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Difficulty: MediumSources of Underwriting Information

A producer is collecting underwriting information for a life insurance applicant. During the process, the producer notices an incomplete answer regarding the applicant's hazardous hobbies, while the insurer indicates that an Attending Physician's Statement (APS) and an Investigative Consumer Report will be required. Based on the regulations governing sources of underwriting information, which of the following statements are correct? (Select all that apply)

  1. The insurer must provide the applicant with a written disclosure stating that an Investigative Consumer Report may be ordered.Answer
  2. The insurer must obtain a specific, signed authorization from the applicant prior to requesting the Attending Physician's Statement.Answer
  3. C
    The producer is authorized to independently fill in the missing information regarding the hazardous hobby to prevent underwriting delays.
  4. D
    The applicant's medical history statements provided on the application are considered absolute warranties that cannot be contested.

Answer

The correct statements are that the insurer must provide a written disclosure for the Investigative Consumer Report and must obtain a signed authorization for the Attending Physician's Statement.
The correct statements accurately reflect federal compliance rules: the FCRA requires insurers to notify applicants when an investigative consumer report is ordered, and medical privacy laws (like HIPAA) mandate signed authorization before an insurer can request an Attending Physician's Statement.

Step-by-Step Solution

1
Analyze the requirement for the Investigative Consumer Report.
The FCRA mandates that consumers receive a written disclosure when an investigative report is requested.
This ensures compliance with federal consumer privacy and reporting laws.
2
Analyze the requirement for the Attending Physician's Statement (APS).
Obtaining medical information directly from a physician requires the patient's explicit written consent.
This is a strict requirement under HIPAA and general medical privacy regulations.
3
Evaluate the producer's authority regarding incomplete applications.
Producers cannot make unauthorized changes; the applicant must provide and initial any missing information.
Unauthorized changes violate the legal integrity of the application as the applicant's offer.
4
Evaluate the legal nature of the applicant's statements.
Applicant statements are representations, not warranties.
Insurance law treats application responses as representations to protect applicants from unintentional minor inaccuracies voiding the contract.

Key Concept

Regulatory and legal requirements for gathering underwriting information, including FCRA disclosures, HIPAA authorizations, and the proper handling of application data.
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Sources of Underwriting Information

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