Difficulty: Hard

Average Score: 40%

An insurance company will take which of the following actions if a producer submits an incomplete application for life insurance?

Rationale

Return the application to the producer.

When a producer submits an incomplete application for life insurance, the insurance company is likely to return the application to the producer. This action allows the producer to complete the necessary information or requirements to process the application accurately.

B (Offer to issue the policy with restricted Nonforfeiture Options.) YOUR ANSWER

Offering to issue the policy with restricted Nonforfeiture Options is not a typical action taken by insurance companies for incomplete applications. Nonforfeiture options relate to the cash value of a policy and are not directly linked to incomplete applications.

C (Issue the policy with an extended Incontestable Period.) YOUR ANSWER

Extending the Incontestable Period of a policy is unrelated to handling incomplete applications. The Incontestable Period typically refers to a specific timeframe during which the insurer cannot contest the validity of the policy based on misrepresentation or concealment by the insured.

D (Issue a rated policy.) YOUR ANSWER

Issuing a rated policy involves adjusting the premium based on the increased risk associated with the insured individual's health or lifestyle factors. This action is not directly related to the submission of an incomplete application.

Conclusion

When a producer submits an incomplete application for life insurance, the insurance company's standard procedure is to return the application to the producer. This allows for the completion of missing information or requirements to ensure accurate processing and evaluation of the application.

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