The provision that allows changing a term policy to a permanent policy without additional medical requirements is a:
term conversion
A policy rider allowing defined increments of additional insurance to be purchased at set future intervals without underwriting evidence is:
guaranteed insurability
Post-issue policy changes that typically require underwriting review include:
requests for rating reductions
Factors when considering reinstatement (8)
- Whether or not the policy was facultatively reinsured
- Policy face amount
- current policy values
- age of the proposed insured
- duration policy has been in force
- duration it has been lapsed
- whether or not there have been prior lapses and reinstatements of this same policy
- disclosed health history on the reinstatement application
How underwriters add value to the policy change process:
- Underwriter impacts the bottom-line performance of the company by placing business on the books from which the company will derive a profit or loss (evaluating mortality risk)
- How underwriters handle a policy can affect how policyholders and producers view the company. (customers service)
Contestability peroid
Usually 2 years, during which the validity of the policy contract can be contested by the insurer for material misrepresentations.
Material Misrepresentations
Statements made that are false which, had the truth been disclosed, would have resulted in a less favorable risk class than was issued.
1035 Internal Exchanges
In the United States, The IRS allows you to exchange an insurance policy that you own for a new life insurance policy insuring the same person without paying tax on the investment gains earned on the original contract.
Re-entries
term insurance policies that have reached the end of their period of specified coverage and are being considered for renewal.
Conversions
A provision which allows the conversion of a term policy to a permanent product without evidence of insurability if requested within a set time frame.
Reinstatement
the process by which a life insurance company puts back in force a life insurance policy that has either been terminated because of nonpayment or been continued under the extended term or reduced paid up insurance non forfeiture option
Tools used by the underwriter in determining insurability when considering a policy change (7)
- MIB
- non medical health questionnaire
- Paramed exam
- blood profile
- urine specimen
- Rx search history
- Medical records
The adverse impact upon insurers that occurs when insureds select insurance coverage for only those risks that are likely to generate losses.
Anti-selection
When underwriting a rate reduction the economic incentive is to:
A: Keep requirements to a minimum
B: Order more requirements
A: Keep requirements to a minimum
remember in the case of a rate reduction this will not be “new premium added to the books”
