Underwriting Basics

Assume there are 4 different mortality tables. Of these, the most reliable would be the mortality table covering

10 million lives

An attending physician's statement (APS) requested by the underwriting department will normally contain all of the following applicant information EXCEPT

A medical information bureau report

Which of the following criteria may be used when determining the premium rate for an insurance applicant?

Age

Which of the following is NOT considered unfair discrimination?

Charging a higher individual life insurance premium for a 50 year old than for a 25 year old

All of the following factors influence any applicant's mortality EXCEPT

Credit report

Which of the following does NOT appear in the producer's report?

Education

What is the most common approach for rating life insurance applicants who are determined to be substandard risks?

Issuing a policy in the amount applied for, with a higher than standard premium

Underwriting is a process of

Selecting, classifying, and rating risks

All of the following are sources of insurability information about life insurance applicants EXCEPT

Social Security reports

Major risk factors in life and health insurance underwriting include all of the following EXCEPT

financial status

An agent must notify the applicant that all of the following sources will be used to assess the applicant EXCEPT

personal references

Which of the following is NOT found in part 1 of the application?

the name and address of the insured's current physician

an applicant determined by underwriting to be declined would be

uninsurable at any price

Which of the following would NOT constitute unfair discrimination in insurance underwriting?

Maria is charged a higher premium based on her poor health

An investigative consumer report is also called

an inspection report

Which of the following statements regarding risk factors is NOT correct?

Jill is 15 years younger than her supervisor and therefore poses a higher risk to an insurance company

The concept of agent confidentiality requires all of the following practices EXCEPT

Notifying the applicant of a substandard rating decision by the insurer

Which section of the application should contain a record of any injuries the applicant may have suffered?

The medical section

Which of the following statements is CORRECT?

George's brother, father, and grandfather had diabetes during their lifetimes. Family history will be considered a risk factor when George applies for insurance

All of the following are found in the first part of the application EXCEPT

Hobbies

Which of the following statements pertaining to inspection reports and credit reports on life insurance applicants is NOT correct?

Inspection reports only require consumer notification when they are conducted

All of the following can directly affect the amount of premium an individual insured pays EXCEPT

Marital status

Major risk factors in health insurance underwriting include all of the following EXCEPT

Marital status

The concepts of agent accuracy and completeness would prohibit all of the following practices EXCEPT

Reviewing the completed application with the applicant to ensure accuracy

Which of the following statements pertaining to sources of insurability information is CORRECT?

Special questionnaires are used to obtain additional information when an extra hazard or risk may be involved

Which of the following statements regarding life insurance applications is NOT correct?

Statements made by the applicant on the application are considered to be warranties

AGC Publishing applied for key-person life insurance on its chief executive officer. Which of the following parties must sign the application?

The CEO, another officer of AGC, and the agent handling the application

Which of the following statements pertaining to the Medical Information Bureau (MIB) is NOT correct?

The MIB is organized and supported by private hospitals

If there are changes to an insurance application due to an error in information, who must initial the corrections?

The applicant

An insurer will use all of the following to determine if a person should be issued a policy EXCEPT

The applicant's work history

What is the basic source of information for life insurance underwriting and policy issue?

The application

With regard to life insurance applications, which of the following statements is CORRECT?

The application includes the names of the insured and the beneficiary

Each application for life insurance requires the signature of all the following EXCEPT

The beneficiary

Malik works as a dentist and mountain climbs, skis, and flies airplanes in his spare time. When he applies for a life insurance policy, the agent's and Malik's signatures will be required on all of the following documents EXCEPT

The report issued by the Medical Information Bureau

Which of the following statements pertaining to inspection reports on life insurance applicants is NOT correct?

They provide information obtained principally from law enforcement officials

With regard to substandard life insurance risks, which of the following statements is CORRECT?

When the applicant represents a substandard risk, the policy may be modified to reduce the benefits provided.

If a medical report is required on an applicant, it is completed by

a paramedic or examining physician

The inclination of higher-risk individuals to be "first in line" to get and keep insurance is called?

adverse selection

When applicable, all of the following forms require an applicant's signature

an aviation questionnaire, the authorization form, the application

In order to be insured, a group must be randomly selected to avoid

adverse selection

All of the following may be done to determine insurability in regard to AIDS EXCEPT

Asking questions regarding the applicant's sexual orientation

Underwriting techniques commonly used by insurers in issuing policies to applicants who do not measure up to a standard rating include the following EXCEPT:

Averaging total risks pending

Which of the following statements pertaining to a life insurance policy application is CORRECT?

An agent must be very specific when listing an applicant's occupation on an application

Which of the following situations is the best example of unfair discrimination?

An insurer assigns a premium rating to an applicant because of studies that suggest members of the applicant's race have a shorter than average life expectancy

Which of the following statements pertaining to the Medical Information Bureau (MIB) is CORRECT?

Information obtained from the MIB by insurers may not be used as the sole reason to decline an applicant's request for insurance

To avoid adverse selection, insurers determine many different factors and rely on an extensive amount of information before issuing a policy. This process is called

Underwriting

During the underwriting process, and insurer may do all of the following EXCEPT

Verify the applicant's military records, if any

Jia is applying for individual medical insurance coverage. All of the following factors will adversely affect her ability to obtain coverage at a reasonable premium EXCEPT

Working at a desk every day

An insured that meets the average health and life expectancy anticipated by the insurer for a person of that age and gender would be classified as

a standard risk