Chapter 2 - Underwriting

All of the following are important underwriting factors for risk classification in a health insurance policy, EXCEPT: a. Physical condition b. Marital status c. Financial status d. Occupation

b. Marital status

Which part of the insurance application collects information about the applicant's medical history? a. Part 1 b. Part 2 c. Part 3 d. None of the above

b. Part 2

Insurance agent Margaret receives life insurance applications from Tim and Tom, who are identical twins, and are each applying for the exact same type of policy with the same face amount. The insurance company issues the policies as applied for, but charges Tom a 15% higher premium. Which of the following best explains the higher premium charged to Tom? a. Longer free look period b. Insuring clause c. Tom had to undergo a medical examination d. Tom's risk classification

d. Tom's risk classification

Which of the following is not an underwriting factor? a. National origin b. Lifestyle c. Smoking status d. Age

a. National origin

The process of selecting and classifying risks is best described by which of the following terms? a. Underwriting b. Classification c. Designation d. Specification

a. Underwriting

What is the basic source of information for life insurance underwriting and policy issue? a. Medical Information Bureau b. Application c. Consumer reports d. Physician reports

b. Application

_____________ is/are used to classify risks and assign premium rates that accurately reflect the amount of risk undertaken by the insurer. a. Loss ratios b. Underwriting c. Applications d. Insurance laws

b. Underwriting

Who is informed of a positive HIV/AIDS test? a. Insurer, agent and underwriter b. Insurer, agent and applicant c. Applicant and underwriter d. Only the applicant

c. Applicant and underwriter

What action will the life insurance company most likely take when an applicant for a life insurance policy is discovered to be substandard risk? a. Decline issuance of the policy b. Require the applicant undergo a physical examination c. Require the applicant pay additional premium d. Request the applicant provide proof of insurability for the past 10 years

c. Require the applicant pay additional premium

Rates for insurance policies are based on: a. Marital status and age b. Sex, age and marital status c. Sex and age d. Sex only

c. Sex and age

Which of the following terms describes a person who is the applicant and policyowner of an insurance policy, but not the insured? a. Beneficiary b. Underwriting c. Third party ownership d. Insurer

c. Third party ownership

This employee of the insurer assigns risk categories to applicants: a. Broker b. Agent c. Underwriter d. Actuary

c. Underwriter

The term attributed to the person who applies for insurance coverage is _______; the term attributed to the person insured by the policy is ________. a. Beneficiary; applicant b. Insured; insurer c. Policyowner; insurer d. Applicant; insured

d. Applicant; insured

Which of the following factors is not used in the underwriting process? a. Medical history b. Build c. Age d. Highest level of education completed

d. Highest level of education completed

All of the following are involved in the collection of an applicant's medical history, EXCEPT: a. The application for the insurance policy b. The attending physician statement c. The agent report d. The consumer report

d. The consumer report

Which of the following best describes the process used to select and classify risks? a. Rating b. Discrimination c. Risk classification d. Underwriting

d. Underwriting

An insurer requests that an applicant for life insurance undergo an HIV test. Which of the following is true? a. A consent form must be signed by the applicant prior to the test. b. The insurer can inquire about the applicant's sexual orientation. c. Insurers can target specific populations for HIV testing. d. HIV testing cannot be used for underwriting.

a. A consent form must be signed by the applicant prior to the test.

Which one of the following forms does NOT require an applicant's signature? a. Agent's report b. Application c. Aviation questionnaire d. Authorization form

a. Agent's report

Which of the following best describes the MIB? a. Nonprofit trade organization that supplies insurability information to member companies b. Government agency that collects information about individuals' life and health insurance policies c. State organization that catalogs individuals' life and health insurance claims d. Group of federally-appointed physicians that monitor the medical treatments received by individuals insured by private companies

a. Nonprofit trade organization that supplies insurability information to member companies

Which part of the insurance application is described by the following: the applicant's general information, including name, date of birth, age, sex, social security number, marital status, address, occupation and income are collected? a. Part 1 b. Part 2 c. Part 3 d. None of the above

a. Part 1

James has above average health and is physically active. He has never smoked. Which risk classification will James most likely be rated? a. Preferred b. Standard c. Substandard d. Declined

a. Preferred

Which of the following is the primary source of information used in underwriting an insurance policy? a. Attending physician statement b. Application c. Agent report d. Medical Information Bureau

b. Application

Which report may contain information gathered through interviews with friends and neighbors, employers and coworkers, who know the insured? a. Agent's report b. Investigative report c. Medical report d. Insurer's report

b. Investigative report

Part II of the life insurance application includes: a. The agent's statement or report b. Medical Information c. General Information d. Inspection Statement

b. Medical Information

Which of the following best describes a life insurance policy in which the proposed insured is not required to undergo a medical examination? a. Easy policy b. Simply-issued policy c. Simplified issue d. Standard coverage policy

b. Simply-issued policy

Which of the following best describes the main purpose of the Medical Information Bureau (MIB)? a. The MIB is a group of underwriters contracted by insurers to evaluate risks. b. The MIB collects and shares medical information with member insurance companies. c. The MIB rates policies. d. The MIB publishes the CSO Tables every two decades.

b. The MIB collects and shares medical information with member insurance companies.

The MIB is best described as: a. A private underwriting group b. A government agency that collects credit information c. A nonprofit organization that supplies insurability information d. None of the above

c. A nonprofit organization that supplies insurability information

Gerald has a chronic medical condition. What will his risk classification be? How will his premium be affected? a. Gerald's risk classification will be preferred. His premium will be higher. b. Gerald's risk classification will be standard. His premium will be lower. c. Gerald's risk classification will be substandard. His premium will be higher. d. Gerald will be denied coverage.

c. Gerald's risk classification will be substandard. His premium will be higher.

With respect to credit reports, which of the following best describes the purpose in obtaining an inspection or investigative report on an applicant, for an insurance policy? a. Provides information about the applicant's financial stability b. Provides information about the applicant's lifestyle c. Provides information about the applicant's character d. All of the above

d. All of the above