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Difficulty: MediumSources of Underwriting Information

An insurance producer is finalizing a life insurance application with a client. The producer notices that a specific medical history question in Part II of the application was accidentally left blank. Additionally, during the meeting, the producer observes that the client smells strongly of alcohol and is slurring their words, raising concerns about the client's lifestyle. Which action represents the correct procedure for handling these sources of underwriting information?

  1. Have the client answer the blank question and initial the addition, and detail the observations regarding the client's condition in the confidential Agent's Report.Answer
  2. B
    Fill in the blank question with a negative response to expedite the underwriting process, and request an Investigative Consumer Report.
  3. C
    Submit the application as-is to the home office so the underwriter can officially request an Attending Physician's Statement (APS) to fill the gaps.
  4. D
    Document the client's condition directly on the application as a severe physical hazard and have the client initial the notation.

Answer

The producer must have the client answer the blank question and initial the change, while documenting the personal observations about the client's condition in the confidential Agent's Report.
The correct procedure requires two distinct actions: First, the applicant must personally supply the missing information on the application and initial the update to maintain the legal integrity of the document. Second, the producer's subjective observations regarding the applicant's intoxication—which represents a moral or morale hazard—must be communicated to the underwriter via the Agent's Report. This report is a confidential source of underwriting information that is not attached to the final policy.

Step-by-Step Solution

1
Identify the procedural rules for correcting or completing life insurance applications.
The applicant must provide the missing information and initial the addition themselves; the agent cannot make unilateral or unauthorized changes.
To ensure the application remains a valid, legally binding document that accurately represents the applicant's true statements.
2
Determine the correct underwriting source for communicating an agent's personal observations.
The Agent's Report is the designated confidential form for a producer to communicate subjective observations about an applicant's lifestyle, character, or apparent habits to the home office.
Observations about intoxication relate to potential moral or morale hazards and must be disclosed directly to the underwriter without altering the applicant's official statements on the application.

Key Concept

Application Procedures and the Agent's Report
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Topics

Sources of Underwriting Information

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