Application mechanics: signatures, changes, and incomplete applications

Correct answer: The producer's report, also called the agent's statement.

The producer's report records the producer's own observations -- how long the producer has known the applicant, whether the coverage is a replacement, anything bearing on the risk. It is signed by the producer only and is not shown to the applicant.

Correct answer: As representations -- statements believed true to the best of the applicant's knowledge.

Application answers are representations: statements the applicant believes to be true to the best of his or her knowledge. They are not warranties, which would have to be literally true, and they are not mere opinions -- the applicant is accountable for answering truthfully and completely.

Correct answer: Refuse; the producer may never sign the applicant's name, even with permission.

A producer may never sign the applicant's name, even with the applicant's permission over the phone. Signing for a client is forgery, and the resulting policy rests on a document the insured never actually executed.

Correct answer: The husband's as owner, the wife's as proposed insured, and the producer's as witness.

When the owner is someone other than the insured, both sign: the owner as the party to the contract and the insured as consent to being insured and to the investigation of his or her health. The producer signs as witness to those signatures and to the producer's report.

Correct answer: A parent or guardian signs on the child's behalf.

A minor lacks legal capacity to execute the application, so a parent or guardian signs on the child's behalf. The producer never signs for an applicant or insured.

Correct answer: The date is corrected and the applicant initials the change.

Any change to an answer on the application must be initialed by the applicant. The producer may not white out, cross through, or rewrite an answer alone, and an error is never left for the underwriter to guess at.

Correct answer: The insurer is treated as having waived the question and cannot deny the claim on that basis.

If the insurer issues a policy on an application containing an unanswered question, it is generally held to have waived that question. It had the chance to ask again and chose to issue, so it cannot later rescind or deny a claim on the ground that the blank would have revealed something material.

Correct answer: Only when the agent has an insurable interest in the insured's life.

A life agent may not place or modify life coverage on the life of a non-family member when the agent or a family member of the agent is the named beneficiary, unless the agent or family member has an insurable interest in that person's life (Fla. Stat. s. 626.798(1)).

Correct answer: Return it to the producer to be completed before underwriting begins.

An incomplete application is normally returned to the producer to be completed before underwriting begins. That delays coverage, which is why the producer reviews every page before the applicant signs.

Correct answer: To witness the applicant's signature and attest to the producer's report.

The producer signs as the witness to the applicant's signature and to the producer's report. The signature attests that the producer saw the application completed and signed; it does not make the producer a party to the contract or a guarantor of the answers.

Correct answer: The applicant signs an amendment or endorsement at delivery accepting the new terms.

A change made by the insurer at issue -- a rated policy or a lower face amount than requested -- is handled by an amendment or endorsement that the applicant signs at delivery. Coverage on the changed terms does not begin until that signed amendment is accepted.

Correct answer: The agent's first cousin.

The statute lists the relatives who count as family members, and first cousin is on the list; second cousins, business partners and clients are not (Fla. Stat. s. 626.798(3)(a)).

Correct answer: The beneficiary designation.

Part 1 collects identifying information, the plan and face amount, the beneficiary designation, other insurance, and replacement questions. Medications and exam findings belong to Part 2, and the producer's acquaintance with the applicant belongs to the producer's report.

Correct answer: It is prohibited; the applicant must sign a completed application whose answers are recorded as given.

A producer may never take a signature on a blank form to be filled in later. The applicant's signature attests to the answers on the form, so the answers must be there, recorded as the applicant gave them, before the applicant signs.

Correct answer: It is attached to the policy and becomes part of the contract.

The application is usually attached to and made part of the issued policy. Years later it is the document a claims examiner reads when deciding whether a death benefit is payable, which is why its mechanics matter.

Correct answer: Record the answer exactly as the applicant gave it and note any concern in the producer's report.

The applicant is accountable for answering truthfully; the producer is accountable for recording the answers exactly as given. The producer's report is where the producer's own observations about the risk belong.

Correct answer: Complete a new application, since the change is substantial.

A change to the plan and face amount after signing is substantial, and many insurers will not allow those fields to be altered at all once the application is signed. The safest course is a fresh application.

Correct answer: Obtain the proposed insured's medical records and consumer reports.

The authorization is the proposed insured's signed consent for the insurer to obtain medical records and consumer reports for underwriting. It is accompanied by the required notices about the insurer's information practices.

Correct answer: Payment of the premium and a signed statement of good health.

When the application is submitted without premium, coverage does not begin until the policy is delivered, the premium is paid, and the applicant signs a statement that his or her health has not changed since the application. A conditional receipt is given only when premium is collected with the application.

Correct answer: It records the producer's observations about the risk and is signed by the producer only.

The producer's report contains the producer's own observations -- acquaintance with the applicant, replacement, anything bearing on the risk -- and is signed by the producer alone. It is a required part of the application and is not shown to the applicant.

Correct answer: No; the prohibition applies only when the insured is not a family member of the agent, and a brother is a family member.

The prohibition applies to coverage on the life of a person who is not a family member of the agent. Brother is on the statutory list of family members, so the agent may be beneficiary of a policy on the brother's life (Fla. Stat. s. 626.798(1), (3)(a)).

