12 - Health Insurance Underwriting

An increase in which factor will decrease the disability insurance premium? A) Interest rate. B) Benefit level. C) Expenses used. D) Morbidity figures.

A) Interest rate. Interest is a major element in establishing insurance premiums. A large portion of every premium received is invested to earn interest. These interest earnings reduce the premium amount.

Which of the following is considered a moral hazard in health insurance underwriting? A) Skydiving. B) Alcoholism. C) High blood pressure. D) Morbid obesity.

B) Alcoholism. The habits or lifestyles of applicants can flash warning signals that there may be additional risk for the insurer. Excessive drinking, the use of drugs, poor credit rating, and dishonest business practices are all signals of high moral hazard.

Major risk factors in health insurance underwriting include all of the following EXCEPT? A) Habits or lifestyle. B) Marital status. C) Occupation. D) Physical condition.

B) Marital status. Three of the most important factors in classifying risks for health insurance are physical condition, moral hazards, and occupation. Marital status is not included in this.

Which of the following is NOT a technique for issuing health insurance policies to individuals with chronic health conditions? A) Charging an extra premium. B) Requiring yearly physical examinations. C) Limiting the type of policy issued. D) Attaching an exclusion rider.

B) Requiring yearly physical examinations. Requiring yearly physical examinations is NOT a technique for issuing health insurance policies to individuals with chronic health conditions.

All of the following factors would affect a health insurance policy's premium rate EXCEPT? A) Occupation of the insured. B) Residential address of the insured. C) Age of the insured. D) Type of benefit provided.

B) Residential address of the insured. The insured's residence is not considered when determining the policy's premium rate.

What kind of table reflects the average number of disabilities due to sickness or accidents at various ages? A) Underwriting. B) Claims underwriting. C) Mortality. D) Morbidity.

D) Morbidity. Morbidity is the relative incidence of disability due to sickness or accident within a given group.

The expected incidence of sickness or disability within a given group during a given period of time is? A) mortality. B) consideration. C) claim experience. D) morbidity.

D) morbidity. Morbidity is the expected incidence of sickness or disability within a given group during a given period of time.

Which of the following statements BEST represents the tax status of personal disability income policies? A) Premiums are not deductible; benefits are tax-free. B) Premiums are deductible; benefits are taxed. C) Premiums are not deductible; benefits are taxed. D) Premiums are deductible; benefits are tax-free.

A) Premiums are not deductible; benefits are tax-free. Premiums for personal disability policies are normally not deductible, however the benefits are tax-free.

Which of the following statements most aptly describes health insurance benefits? A) The greater the benefits, the higher the premium. B) Each policy offers a single type of benefit. C) Policyowners who have policies with identical benefits pay the same premiums. D) Claims, not benefits, affect premium rates.

A) The greater the benefits, the higher the premium. Policies that pay greater benefits normally command higher premiums.

Assume the following individuals are issued health insurance policies with varying renewability provisions. All other factors being equal, who would pay the highest premium? A) Chris-optionally renewable. B) Dana-cancellable. C) Jack-noncancellable. D) Pam-conditionally renewable.

C) Jack-noncancellable. The insurer assumes a higher risk in a noncancellable policy, therefore they charge a higher premium.