Life License Qualification Program (LLQP) Practice Exam

What should a producer do if a client discloses a recent health issue during policy delivery?

1. Collect the initial premium

2. Collect initial premium and a signed health statement

3. Explain the policy is no longer in effect

4. Collect initial premium and issue a temporary binding receipt

The correct answer is: Collect initial premium and a signed health statement

When a client discloses a recent health issue during policy delivery, it is crucial for the producer to handle the situation with care to ensure compliance with underwriting processes and to uphold ethical standards. Collecting the initial premium and a signed health statement is the correct course of action because it addresses the new information regarding the client's health status while allowing the insurer to reassess the risk associated with issuing the policy. The signed health statement serves as an updated disclosure that the insurer can use to evaluate the client's current insurability. It ensures that the insurer is fully informed of any changes in health that may affect the policy's terms or the risk assessment, adhering to the principle of utmost good faith in the insurance contract. Collecting the initial premium without this additional verification could lead to complications later if the health issue affects the claim process. Other options may not provide the necessary updated information the insurer requires. For instance, simply collecting the initial premium would not ensure that the insurer has the most current information regarding the client's health, which is essential for proper underwriting. Explaining that the policy is no longer in effect could be unnecessarily alarming and does not align with the producer's responsibility to service the client. Collecting an initial premium and issuing a temporary binding receipt might imply