EstatePass
L&HNationalmedium

An insurer declines a life insurance application based in whole or in part on information contained in a consumer report (e.g., MIB report, prescription database, motor-vehicle record). Under FCRA §615 (15 USC §1681m), the insurer must provide the applicant with an adverse-action notice that includes:

AThe applicant's full numeric credit score, the underwriting risk classification assigned, and a complete copy of every consumer report the insurer relied upon in reaching the decision
The name, address, and toll-free number of the reporting agency that furnished the report; a statement that the CRA did not make the decision; and notice of the right to a free copy and to dispute it
CA check for statutory liquidated damages equal to one full year of the applied-for annual premium, payable to the rejected applicant within thirty calendar days of the date of the declination decision
DNothing at all, because FCRA adverse-action notices apply solely to consumer credit transactions and never to any insurance underwriting decision

Why this is the answer

FCRA defines 'adverse action' broadly (§603(k)) to include a denial, cancellation, or unfavorable change in insurance, employment, or credit. When such action is based 'in whole or in part' on a consumer report, the user (insurer) must give the adverse-action notice. The notice must include: (1) notice of the adverse action, plus any numerical credit score used and its key factors; (2) the CRA's name/address/phone; (3) a statement that the CRA did not make the decision and cannot explain why it was made; (4) notice of the applicant's right to a free copy of the report within 60 days; and (5) notice of the right to dispute accuracy or completeness directly with the CRA. The insurer need not disclose the contents of the report itself — only the source and the consumer's rights.

Studying for the Life & Health exam?

This question comes from our L&H bank. Take a free practice test — no signup.

Free L&H practice testLife & Health exam guide