NJ Life Insurance Exam |205
Questions with Detailed Answers
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
Questions with Detailed Answers
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
