Question 59

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

When an insurer approves an incomplete application, it implies that the insurer has chosen to accept the application as is, thereby waiving any right to the missing information. Consequently, the insurer is obligated to honor the contract based on the terms provided in the application.

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

This option is incorrect because once the insurer approves an incomplete application, there is no requirement for the insured to complete it afterward. The acceptance of the incomplete application means the insurer has agreed to proceed without the additional information.

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

This option is also incorrect. While a death benefit may be reviewed for various reasons, an insurer approving an incomplete application indicates that they accept the policy as is and are obliged to honor the death benefit without further review due to incompleteness.

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

This option is correct as it reflects the consequence of the insurer's approval of an incomplete application. By proceeding with the application despite its incompleteness, the insurer forfeits any claim to the missing information and must fulfill the contract as issued.

D) The agent can at any time during the term of the policy complete the application.

This statement is incorrect. The approval of an incomplete application does not grant the agent the authority to unilaterally complete the application after the policy has been issued. The insurer's acceptance of the incomplete application stands, and any modifications would require the insurer's consent.

Conclusion

The correct answer is C because it accurately captures the implications of the insurer's decision to approve an incomplete application, which obligates them to honor the contract without the need for additional information. Other options fail to recognize the binding nature of the insurer's approval and the obligations it creates, highlighting the importance of understanding contractual agreements in insurance.