Life License Qualification Program (LLQP) Practice Exam

Which of the following statements about the Fair Credit Reporting Act is true for life insurance applicants?

1. Rights must be informed before the application

2. Rights must be informed upon completion of the application

3. Rights must be informed when the policy is in force

4. Rights must be informed upon MIB report receipt

The correct answer is: Rights must be informed upon completion of the application

The Fair Credit Reporting Act (FCRA) stipulates that applicants for life insurance must be informed of their rights upon completion of the application. This means that once an applicant submits their application for insurance, they should receive clear communication about their rights regarding their credit report and how it may be used in the underwriting process. This requirement is crucial as it helps ensure transparency and protects the rights of consumers, allowing them to be aware of and understand the implications of their personal information being used in the insurance decision-making process. It includes informing applicants about their rights to request access to their credit reporting file, dispute inaccuracies, and understand how their information will affect the underwriting process. Although there are various points in the insurance process where rights and legal guidelines may be relevant, the timing of notifying applicants after they have completed the application aligns specifically with the FCRA's requirements for clarity on how their information will be handled during underwriting.