63. What is the result of an Insurer approving an incomplete application?
Answer: C
The insurer waives the right to that information and must honor the contract.
When an insurer approves an incomplete application, it effectively waives the right to require further information related to the incomplete parts and is obligated to honor the contract that has been formed based on the provided information.
A) The death benefit will be subject to review upon the death of the insured.
This option is incorrect because if the insurer has approved the application, they cannot later subject the death benefit to review based on the incomplete information. The approval signifies acceptance of the application as it stands.
B) The agent can at any time during the term of the policy complete the application.
This option is also incorrect, as the agent does not have the authority to complete the application after the policy has been issued. The insurer's approval of the incomplete application means the terms are set, and no further completion is necessary or permitted by the agent.
C) The insurer waives the right to that information and must honor the contract.
This is the correct answer because once the insurer has approved the application, they cannot demand any additional information that was initially lacking. This approval creates a binding contract, obligating the insurer to provide coverage as stated, regardless of the incomplete nature of the application.
D) The insured must complete the application after the policy has been issued.
This option is incorrect as it implies a requirement for the insured to provide additional information after the policy issuance, which is not the case if the insurer has already approved an incomplete application. The contract is already in effect, and additional completion is not necessary.
Conclusion
The correct answer, that the insurer waives the right to that information and must honor the contract, highlights the principle that an insurer is bound by its approval of an application, even if it is incomplete. All other options fail to recognize this binding obligation and misinterpret the implications of the insurer's approval process.