Underwriting and Risk Analysis Flashcards

What role does the 'Medical Information Bureau' (MIB) play in the underwriting process?

Answer: It maintains a database of coded medical information reported by member insurers to detect application inconsistencies

The MIB maintains a database of coded medical information shared among member insurance companies to help detect inconsistencies in insurance applications.

What is 'field underwriting' and what is the agent's role in this process?

Answer: The initial risk assessment performed by the agent during the application process before formal underwriting

Field underwriting is the initial risk assessment performed by the agent when meeting with the client, gathering information and identifying potential issues before the formal underwriting process.

How do lifestyle factors such as hazardous hobbies affect life insurance underwriting?

Answer: Hazardous hobbies may result in premium surcharges, exclusions, or declined coverage depending on the risk level

Hazardous hobbies and lifestyle factors are assessed during underwriting and may result in additional premiums, specific exclusions, or coverage denial depending on the severity of risk.

What is 'simplified issue' or 'non-medical' life insurance and how does its underwriting differ?

Answer: Insurance issued based on a health questionnaire without a medical examination, typically for lower coverage amounts

Simplified issue insurance relies on health questionnaire answers rather than a medical exam, available for lower coverage amounts where the insurer accepts limited underwriting information.

What is a 'table rating' in substandard underwriting?

Answer: A percentage increase applied to the standard premium to account for additional mortality risk

Table rating is a method of pricing substandard risk by applying a percentage increase to the standard premium, typically in increments of 25%, to account for the additional mortality risk.

How has technology changed the life insurance underwriting process in recent years?

Answer: Electronic health records, predictive analytics, and automated underwriting platforms have accelerated and enhanced the process

Technology has significantly transformed underwriting through electronic data sources, predictive analytics, automated decision-making platforms, and digital application processes.