Field Underwriting Procedures — practice questions

5% of the exam ≈8 real questions 9 free questions here

The agent’s role in the application process, HIPAA and FCRA disclosures, premium receipts, policy delivery, and contract law — about 8 scored questions.

Where people lose points

• The four elements of a contract are consideration, offer and acceptance, competent parties, and legal purpose.
• Insurance contracts are conditional, unilateral, aleatory, and contracts of adhesion — know which word means what.
• An investigative consumer report requires advance written notice to the applicant.
• The agent is the field underwriter, but only the home office can accept the risk.

Questions and answers, explained

All 6 questions above, with the correct answer and why it is correct. Everything here is on field underwriting procedures.

1. While completing an application for health insurance, the applicant gives the agent an answer that later must be corrected. What is the BEST way to correct the application?

   • AErase the incorrect answer or cover it with correction fluid and write in the new answer
   • BHave the agent correct the answer later and initial the change on the applicant's behalf
   • CDraw a line through the incorrect answer, insert the correct one, and have the applicant initial the changeCorrect
   • DSubmit the application unchanged and explain the error to the underwriter by phone

   Why: The application is the insurer's primary source of underwriting information and typically becomes part of the contract, so any change must be clearly visible and acknowledged by the applicant with his or her initials — or a fresh application should be completed. An agent must never alter an application on his or her own or conceal a correction.

   Reference Outline IX (Field Underwriting Procedures): completing the application

2. A Florida agent is taking an application for a life insurance policy that she knows will replace the applicant's existing life policy. Under Florida's replacement rule, no later than the time she takes the application, the agent must

   • Aobtain the Department of Financial Services’ written approval of the replacement transaction
   • Bsurrender the existing policy to the original insurer on the applicant’s behalf
   • Cpersonally notify the existing insurer that its policy is being replaced now
   • Dpresent a signed Notice to Applicant Regarding Replacement and leave it with the applicantCorrect

   Why: Rule 69B-151.006, F.A.C. (Duties of Replacing Agent), requires the replacing agent to present the Notice to Applicant Regarding Replacement of Life Insurance (Form OIR-B2-312) no later than at the time of taking the application; both parties sign it and it is left with the applicant, with a completed copy submitted to the replacing insurer along with the application. Under Rule 69B-151.005, F.A.C., the agent also submits signed statements as to whether replacement is involved. Notifying the existing insurer is a duty of the replacing insurer, not the agent, and no advance DFS approval is required.

   Reference Outline IX (Field Underwriting Procedures): replacement; Rules 69B-151.005–.006, F.A.C.

3. On his application for an individual health policy, Tomás honestly but mistakenly failed to disclose ongoing treatment for a heart condition. During the policy's first year he files a large claim, and the insurer proves it would not have issued the policy at the same premium had it known the truth. Under Florida law, the insurer may

   • Ado nothing, because statements on an application are mere representations
   • Bdeny the claim only if it can prove Tomás intended to commit fraud
   • Cdeny the claim only if his statements had been written into the policy as express warranties
   • Drescind or deny, because the misstatement was material even though unintentionalCorrect

   Why: Under s. 627.409, F.S., statements in an application are representations, not warranties, but a misrepresentation or omission may still prevent recovery if it is fraudulent, is material to acceptance of the risk, or if the insurer in good faith would not have issued the policy on the same terms had it known the facts. Intent is not required — even an innocent but material misstatement can support rescission, particularly within the policy's contestable period.

   Reference Outline IX (Field Underwriting Procedures): warranties and representations; s. 627.409, F.S.

4. An underwriter reviewing a health insurance application sees an MIB code and an application answer that both suggest a past cardiac condition. The MOST appropriate next step is to

   • Adecline the application on the basis of the MIB code alone, without further inquiry
   • Border an investigative consumer report to interview the applicant's neighbors and coworkers
   • Corder an attending physician's statement, using the applicant's written authorizationCorrect
   • Dissue the policy as applied for and rely on the incontestability clause if a problem arises

   Why: An attending physician's statement is the standard tool for clarifying a specific medical history disclosed on an application or flagged by the MIB, and it requires the applicant's signed authorization. Choice A is prohibited — an insurer may not decline or rate an applicant on MIB information alone — and an investigative consumer report gathers character, reputation, and lifestyle information rather than clinical detail.

   Reference Outline IX (Field Underwriting Procedures): sources of insurability information — attending physician's statement

5. How does a binding (unconditional) premium receipt differ from a conditional receipt?

   • AA binding receipt covers the applicant from the date of the receipt even if he is later found uninsurableCorrect
   • BA binding receipt provides no coverage at all until the policy is actually delivered and paid for
   • CA binding receipt requires a medical examination, while a conditional receipt does not
   • DA binding receipt may be issued only by the insurer's home office, never by a soliciting agent

   Why: A binding receipt creates temporary insurance effective on the date of the receipt and lasting a stated period, often 30 or 60 days, regardless of the applicant's insurability, whereas a conditional receipt provides coverage only if the applicant is later determined insurable as applied for. Choice B describes what happens when no premium is collected with the application at all — in that case coverage begins only at delivery with payment and a statement of continued good health.

   Reference Outline IX (Field Underwriting Procedures): initial premium and receipt consequences

6. An insurance contract is described as aleatory because

   • Ait is drafted entirely by the insurer and offered on a take-it-or-leave-it basis
   • Bonly one party makes a legally enforceable promise
   • Cthe values exchanged by the parties may be unequal and depend on an uncertain eventCorrect
   • Dthe insured must satisfy certain requirements before the insurer is obligated to pay

   Why: Aleatory means the exchange is unequal and contingent: the insured may pay a modest premium and collect a large benefit, or pay premiums for years and collect nothing at all. Choice A describes a contract of adhesion, choice B describes a unilateral contract, and choice D describes a conditional contract — all separate characteristics of the very same policy, which is why they read as plausible.

   Reference Outline IX (Field Underwriting Procedures): contract law — characteristics of an insurance contract

Topics inside this domain

• Twisting vs churning vs sliding vs rebating
• Disability income insurance
• HIV testing and consent in Florida underwriting
• Compulsory vs discretionary license discipline

Drill other domains

• Types of Life Policies and Features (10%)
• Life Policy Riders, Provisions, Options, and Exclusions (10%)
• Life Application, Underwriting, and Policy Delivery (8%)
• Retirement and Other Life Insurance Concepts (5%)
• Types of Health Policies (11%)
• Health Policy Provisions, Clauses, and Riders (10%)

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