Examkin

Question

Difficulty: MediumSources of Underwriting Information

Upon receiving a life insurance application, a home office underwriter notes that the producer filled in a missing medical answer after leaving the applicant's presence. The submission also includes an Agent's Report stating the applicant regularly competes in amateur stock car racing. To clarify a separate past medical event, the underwriter decides an Attending Physician's Statement (APS) is necessary. According to underwriting guidelines and privacy regulations, which course of action must the insurer take?

  1. The insurer must return the application so the applicant can answer and initial the alteration, obtain a signed HIPAA-compliant disclosure before requesting the APS, and evaluate the racing as a physical hazard.Answer
  2. B
    The underwriter may process the application with the producer's written correction, provided they secure verbal authorization for the APS and assess the racing exposure.
  3. C
    The insurer must return the application for the applicant's initials and obtain a signed HIPAA consent, but the stock car racing must be classified as a moral hazard.
  4. D
    The underwriter can accept the producer's undocumented correction since applicant statements are considered warranties, and order the APS immediately without additional consent.

Answer

The insurer must return the application so the applicant can answer and initial the alteration, obtain a signed HIPAA-compliant disclosure before requesting the APS, and evaluate the racing as a physical hazard.
The correct course of action strictly follows three vital underwriting rules. First, any alteration or addition to an application must be made and initialed by the applicant, never the producer. Second, requesting an Attending Physician's Statement (APS) requires the applicant's explicit, signed consent under HIPAA regulations. Finally, high-risk avocations like stock car racing represent a physical hazard, not a moral or morale hazard, and must be evaluated appropriately by the underwriting department.

Step-by-Step Solution

1
Evaluate the altered application.
The application must be returned to the applicant.
A producer cannot make unauthorized application changes; all alterations or missing answers must be completed and initialed by the applicant.
2
Determine requirements for the Attending Physician's Statement (APS).
A signed HIPAA-compliant authorization is required.
Requesting detailed medical records from a physician requires the applicant's explicit, written consent under federal privacy laws.
3
Classify the risk identified in the Agent's Report.
The stock car racing is identified as a physical (avocational) hazard.
Dangerous hobbies increase the physical likelihood of loss, distinguishing them from moral hazards (dishonesty) or morale hazards (carelessness).

Key Concept

Sources of Underwriting Information and Compliance
Estimated Time:1m 30s
Rate this question

Topics

Sources of Underwriting Information

More questions from this topic