Q. If an individual is considered low risk and insurable at standard premium rates by insurance companies, what type of risk is associated with the individual?

View solution

Q. What is increasing extra risk?

View solution

Q. What is decreasing extra risk?

View solution

Q. What is constant extra risk?

View solution

Q. What is an example of constant extra risk?

View solution

Q. What is standard risk?

View solution

Q. What is adverse selection?

View solution

Q. Which of the following risks associated with an individual is high at the time of initial underwriting but decreases over a period?

View solution

Q. What criteria can an underwriter use to make a decision on accepting a sub-standard risk?

View solution

Q. What are the possible outcomes of the underwriting process?

View solution

Q. In what situation might an insurance company charge extra premium over the standard rate for accepting a sub-standard risk?

View solution

Q. What is the method of charging extra premium for accepting an increasing extra risk?

View solution

Q. Why might it not be fair to charge a level extra premium to an individual throughout the policy term for a decreasing extra risk?

View solution

Q. How is a temporary extra premium charged for a decreasing extra risk?

View solution

Q. How does an insurance company handle sub-standard risk?

View solution

Q. How does an insurance company charge extra premium for the extra risk associated with an individual?

View solution

Q. Why is it difficult to administer an increasing extra premium for increasing risk?

View solution

Q. What is diminishing lien?

View solution

Q. When is a reduced basic sum assured paid in a policy with a diminishing lien?

View solution

Q. How does the amount of debt in a policy with a diminishing lien change over time?

View solution