Correct answer: The insurer returns the application unprocessed, so underwriting -- and the coverage the receipt is conditioned on -- does not begin.

An incomplete application is returned to the producer before underwriting begins. Because a conditional receipt's coverage depends on the insurer determining that the applicant is insurable as applied for, a file that cannot be underwritten leaves the receipt's condition unmet and the applicant exposed.

Correct answer: Every change to an answer has been initialed by the applicant or a new application taken.

The producer's pre-submission checklist includes confirming that every change has been initialed by the applicant or that a fresh application was taken. The applicant does not see the producer's report, and the beneficiary does not sign the application.

Correct answer: An actual, lawful, and substantial economic interest in the insured's continued life, or a reasonable expectation of benefit from it.

The statute defines insurable interest as the agent or family member having an actual, lawful, and substantial economic interest in the safety and preservation of the insured's life, or a reasonable expectation of benefit or advantage from the insured's continued life (Fla. Stat. s. 626.798(3)(b)).

Correct answer: An officer of the business as owner and the employee as proposed insured, with the producer as witness.

When the owner is someone other than the insured, both sign: the owner (here an authorized officer of the business) as the party to the contract and the insured as consent to being insured. The producer signs as witness.

Correct answer: The producer must record the answers exactly as the applicant gave them.

The applicant is accountable for answering truthfully and completely; the producer is accountable for recording those answers exactly as given. The producer neither guarantees nor independently verifies them.

Correct answer: Incomplete; the insurer will return it for the missing signature before underwriting.

A missing required signature makes the application incomplete, and the insurer's normal response is to return it to the producer to be completed before underwriting begins. The insurer cannot obtain records without the insured's signed authorization.

Correct answer: Coverage on the changed terms does not begin until the applicant signs and the insurer accepts the amendment.

Because the insurer has offered different terms from those applied for, the contract is not complete until the applicant accepts them by signing the amendment. Coverage on the changed terms begins only when that signed amendment is accepted.

Correct answer: Changing the plan of insurance from term to universal life.

Minor corrections to contact details or spelling are initialed by the applicant. A change to the plan of insurance is substantial -- and many insurers will not allow the plan, face amount, or premium mode to be altered once signed -- so a fresh application is the safer course.

Correct answer: Errors in signatures, changes, or blanks can jeopardize coverage for a client who did nothing wrong.

The application drives underwriting, becomes part of the policy, and is read at claim time. A producer who handles it carelessly -- a forged signature, an uninitialed change, an unanswered question -- can void or delay coverage for a client who answered honestly.

Correct answer: The initial premium.

A conditional receipt is given when the initial premium is collected with the application. If no premium is collected, the application is marked as submitted without premium and a statement of good health will be required at delivery instead.

Correct answer: Contact the applicant to complete and initial the answer before submitting.

Only the applicant may supply and initial an answer. The producer may not fill it in, even when confident of the answer, and deliberately submitting a blank in the hope the insurer waives it is not an acceptable practice -- the normal result is a returned file and a delayed policy.

Correct answer: Part 2, the medical section.

Part 2 is the medical section: health history, medications, tobacco use, and the questions a paramedical examiner or physician completes when an exam is required.

Correct answer: No; the prohibition covers a family member of the agent as beneficiary, and there is no insurable interest.

The statute bars placing coverage on a non-family member when the agent or a family member of the agent is the named beneficiary, unless the agent or family member has an insurable interest in that life. The wife is a family member of the agent, the client is not, and no insurable interest exists (Fla. Stat. s. 626.798(1)).

Correct answer: The health statements and the authorization to investigate them.

The proposed insured must sign because the application contains that person's health statements and the authorization for the insurer to obtain records about them. The producer's report, the underwriting class, and the premium are not the insured's statements.

Correct answer: The producer has altered the applicant's representations without authority, and the applicant never attested to the changed answer.

Every change must be initialed by the applicant because the answers are the applicant's representations. A producer who rewrites an answer alone has substituted his or her own statement for the applicant's, and the applicant's signature no longer covers what is on the form.

Correct answer: They include the signed authorization to obtain medical records and consumer reports plus notices about the insurer's information practices.

The authorizations and disclosures part of the application consists of the applicant's signed authorization for the insurer to obtain medical records and consumer reports, together with the required notices about the insurer's information practices.

Correct answer: The insurer must have issued the policy with the question still unanswered.

The waiver arises from the insurer's own conduct: it issued the policy on an application containing an unanswered question when it could have asked again. The producer's initials, premium timing, and the subject of the question are irrelevant to the rule.

Correct answer: Not deliver the policy; the applicant cannot sign a statement of good health, so the insurer must be informed before coverage begins.

When the premium was not collected with the application, delivery requires payment and a signed statement that the applicant's health has not changed. An applicant who was just hospitalized cannot truthfully sign it, so the producer withholds delivery and reports the change to the insurer.

Correct answer: That the producer's report is complete and signed by the producer.

The producer's checklist includes answers, signatures, initialed changes, premium handling, and the producer's report completed and signed by the producer. The beneficiary does not consent, the underwriter does not pre-approve, and the applicant does not see the producer's report.