LLQP Underwriting and Risk Analysis 5 — Questions and Answers
Question 1: An underwriter reviewing a life application notices the proposed insured's build table shows a height of 5'10" and weight of 285 lbs. What underwriting consideration does this primarily raise?
- The application must be automatically declined per regulatory guidelines
- Excess weight increases mortality risk and may result in a rated or declined policy (Correct answer)
- Weight is not considered a valid underwriting factor under US insurance law
- The application is approved at standard rates if no other health issues exist
Correct answer: Excess weight increases mortality risk and may result in a rated or declined policy
Obesity is a significant mortality risk factor because it correlates with conditions like heart disease, diabetes, and hypertension, typically resulting in a rated premium or possible decline.
Question 2: What is the function of the MIB Group (formerly Medical Information Bureau) in the underwriting process?
- To set maximum benefit limits allowable under federal law
- To serve as a clearinghouse of coded medical information shared among member insurers to detect misrepresentation (Correct answer)
- To perform mandatory physical examinations for all applicants over age 50
- To regulate premium rates charged by life insurance companies
Correct answer: To serve as a clearinghouse of coded medical information shared among member insurers to detect misrepresentation
MIB maintains a coded database of significant health and lifestyle information reported by member insurers, helping underwriters identify inconsistencies or omissions in applications.
Question 3: A proposed insured is a 55-year-old with a family history of cardiovascular disease—both parents died of heart attacks before age 60. How does this typically affect underwriting?
- Family history is irrelevant if the applicant's own health tests are normal
- It may result in a rating because premature family cardiovascular history increases mortality risk (Correct answer)
- It automatically triggers a 2-year contestability period extension
- The policy must exclude all cardiovascular-related death benefits
Correct answer: It may result in a rating because premature family cardiovascular history increases mortality risk
Premature cardiovascular death in first-degree relatives is a recognized mortality risk factor that underwriters may use to justify a rating, particularly when multiple close relatives are affected.
Question 4: Which risk classification term describes an applicant whose expected mortality is significantly better than the average standard applicant?
- Substandard
- Preferred or super-preferred (Correct answer)
- Table-rated
- Declined
Correct answer: Preferred or super-preferred
Preferred or super-preferred classifications are awarded to applicants with excellent health profiles, favorable family history, and no hazardous activities, resulting in lower premiums than standard.
Question 5: When an insurer applies a 'table rating' to a life insurance policy, what does 'Table B' or 'Table 2' typically indicate?
- The policy is issued to a non-smoker receiving a discount
- The insured is rated at 150% of standard mortality, indicating a moderately elevated risk (Correct answer)
- The policy is restricted to a term product only
- The death benefit is reduced by 25% for the first two policy years
Correct answer: The insured is rated at 150% of standard mortality, indicating a moderately elevated risk
Table ratings (A through P, or 1 through 16) each represent an incremental increase in mortality of approximately 25%, so Table B/2 equals roughly 150% of standard mortality.
Question 6: A client who was treated for depression five years ago now applies for life insurance. The condition has been in remission with no medication for three years. Which underwriting outcome is MOST likely?
- Automatic decline because mental health history is never insurable
- Consideration for standard or mildly rated coverage depending on severity and stability of remission (Correct answer)
- Coverage issued only as an accidental death benefit policy
- The three-year remission period eliminates any underwriting concern entirely
Correct answer: Consideration for standard or mildly rated coverage depending on severity and stability of remission
A history of depression does not automatically lead to decline; underwriters evaluate severity, treatment type, duration of remission, and compliance to determine whether standard or rated coverage is appropriate.
Question 7: Under the principle of utmost good faith (uberrimae fidei) in life insurance, what obligation does the applicant have during the underwriting process?
- To pay the first premium before any coverage is evaluated
- To voluntarily disclose all material facts that could affect the insurer's decision, even if not specifically asked (Correct answer)
- To provide only the information requested on the written application form
- To undergo a mandatory medical examination regardless of policy amount
Correct answer: To voluntarily disclose all material facts that could affect the insurer's decision, even if not specifically asked
Utmost good faith requires the applicant to proactively disclose any material information that a prudent insurer would consider relevant, not merely answer the questions asked.
LLQP Underwriting and Risk Analysis 5
An underwriter reviewing a life application notices the proposed insured's build table shows a height of 5'10" and weight of 285 lbs.
What underwriting consideration does this primarily raise?