Field Underwriting Procedures ***
MR. WATSON: A field underwriter is the agent or producer going out soliciting business.
MR. WATSON: Proper solicitation . No high pressure sales tactics, false advertising (an unfair trade practice). Also, a Buyer's Guide and Policy Summary are required to be delivered. The Buyer's Guide explains things in a way that the average consumers can understand. The Policy Summary addresses the specific product being presented.
MR. WATSON: You have to give buyers a buyer's guide and a policy summary at the time you collect the premium payment. The buyer's guide is a generic pamphlet that is supposed to explain insurance so that a dummy could understand it. The policy summary, which is more specific to the policy purchased, identifies the agent, the insurer, the policy, & each rider. Understand?
Completing the application
MR. WATSON: Completing the application. Should you complete the application? Yes. I would think so.
STUDENTS: Yes.
MR. WATSON: It is the agent's responsibility to make sure the application is completed thoroughly. If there are any missing answers to questions when the policy is issued, or, if the applicant has committed fraud, (lied about a material fact), and the company discovers this at any time during the contestable period, they can void the contract.
Note: Remember, a material fact is information the company uses to determine whether to issue or not to issue a policy. Ex. drug abuse, health. Age and sex are not material facts. Misstatements of age and sex result in an adjusted benefit, typically paying a reduced benefit because the person typically would say they’re younger than they really are.
MR. WATSON: But there are still a couple of things that you need to know about the application, though. You need a few signatures on the app:
- the agent
- the insured
- the policyowner, if it is someone other than the insured, like a business. But not the beneficiary. The beneficiary never signs the application. The only thing a beneficiary ever signs is a paycheck when the insured dies.
MR. WATSON: You also need to know that on the cover of every app, no matter what type of application it is, there needs to be
- the name of the company,
- the name of the agent, and
- the license number of the agent. Those can
be printed, typed, stamped or handwritten, but if they're handwritten they
must be legible.
Changes in the application ***
MR. WATSON: What if there is an error made in the application? Let's say the agent asked the applicant about drug use. The applicant said "no" but the agent mistakenly marked "yes" on the application.
MR. WATSON: The agent makes the change in the application, the correction, but the applicant initials it. Be careful, it's important. We don’t necessarily need a new application. Getting a new application that is completely correct is the best way to do it, but the agent can also simply correct it and have the applicant initial the correction.
MR. WATSON: What if the agent collects the application and a check for the premium, and realizes the check isn’t signed? Are you covered?
STUDENTS: No, no payment.
MR. WATSON: What if you collect the application and premium and then, before giving it to the company, you realize that a section of the application is not completed. What then?
MAN: You complete it.
MR. WATSON: No. You go back to the applicant and have them give you the answers to complete it. Be careful.
MR. WATSON: This is important. If the company accepts the application and then, before the incontestable period takes effect, before the end of the two years, discovers incomplete or incorrect information, the company may rescind or cancel the contract. Understand?
STUDENTS: Yes.
Quick Review
MR. WATSON: What's the minimum age to buy insurance?
STUDENTS: 15.
MR. WATSON: What two signatures are found in the insuring clause?
STUDENTS: President and secretary.
MR. WATSON: Who is responsible for making sure the application is completed correctly?
STUDENTS: The agent.
MR. WATSON: Very good. Now, listen, there's three things listed in every application.
- The agent's name,
- His ID number, and
- The company name. Give them to me.
STUDENTS: Agent's name, ID number, and company name.