Which factor must be explained to an applicant upon policy delivery?

Study for the AD Banker Life Insurance Exam. Test your knowledge with flashcards and multiple choice questions, each equipped with hints and explanations. Ensure you're prepared for the exam!

Upon policy delivery, it is essential to explain substandard ratings and any changes in premium to the applicant. This is crucial because if a policyholder receives a substandard rating, it indicates that the insurance company has assessed the applicant to have a higher risk compared to the standard rates due to health or lifestyle factors. As a result, this can lead to higher premiums or specific exclusions in the policy.

Understanding substandard ratings allows the applicant to grasp how their individual circumstances may affect the cost of their insurance coverage. This ensures transparency and helps the applicant make informed decisions about their policy. Additionally, being clear about potential changes in premiums ensures that the policyholder is prepared for any future fluctuations in their financial obligations related to the policy.

Providing this information establishes trust and helps avoid any misunderstandings that could arise later regarding pricing and coverage terms.

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