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Question

Difficulty: MediumSources of Underwriting Information

When an insurance company requires a paramedical examination and blood testing to gather clinical underwriting information for a substantial life insurance policy, what procedural compliance standard must be followed?

  1. Explicit, prior written consent for specific clinical screening must be secured from the individual, with the insurance company bearing the financial cost of the examination.Answer
  2. B
    The insurance producer is authorized to amend the initial application directly if the lab results contradict the individual's stated medical history.
  3. C
    Gramm-Leach-Bliley Act privacy provisions automatically grant the carrier full access to the clinical results without necessitating distinct medical authorization.
  4. D
    An unconditional binding receipt must be issued by the agent before any clinical professionals are legally permitted to schedule the examination.

Answer

The correct answer is that explicit, prior written consent must be secured and the insurer bears the financial cost.
When an insurer requires medical examinations or specific laboratory tests as a source of underwriting information, the carrier is responsible for covering all associated costs. Furthermore, strict regulatory standards require securing the individual's prior written consent before performing these clinical screenings.

Step-by-Step Solution

1
Identify the source of underwriting information described in the scenario.
The scenario focuses on medical and paramedical examinations, which include laboratory blood testing.
Different sources of information (e.g., MIB, consumer reports, medical exams) have unique regulatory requirements.
2
Determine the procedural rules for obtaining medical examinations.
Insurers must cover the costs of requested exams and obtain specific written consent, particularly for sensitive tests like HIV screening.
Medical data is highly protected, and testing requires direct authorization from the applicant.
3
Evaluate the options against these regulatory standards.
The option requiring prior written consent and insurer payment correctly describes the regulatory standard.
This confirms the proper legal and procedural protocol for this underwriting source.

Key Concept

Medical Examinations and Consent Requirements
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Topics

Sources of Underwriting Information

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