When the insurer learns of an omission related to treatment for a serious chronic illness on Terry's life insurance application, what action can they take?

When an insurer discovers an omission related to a serious chronic illness on a life insurance application, the appropriate action may often be to take no immediate action, especially if the application process and underwriting standards allow for discussion or clarification of the omitted information rather than an automatic denial or adjustment.

In many cases, insurers may choose to investigate the circumstances surrounding the omission before determining their course of action. This could involve reaching out to the applicant for clarification or additional information regarding the treatment for the chronic illness. If the omission is determined to be unintentional or if the applicant provides further details that mitigate the concern, the policy may still remain in force without any immediate penalties or adjustments.

This retains the integrity of the underwriting process and ensures that the applicant is treated fairly. While actions such as increasing the premium, canceling the policy, or adjusting benefits might seem like viable options, they typically rely on the specific circumstances of the omission and existing regulations regarding insurance practices. In the absence of a clear violation of the application process or a material impact on the risk assessment, choosing to take no action can be a valid and often expected approach in the insurance industry.