Life and Health License Maine Solved 100% Correct!!

Life and Health License Maine Solved 100% Correct!! Lapse policy termination due to nonpayment of premium Premium amount paid to the insurance company for the insurance policy "Insurance Transaction" (by email or other means) Solicitation Negotiations Sale Advising an individual concerning coverage or claims Elements of legal contract to be legally binding (4 Essential elements) 1. Agreement 2. Consideration 3. Competent Parties 4. Legal Purpose Consideration (contract) Is something of value that each party gives to another. Insured = payment on premium Insurer = promise to pay in event of loss. Competent Parties Must be entering contract in eyes of the law. -Both parties must be legal age, mentally competent, not under influence of alcohol or drugs. Contract of Adhesion prepared by one party (insurer) and accepted or rejected by the other party. Aleatory Contract Means exchange of unequal amounts or values. Premium paid is small in relation to amount paid by insurer in event of loss. Unilateral Contract Only one parties to the contract is legally bound to do anything. (Insured = no legally binding promises, Insurer promises to pay losses covered by policy) Conditional Contract Certain conditions met by policy owner and company in order for the contract to be executed. (Proof of loss...) Warranty Absolutely true statement upon which the validity of insurance policy depends. Representations Statements believed to be true to best of one's knowledge. Misrepresentations & Material Misrepresentations can lead to..... FRAUD "Completing application" 2 basic Parts: Part 1: general information Part 2: Medical information Agent's Report Provides the agents personal observations concerning the proposed insured. Changes in Application Should have applicant initial the change or complete a new application. Consequences of Incomplete Application Incomplete then must return it to applicant. If a policy is issued with questions left, insurer waived it right to have an answer to the question. Collecting premium Whenever agent collects premium, must issue "premium receipt." "Conditional receipt" is used only when the applicant submits a prepaid application. Replacement Terminating policy or letting it lapse, and getting a new one. Underwriting Risk selection process. Underwriter responsible for selecting only those risks that are considered insurable and meet insurer's standards. Sources of underwriting information Application Agent's Report Investigative Consumer Report (Inspection) Underwriter can order inspection from investigation firm or credit agency. (subject to fair credit reporting act) Fair Credit Reporting Act est. procedures that consumer-reporting agencies must follow. Consumer Reports written / oral information regarding consumers credit, character, reputation, or habits. Investigative consumer reports Similar to Consumer report but use information from friends, neighbors and associates. Medical Information Bureau (MIB) (A nonprofit trade organization) Owned by member insurance companies, receives medical information from insurance companies and maintains confidential information. Medical Examinations Two kinds: 1. Paramedical report - completed by paramedic or registered nurse. 2. Attending Physician's Statement (APS) HIPAA (Health Insurance Portability and Accountability ACT) federal law that protects health information. Risk Classification If accepted: -Standard -Substandard (High Exposure) -Preferred Stranger Originated Life Insurance (STOLI)