LLQP Underwriting and Risk Analysis 4

Question 1

A 45-year-old applicant discloses a history of controlled Type 2 diabetes managed by diet alone. How would an underwriter most likely classify this risk?

Accepted Answer

Issue with a rated premium or exclusion rider

Answer

Well-controlled diabetes managed by diet is typically classified as a substandard risk, resulting in a rated premium or an exclusion rider rather than an outright decline.

Question 2

Which underwriting concept refers to the tendency of individuals who know they are at high risk to disproportionately seek insurance coverage?

Accepted Answer

Adverse selection

Answer

Adverse selection occurs when higher-risk individuals are more likely to purchase insurance, skewing the insurer's risk pool unfavorably.

Question 3

When an underwriter requests an Attending Physician's Statement (APS), what is the PRIMARY purpose?

Accepted Answer

To get detailed medical information directly from the applicant's doctor

Answer

An APS is requested to obtain detailed, firsthand medical information from the applicant's treating physician to clarify or expand on disclosed health conditions.

Question 4

An applicant who works as a commercial deep-sea diver applies for a $1 million life insurance policy. This occupational risk is best addressed by the underwriter through which action?

Accepted Answer

Charging an extra flat extra premium to reflect the hazardous occupation

Answer

A flat extra premium per $1,000 of coverage is the standard underwriting tool for quantifiable, occupation-specific hazards like commercial diving.

Question 5

In the context of life insurance underwriting, what does the term 'numerical rating system' refer to?

Accepted Answer

A method of assigning debits and credits to mortality risk factors to determine a final risk rating

Answer

The numerical rating system assigns positive or negative point values (debits/credits) to various risk factors such as build, health history, and occupation to arrive at an overall risk class.

LLQP - Life License Qualification Program Practice Test

LLQP - Life License Qualification Program Practice Test

LLQP Underwriting and Risk Analysis 4