Difficulty: Medium

Average Score: 72%

What is the result of an insurer approving an incomplete application?

Rationale

The insurer waives the right to that information and must honor the contract.

When an insurer approves an incomplete application, it indicates that they have accepted the risks associated with the application as presented, thereby waiving their right to request additional information and must honor the terms of the policy issued.

A (The insured must complete the application after the policy has been issued.) YOUR ANSWER

This choice is incorrect because once the insurer approves the incomplete application and issues the policy, the insured is not required to complete the application. The insurer's acceptance of the application implies that the current information is sufficient for coverage.

B (The death benefit will be subject to review upon the death of the insured.) YOUR ANSWER

This statement is misleading as the insurer cannot later review the application for additional information if they have already accepted the application and issued the policy. The death benefit is guaranteed as per the terms of the contract established at the time of approval.

C (The insurer waives the right to that information and must honor the contract.) CORRECT

This is the correct answer because approving an incomplete application means the insurer has decided to proceed with the policy despite lacking certain information. Thus, they waive any rights to additional information that could have been required before issuing the policy.

D (The agent can at anytime during the term of the policy complete the application.) YOUR ANSWER

This choice is incorrect as it suggests that the agent can alter the application after the policy has been issued. Once a policy is in effect, the terms cannot be changed unilaterally by the agent; any amendments would require mutual agreement between the insurer and the insured.

Conclusion

When an insurer approves an incomplete application, it signifies their acceptance and commitment to the terms of the policy without requiring further information. This process highlights the importance of clear communication and understanding of contractual obligations in insurance practices, ensuring that the insured is protected once the policy is issued, regardless of any incomplete details initially present in the application.

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