Tennessee Insurance Practice Exam

What should an agent do regarding changes made on an insurance application?

1. The agent should sign the application

2. The agent should have the applicant initial any changes

3. The agent should not make any changes

4. The agent should inform the insurance company of changes

The correct answer is: The agent should have the applicant initial any changes

Having the applicant initial any changes made on an insurance application serves several important purposes in the insurance process. First, it ensures that the applicant acknowledges and agrees to the modifications, which adds a layer of transparency and consent to the application. This action helps protect both the insurer and the applicant by documenting that any adjustments were not made unilaterally by the agent but rather with the applicant's awareness and approval. Additionally, initialing changes can prevent misunderstandings or disputes in the future about what information was provided at the time of application. It creates a clear record that can be referenced if questions arise later, which is crucial in maintaining the integrity of the application and understanding the mutual agreements made during the application process. While it is important for an agent to be uniform and accurate in the application process, merely signing the application does not provide the same level of assurance about the changes. Not making any changes or informing the insurance company without proper documentation could lead to miscommunication and potential issues during the underwriting process or claims handling. Therefore, having the applicant initial any changes is the best practice to ensure clarity and agreement.