Completing the health insurance application

Correct answer: Field underwriter

The agent meets the applicant, asks the questions and records the answers before anyone at the home office sees the case, which makes the agent the insurer's field underwriter.

Correct answer: The applicant's name, date of birth, occupation and the coverage requested

Part I is the general-information section: identity, age, sex, occupation, the type and amount of coverage requested and any other coverage in force or being replaced.

Correct answer: The proposed insured's health history, current conditions, treatment and physicians

Part II is the medical-information section: health history, current conditions, medications, treatment and the names of physicians who have seen the proposed insured.

Correct answer: It goes to the underwriter and does not become part of the policy

The agent's report is the agent's own statement to the underwriter. It is used in underwriting but is not attached to the policy.

Correct answer: Whether the new policy will replace existing coverage

The agent's report covers the agent's relationship with the applicant, observations the questions did not capture, and whether the policy replaces existing coverage.

Correct answer: Ask each question and record the applicant's own answers exactly as given

The agent asks every question and records the applicant's answers exactly as given. The agent never supplies answers on the applicant's behalf, even when the applicant asks.

Correct answer: Waived its right to that information

By issuing a policy with an unanswered question, the insurer is generally treated as having waived that information. It cannot later deny coverage because of the missing answer.

Correct answer: Strike through the error, write the correct answer, and have the applicant initial the change

Errors are corrected by drawing a line through the mistake, writing the correct answer and having the applicant initial the change.

Correct answer: It conceals what was originally written, so the change cannot be verified as the applicant's

A strike-through with the applicant's initials shows exactly what was changed and that the applicant approved it. Correction fluid hides the original entry.

Correct answer: Contact the applicant so the applicant can make and initial the correction

An agent never changes an answer after the applicant has signed. Any correction must be made and initialed by the applicant.

Correct answer: Both the applicant and the adult son, with the agent signing as witness

The applicant signs, and if the proposed insured is a different adult, that person signs too. The agent signs as a witness to what was recorded.

Correct answer: A witness to the answers and signatures recorded

The agent signs as a witness to what was recorded. The truth of the answers remains the applicant's responsibility.

Correct answer: Answers must be recorded for every person to be covered

On family coverage, Part II must be answered for every person to be covered, not just the applicant.

Correct answer: Obtain records from doctors, hospitals and the Medical Information Bureau

The authorization lets the insurer obtain medical information from doctors, hospitals and the Medical Information Bureau to verify and supplement the application.

Correct answer: That a consumer report or investigative consumer report may be ordered

Under the Fair Credit Reporting Act, the applicant must be told when a consumer report or investigative consumer report may be ordered.

Correct answer: The required replacement disclosure

When existing coverage is being replaced, the required replacement disclosure is completed along with the application.

Correct answer: A conditional receipt

When the first premium comes with the application, the agent issues a conditional receipt.

Correct answer: The date of the application or of the medical exam, if the applicant is insurable as applied for

A conditional receipt can make coverage effective on the application or exam date, on the condition that the applicant is found insurable as applied for.

Correct answer: When the policy is delivered and the first premium is paid

If no premium comes with the application, coverage begins only when the policy is delivered and the premium is paid.

Correct answer: The insured's health has not changed since the application

A statement of good health, taken at delivery when premium was not paid with the application, confirms that nothing has changed in the insured's health since the application.

Correct answer: Becomes part of the entire contract

A copy of the application attached to the policy becomes part of the entire contract.

Correct answer: Representations, or statements believed to be true

Application answers are representations, statements the applicant believes to be true, rather than guarantees of absolute truth.

Correct answer: Would have changed the insurer's decision to issue the policy or its terms

A material misrepresentation is one that would have changed the insurer's decision. Only a material misrepresentation justifies denying a claim or rescinding coverage.

Correct answer: Must pay the claim, because the misstatement was not material

Because the insurer would have made the same decision, the misstatement was not material, and it cannot justify denying the claim or rescinding coverage.

Correct answer: The insurer can no longer contest the policy on that basis, because only fraudulent misstatements remain contestable

After the contestable period, the insurer's right to challenge the policy over application misstatements is limited to fraudulent misstatements.

Correct answer: The applicant's income

Part I collects income where disability income coverage is involved, because the benefit replaces earnings and the insurer needs to relate it to what the applicant actually earns.

Correct answer: In the agent's report

The agent's report is where the agent notes anything observed that the application questions did not capture.

Correct answer: Record the hospital stay as disclosed

The agent records every answer as given and never omits something the applicant said. Leaving it off could make the application materially misrepresent the applicant's health.

Correct answer: The names of physicians who have treated the proposed insured

Physicians' names belong in Part II, the medical section. Occupation, the coverage requested and other coverage are general information in Part I.

Correct answer: The insurer pays the claim, because the receipt's condition was met

With a conditional receipt, coverage can relate back to the application or exam date if the applicant is found insurable as applied for. Here that condition was met, so the claim is covered.

Correct answer: Hold the delivery and report the change to the insurer before putting coverage in force

When no premium was paid, coverage begins at delivery, and a statement of good health confirms nothing has changed. A change in health must be reported to the insurer before coverage is put in force.

Correct answer: The applicant is responsible for the truth of the answers; the agent is responsible for asking every question and recording the answers accurately

The answers are the applicant's representations. The agent, as field underwriter, asks every question and records the answers exactly as given.

Correct answer: A claim may be denied or the coverage rescinded

During the contestable period, a material misrepresentation, one that would have changed the insurer's decision, can justify denying a claim or rescinding coverage.

Correct answer: Part II, the medical section

Treating physicians are part of the medical information collected in Part II.

Correct answer: Errors can cause delays, wrong premiums, denied claims or later rescission

A careless application leads to delays, wrong premiums, denied claims or rescission. A careful one protects the applicant, the insurer and the agent.

Correct answer: Return the application or follow up to obtain the missing answer before issuing

Because issuing a policy with an unanswered question generally waives that information, the insurer should get the missing answer before issuing.

Correct answer: The policy is delivered and the first premium is collected at delivery

When no premium comes with the application, coverage begins at delivery, and the agent often obtains a statement of good health then.

Correct answer: An investigative consumer report

The Fair Credit Reporting Act requires that the applicant be told when a consumer report or investigative consumer report may be ordered.

Correct answer: The insurer needs to know whether the new policy will replace existing coverage

Part I asks about other health coverage in force or being replaced, because replacement must be identified and disclosed.

Correct answer: The insurer may still contest the policy, because the misstatement was fraudulent

After the contestable period, the insurer's right to challenge application misstatements is limited to fraudulent ones. A knowingly concealed serious condition is fraudulent, so it may still be contested.