Massachusetts State Life Insurance Practice Exam

What action must an agent take if they find an error on an applicant's application?

1. Submit the application as is

2. Ignore the error and proceed with the application

3. Correct the error and have the applicant initial the changes

4. Cancel the application and start over

The correct answer is: Correct the error and have the applicant initial the changes

When an agent identifies an error on an applicant's insurance application, the appropriate action is to correct the error and have the applicant initial the changes. This process ensures that any modifications made to the application are formally acknowledged by the applicant, thereby improving the accuracy of the submitted information and maintaining the integrity of the application process. This approach is essential because it protects both the insurer and the applicant. If the application is submitted with uncorrected errors, it could lead to potential issues in the underwriting process, misrepresentation, or claims disputes in the future. By having the applicant initial the corrections, the agent helps to ensure that the applicant is aware of and agrees to the changes. This practice also upholds ethical standards in the insurance industry by emphasizing transparency and accuracy in documentation. In contrast, submitting the application as is, ignoring the error, or starting over without properly addressing the revision would either perpetuate inaccuracies or create unnecessary complications in the insurance process.