State Farm Auto Insurance Practice Test

What should an agent do if a prospect does not meet eligibility guidelines?

1. Offer them a limited plan

2. Provide a declination letter

3. Ignore the application

4. Immediately refund their fees

The correct answer is: Provide a declination letter

When a prospect does not meet eligibility guidelines for an insurance policy, providing a declination letter is the appropriate action. A declination letter formally informs the prospect that their application has been declined due to not meeting the necessary criteria. It is important for transparency and professionalism, ensuring that the prospect understands the reasons for the denial and providing them with an official record of the decision. Offering a limited plan would not be appropriate if the prospect does not meet the eligibility guidelines for any coverage the insurer provides. Ignoring the application is unprofessional and could lead to misunderstandings and dissatisfaction for the prospect. Refunding their fees immediately may not be necessary unless payment has been processed, and it can also depend on the company's procedures regarding declined applications. By using a declination letter, the agent ensures that the communication is clear, documented, and adheres to industry standards. This helps maintain a positive reputation for the agency while respecting the prospect's situation.