A life insurance applicant completes Part II of their application, answering 'no' to all medical history questions. A subsequent Medical Information Bureau (MIB) inquiry by the home office reveals a code indicating recent treatment for a severe cardiovascular disorder. Believing the applicant concealed this information, the insurer wishes to reject the risk. Which of the following describes the legally and procedurally correct action the insurer must take?
- The insurer must conduct further independent investigation, such as ordering an Attending Physician's Statement (APS), because an adverse underwriting decision cannot be based solely on an MIB report.Cevap
- BThe insurer may issue a formal denial immediately, provided they supply the applicant with an adverse action notice in accordance with the Fair Credit Reporting Act (FCRA).
- CThe insurer must return the application to the producer so the producer can amend the medical history section to reflect the MIB findings before the formal denial is issued.
- DThe insurer may issue a formal denial immediately because the applicant's medical responses are considered warranties, meaning any omission automatically nullifies the contract.
Cevap
The insurer must conduct further independent investigation, such as ordering an Attending Physician's Statement (APS), because an adverse underwriting decision cannot be based solely on an MIB report.
The correct answer accurately reflects the fundamental rule of the Medical Information Bureau: MIB reports are designed to serve as an alert system for underwriters. Member companies are contractually prohibited from using an MIB code as the sole reason to decline an applicant or charge a higher premium. Instead, the underwriter must use the MIB information to guide further investigation, typically by ordering an Attending Physician's Statement (APS) to independently verify the applicant's medical history.
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Medical Information Bureau (MIB) Utilization Rules