Best Practices for Delivering Insurance Policy to the Insured in Hospital Settings

On the day a newly-issued policy was to be delivered and the initial premium collected, the producer discovers that the insured is in the hospital with a heart condition pending surgery. What should the producer do?A. Collect additional premium at the time of delivery to reflect the higher risk the insurer now facesB. Hold onto the policy until the insured is discharged from the hospital and then deliver the policyC. Return the policy to the insurer with a letter of explanationD. Deliver the policy to an immediate family member and collect any outstanding premium

Return the policy to the insurer with a letter of explanation*Producers must return the policy to the insurer if they know that the insured’s health status has materially changed since the time of application.

In this situation, the producer should hold onto the policy until the insured is discharged from the hospital and then deliver the policy. The insured’s current health condition may impact the terms of the policy, such as premium rates or coverage limitations. It would not be appropriate to collect additional premium based on the insured’s current health condition as this would constitute unfair discrimination. Similarly, delivering the policy to an immediate family member without the insured’s consent would be inappropriate. Furthermore, returning the policy to the insurer is also not a desirable option as it may result in delays and confusion. Therefore, the best course of action in this situation is to wait until the insured is discharged from the hospital and then deliver the policy.

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