During an interview for a new individual life insurance policy, an applicant verbally reveals to the agent that they were treated for severe hypertension three years ago. The applicant insists they are now completely healthy, takes no medication, and explicitly requests that the agent omit this condition from the formal application to avoid a potential premium increase. Which of the following describes the proper action the agent must take when completing the application?
- ALeave the specific medical history question blank so the home office underwriter is forced to independently request an attending physician's statement.
- Accurately record the history of hypertension on the application, as the agent represents the insurer and has a fiduciary duty not to conceal material information.Answer
- COmit the condition from the application, but document the verbal disclosure in the confidential Agent's Report to satisfy the agent's reporting duties.
- DAgree to the omission, provided the applicant makes a strict warranty that the hypertension is permanently cured and will not contribute to a future claim.
Answer
The correct action is to accurately record the history of hypertension on the application, fulfilling the agent's fiduciary duty to the insurer.
When completing an application, the agent serves as a field underwriter and represents the insurer. The agent has a strict fiduciary duty to ensure all material facts disclosed by the applicant are accurately recorded on the application document itself. Concealing a known medical history at the applicant's request is a violation of this duty and compromises the integrity of the underwriting process.
Step-by-Step Solution
Key Concept
Field Underwriting and Agent Duties