A restaurant proprietor completes an application for a whole life insurance policy and provides a check for the standard initial premium. During underwriting, the insurer evaluates the applicant's medical records and determines they represent a higher risk than initially assumed. The insurer issues the policy but applies a substandard premium rating. What specific steps must the producer take during the delivery of this modified policy to properly establish coverage?
- ADeliver the policy without further requirements, because the original conditional receipt guaranteed coverage at the standard rate.
- BUse apparent authority to waive the premium surcharge if the applicant threatens to cancel the transaction.
- Present the policy as a counteroffer, collect the remaining premium balance, and require the applicant to sign a Statement of Good Health.Cevap
- DUnilaterally correct the premium amount on the original application paperwork to match the new rating, then collect the additional premium.
Cevap
Present the policy as a counteroffer, collect the remaining premium balance, and require the applicant to sign a Statement of Good Health.
When an insurer issues a policy with a premium rating rather than the applied-for standard rate, it is legally making a counteroffer. The original conditional receipt becomes void because the applicant was not approved as a standard risk. Therefore, during policy delivery, the producer must treat the situation as if no premium had been paid: they must explain the counteroffer, collect the additional required premium, and obtain a newly signed Statement of Good Health to confirm the applicant has not experienced adverse medical events since the original application date.
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Anahtar Kavram
Counteroffer and Policy Delivery Procedures