The Producer's Role in the Health Insurance Sale

When an applicant applies for a health insurance policy, a producer is NOT required to:

• determine the premium rate

• issue a receipt

• accept and submit the application

• issue a receipt

Answer explanation

The underwriter, not the producer, determines the premium rate to be charged for the policy.

What is the effect of a binding receipt given to an applicant?

• It gives permanent insurance protection.

• t gives conditional coverage during the underwriting period.

• It guarantees coverage during the underwriting period even if the insured turns out to be uninsurable.

• It obligates the insurer to renew the policy at the insured's request.

Answer explanation

If the applicant is found to be uninsurable, he or she is still covered from the time the receipt was given until the insurer notifies the applicant that it will not issue a policy.

What happens if a person submits an insurance application without the first premium?

• The applicant has made a counteroffer.

• The insurer must make an offer to the applicant.

• The insurer must make a counteroffer.

• The applicant made an offer to the insurer.

Answer explanation

If an applicant submits an application without the first premium, the applicant is asking the insurer to make an offer to contract.

Which activity is NOT an error or omission that makes an agent or producer legally liable to both the insured and the insurer?

• placing insurance with insurers who are not authorized to conduct business in the state

• professional negligence

• failing to perform due diligence

• placing insurance with an approved surplus lines insurer

Answer explanation

A producer who fails to perform due diligence and other duties that are usually assigned to the agent or producer may be held legally liable to both the insured and the insurer.