up to age 65), cash value builds up faster due to premiums being paid sooenr single premium whole life provide a level death benefit to the insured's age 100 for a one-time, lump sum payment. Completely paid up after one premium and generates immediate cash