Evelyn applies for a $500,000 term life insurance policy. During the evaluation process, the home office underwriter requests a Medical Information Bureau (MIB) report. The MIB report returns a code indicating a significant cardiovascular issue that was completely omitted from Part II of Evelyn's application. According to industry regulations and underwriting guidelines, which of the following actions must the underwriter take next?
- Use the MIB code as an alert to request additional medical records, such as an Attending Physician's Statement (APS), to verify the condition before making an adverse decision.Answer
- BImmediately decline the application without further investigation, because statements made on the application are considered warranties and any omission automatically voids coverage.
- CUnilaterally correct Part II of the application to include the cardiovascular issue and proceed with issuing the policy at a substandard premium rate.
- DClassify the MIB report discrepancy as a documented physical hazard and immediately terminate the underwriting process based solely on the MIB findings.
Answer
Use the MIB code as an alert to request additional medical records, such as an Attending Physician's Statement (APS), to verify the condition before making an adverse decision.
The correct answer accurately reflects the fundamental rule governing the Medical Information Bureau (MIB): an insurer is strictly prohibited from making an adverse underwriting decision (such as declining coverage or increasing premiums) based solely on information obtained from the MIB. Instead, MIB codes serve as an alert system, prompting the underwriter to conduct further investigation, typically by requesting an Attending Physician's Statement (APS) to independently verify the applicant's medical history.
Step-by-Step Solution
Key Concept
Regulatory Constraints on MIB Reports