EXAMFX Underwriting and Policy Issue 2

Question 1

Which factor is considered a UNFAVORABLE underwriting factor for life insurance applicants?

Accepted Answer

Family history of hereditary disease

Answer

Regular exercise habits

Answer

Non-smoker status

Answer

Stable employment

Question 2

What is the purpose of a reinsurance arrangement in underwriting?

Accepted Answer

To transfer a portion of risk to another insurer

Answer

To reduce premium costs for policyholders

Answer

To increase the insurer's surplus funds

Answer

To expedite the policy issuance process

Question 3

When an insurer issues a policy with a higher premium than applied for, this is called a:

Accepted Answer

Substandard rating

Answer

Conditional receipt

Answer

Counteroffer

Answer

Binding receipt

Question 4

Which document serves as the insurer's formal acceptance of a life insurance application?

Accepted Answer

Issued policy

Answer

Binder

Answer

Conditional receipt

Answer

Agent's report

Question 5

What does a 'table rating' indicate about an insurance applicant?

Accepted Answer

The applicant poses a higher-than-standard risk requiring a premium surcharge

Answer

The applicant is a preferred risk

Answer

The applicant is declined coverage

Answer

The applicant qualifies for a group rate

Question 6

An underwriter reviewing an application finds the applicant is a pilot who flies private aircraft. This would most likely result in:

Accepted Answer

An aviation exclusion rider

Answer

Immediate policy decline

Answer

Standard rates with no changes

Answer

A waiver of premium benefit

Question 7

What is 'adverse selection' in the context of insurance underwriting?

Accepted Answer

The tendency of higher-risk individuals to seek more insurance coverage

Answer

The insurer's choice to deny high-risk applicants

Answer

The underwriter's selection of preferred risks only

Answer

The process of selecting beneficiaries