Completing the Application Flashcards
Required Signatures
Both the producer and the applicant/insured must sign the application. The applicant is representing that statements on the application are true. If the applicant is a minor, a guardian must sign the application.
Changes in the Application
Whenever an answer to a question needs to be corrected, the applicant or producer makes the correction and the applicant initials the change, or the producer can complete a new application.
Consequences of incomplete Applications -
The underwriter will return an incomplete application to the producer for completion by the applicant. If a policy is issued with questions unanswered, it is assumed the information is not material to the issuance and the insurer waives the right to challenge a claim based on the incomplete application.
Collecting the Initial Premium and Issuing the Receipt
a producer should attempt to collect the initial premium and submit it, along with the application, to the insurer because the policy will not go into effect until the first premium has been paid.
Conditional Receipt
If the premium is paid, coverage will be in effect on the date of application or completion of the medical exam, whichever is later, as long as the policy would have been issued as applied for.
Binding (Unconditional) Receipt
If the premium is paid, coverage will begin immediately, for a specific length of time, regardless of whether the applicant is ultimately approved by the insurer. This may also be referred to as a temporary insurance agreement.
Acceptance (Approval) Conditional Receipt
The coverage becomes effective once the application is approved. If the company doesn’t approve the application, coverage never goes into effect.
Trial Application
A trial application is one submitted without a premium. The policy does not take effect until the policy is issued by the insurer, delivered by the agent, and the premium is paid.
post application consumer review.
The applicant must be notified and give consent for information to be received by a third party. This information is disclosed as part of the application. The applicant’s signature on the application serves as the notice of information practices. This gives the insurance company the right to obtain the various investigative, medical, and financial reports needed to compete the underwriting process. If the insurer declines coverage, the applicant will have the right to obtain a copy of all reports from the reporting agency.
Disclosure at Point of Sale – Issues Relating to AIDS
Insurance companies may refuse to issue a policy to individuals based on positive HIV test results. However, applicants must consent to be tested for HIV and be informed that testing for HIV may determine insurability.
Negligence
Quoting inflated information, misrepresenting a plan of coverage, or neglecting to reveal the effect information might have on the client at a later date. The producer may be guilty of negligence whether the mistakes are intentional or unintentional.
Inadequacy
Failing to obtain proper type or amount of coverage for a client.
