71. 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 signifies that the insurer is willing to proceed with the policy despite the missing information, thereby waiving their right to that information and must honor the contract as issued.
A) The insured must complete the application after the policy has been issued.
This option is incorrect because once the insurer has accepted the incomplete application and issued the policy, the insured is not required to complete it afterward. The acceptance indicates that the insurer has agreed to the terms as they stand.
B) The death benefit will be subject to review upon the death of the insured.
This option is also incorrect. While insurers may review claims for various reasons, the approval of an incomplete application means they have accepted the risk as presented at the time of issuance, and the death benefit should not be subject to additional review solely based on the incompleteness of the application.
C) The insurer waives the right to that information and must honor the contract.
This statement is correct. By approving an incomplete application, the insurer effectively waives the right to the missing information and is obligated to honor the policy issued, as they have chosen to accept the terms without the complete data.
D) The agent can at any time during the term of the policy complete the application.
This option is incorrect because the completion of the application is not solely at the discretion of the agent after the policy has been issued. The insurer's approval of the incomplete application means that the application is considered accepted as is, and further completion is not necessary or permitted.
Conclusion
In summary, the correct answer is that the insurer waives the right to the information and must honor the contract, as the approval of an incomplete application indicates acceptance of the risk as presented. All other options fail to recognize the implications of the insurer's decision to approve the application, making them incorrect in this context.