ALU 202 QUESTIONS AND ANSWERS SET A+
✔✔Most jurisdictions require an insurer prove that the misrepresentation contains all of
the following: - ✔✔-The applicant or insured failed to disclose or misrepresent a fact.
-The fact was within the person's knowledge at the time the misrepresentation was
made.
-The fact was material, or relevant, to the insurer's acceptance of the risk.
✔✔Rescission - ✔✔is a remedy provided by law to an insurer that discovers that it has
issued a policy based on material misrepresentation.
✔✔Fraudulent Misrepresentation - ✔✔-is a misrepresentation that was made with the
intent and result of inducing the other party to enter into a contract.
-This requires a much higher level of proof on the part of the insurer.
✔✔Red Flags for suspecting fraud and/or material misrepresentation include: - ✔✔-
Requesting an amount of coverage slightly less than the amount of coverage that would
require the insured to undergo a physical exam or other specific requirements.
-Discrepancies between the applicant's signature on the application and other
documents such as the exam form.
Answers to questions on the application appear to have been altered.
-Signs of speculation, such as an insured requesting an unusually large amount of
coverage based on their income or amount that is inconsistent with the potential
financial loss.
✔✔International Claims involve insureds who either are traveling in a foreign country or
are a resident there at time of death. - ✔✔-Deaths of US or Canada citizens outside of
their country pose a challenge to process and investigate.
-The procedure for registration of death in other countries are often not as stringent as
in the US and Canada.
-The possibility of fraud may be greater.
-Death certificates and forms are in that other country's language.
✔✔Policy proceeds include - ✔✔The basic death benefit
, Any additions to the basic death benefit
Any deductions to the basic death benefit
✔✔Additions to the basic death benefit include: - ✔✔Paid-up additional insurance
Accidental death benefits
Excess premium paid in advance
Policy dividends declared but not yet paid
Interest on delayed claims payment
Loan interest paid in advance
✔✔Deductions from the basic death benefit could include - ✔✔Premiums due but
unpaid during the grace period
Policy loans
Interest on any policy loans
Accelerated death benefits that have been paid
✔✔Settlement Options - ✔✔Interest option
Fixed-period option
Fixed-amount option
Life income option
✔✔Interest option - ✔✔the insurer invests the proceeds and periodically pays interest
on the proceeds.
✔✔Fixed-period option - ✔✔proceeds are paid by the insurer in equal installments for a
specified period of time.
✔✔Fixed-amount option - ✔✔proceeds are paid in equal installments at a stated
amount until the proceeds, including any accrued interest, are exhausted.
✔✔Life income option - ✔✔proceeds are paid over the payee's lifetime in periodic
installments.
✔✔Escheat - ✔✔-is a common law doctrine by which the property of a person who dies
without heirs is transferred to the crown or state.
-It serves to ensure the property is not left in limbo without recognized ownership.
✔✔Good underwriting managers are proficient in five classical managerial functions of -
✔✔planning, organizing, staffing, directing and controlling.
✔✔Protective Value Analysis - ✔✔is the means by which the value of an age-and-
amount underwriting requirement to the company is determined.
✔✔Most jurisdictions require an insurer prove that the misrepresentation contains all of
the following: - ✔✔-The applicant or insured failed to disclose or misrepresent a fact.
-The fact was within the person's knowledge at the time the misrepresentation was
made.
-The fact was material, or relevant, to the insurer's acceptance of the risk.
✔✔Rescission - ✔✔is a remedy provided by law to an insurer that discovers that it has
issued a policy based on material misrepresentation.
✔✔Fraudulent Misrepresentation - ✔✔-is a misrepresentation that was made with the
intent and result of inducing the other party to enter into a contract.
-This requires a much higher level of proof on the part of the insurer.
✔✔Red Flags for suspecting fraud and/or material misrepresentation include: - ✔✔-
Requesting an amount of coverage slightly less than the amount of coverage that would
require the insured to undergo a physical exam or other specific requirements.
-Discrepancies between the applicant's signature on the application and other
documents such as the exam form.
Answers to questions on the application appear to have been altered.
-Signs of speculation, such as an insured requesting an unusually large amount of
coverage based on their income or amount that is inconsistent with the potential
financial loss.
✔✔International Claims involve insureds who either are traveling in a foreign country or
are a resident there at time of death. - ✔✔-Deaths of US or Canada citizens outside of
their country pose a challenge to process and investigate.
-The procedure for registration of death in other countries are often not as stringent as
in the US and Canada.
-The possibility of fraud may be greater.
-Death certificates and forms are in that other country's language.
✔✔Policy proceeds include - ✔✔The basic death benefit
, Any additions to the basic death benefit
Any deductions to the basic death benefit
✔✔Additions to the basic death benefit include: - ✔✔Paid-up additional insurance
Accidental death benefits
Excess premium paid in advance
Policy dividends declared but not yet paid
Interest on delayed claims payment
Loan interest paid in advance
✔✔Deductions from the basic death benefit could include - ✔✔Premiums due but
unpaid during the grace period
Policy loans
Interest on any policy loans
Accelerated death benefits that have been paid
✔✔Settlement Options - ✔✔Interest option
Fixed-period option
Fixed-amount option
Life income option
✔✔Interest option - ✔✔the insurer invests the proceeds and periodically pays interest
on the proceeds.
✔✔Fixed-period option - ✔✔proceeds are paid by the insurer in equal installments for a
specified period of time.
✔✔Fixed-amount option - ✔✔proceeds are paid in equal installments at a stated
amount until the proceeds, including any accrued interest, are exhausted.
✔✔Life income option - ✔✔proceeds are paid over the payee's lifetime in periodic
installments.
✔✔Escheat - ✔✔-is a common law doctrine by which the property of a person who dies
without heirs is transferred to the crown or state.
-It serves to ensure the property is not left in limbo without recognized ownership.
✔✔Good underwriting managers are proficient in five classical managerial functions of -
✔✔planning, organizing, staffing, directing and controlling.
✔✔Protective Value Analysis - ✔✔is the means by which the value of an age-and-
amount underwriting requirement to the company is determined.
