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2-14 lesson 9 life policy underwriting, pricing & claims
Terms in this set (27)
NAIC Life Insurance Solicitation Model Regulation
most states have adopted its methods over the years as it has expanded to include more accurate comparisons, as well as more detailed disclosures to consumers. Such disclosures include requiring a prospective buyer to be provided with a general 'buyer's guide' and a 'policy summary' specific to the product being marketed
generic document that explains the basic terms and definitions related to life insurance, as well as the type of whole life insurance being marketed.
reviews the specific product being purchased in detail, including identifying the agent and insurer from which the policy is being marketed, the policy's premium rate, policy exclusions, dividends, policy riders, cash values and benefit amounts.
traditional cost comparison method
accounts for the various cost factors of a whole life policy except for the interest earned over the life of the policy, making the comparison less accurate since it does not account for the 'time value of money.'
time value of money
earn interest and increase in value over time
interest-Adjusted Cost Comparison Method
takes into account and calculates the amount of interest a whole life policy will earn to more accurately compare it with other whole life policies. This method more accurately compares the true cost of similar whole life policies based on the insurer's projected rate of return in interest.
takes into account the various cost factors of a whole life policy and computes an 'index number' to more easily compare it similar whole life policies.
surrender cost index
based on the assumption that a policyowner will surrender a whole life policy in the future and is calculated using the interest-adjusted cost comparison method
net payment cost index
used to compare similar policies based on the death benefit provided to the beneficiary. This index is calculated using the traditional cost comparison method.
presentation or depiction that includes non-guaranteed elements of a life insurance policy over a period of years.
include premiums, benefits, value, credits or charges under a life insurance policy that are not guaranteed or determined at policy issue
include premiums, benefits, values, credits or charges under a life insurance policy that are guaranteed and determined at policy issue.
defined as a ledger or proposal used in the sale of a life insurance policy that shows both guaranteed and non-guaranteed elements.
defined as an illustration furnished in addition to a basic illustration that may be presented in a format differing from the basic illustration, but may only depict a scale of non-guaranteed elements that is permitted in a basic illustration.
in force illustration
defined as an illustration furnished at any time after the policy that it depicts has been in force for one year or more.
NAIC Life Insurance Solicitation Model Regulation
developed rules for insurers and agents to follow when presenting consumers with life insurance policy illustrations to both protect consumers from misrepresentation and misinformation, and to promote a more educational process for consumers when purchasing life insurance.
This regulation applies to all group and individual life insurance policies and certificates except:
Variable life insurance;
Individual and group annuity contracts;
Credit life insurance; or
Life insurance policies with no illustrated death benefits on any individual exceeding $10,000
life insurance illustration includes:
Name of insurer
Name and business address of producer or insurer's authorized representative, if any
Name, age and sex of proposed insured, except where a composite illustration is permitted under this chapter
Underwriting or rating classification upon which the illustration is based
Generic name of the policy, the company product name, if different, and form number
Initial death benefit
Dividend option election or application of non-guaranteed elements, if applicable
proof that an application has been received by the insurer and in return, a policy has been delivered to the applicant for inspection purposes only
the applicant is covered against loss, should it occur, before the policy becomes effective, on the 'condition' that the applicant is found to be insurable as applied for by the insurer's underwriting department upon completion of its underwriting process
guarantees temporary coverage at the time of application for a specified benefit amount regardless of whether the insurer later approves or declines the applicant
Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism' Act
now known as USA PATRIOT ACT.
requires financial institutions, including life insurance companies, to establish anti-money laundering and suspicious activity reporting programs in an attempt to prevent criminal money laundering.
defined as benefit limits, exclusions of certain risk or additional premium that the insurer adds to a policy for any applicant underwritten as substandard risk.
the date that the application is submitted along with the initial premium and a conditional receipt is given to the applicant
meaning that it is replaced with another policy by the same insurer
meaning that it is replaced with another policy by a different insurer
defined as maintaining an insured's current life policy as the policy matures over time.
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