Life Underwriting Principles and Concepts Part 1 MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Life Underwriting Principles and Concepts Part 1, a fundamental topic in the field of IC22 Life Insurance Underwriting. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our Life Underwriting Principles and Concepts Part 1 MCQs are designed to help you grasp the core concepts and excel in solving problems.

In this section, you'll find a wide range of Life Underwriting Principles and Concepts Part 1 mcq questions that explore various aspects of Life Underwriting Principles and Concepts Part 1 problems. Each MCQ is crafted to challenge your understanding of Life Underwriting Principles and Concepts Part 1 principles, enabling you to refine your problem-solving techniques. Whether you're a student aiming to ace IC22 Life Insurance Underwriting tests, a job seeker preparing for interviews, or someone simply interested in sharpening their skills, our Life Underwriting Principles and Concepts Part 1 MCQs are your pathway to success in mastering this essential IC22 Life Insurance Underwriting topic.

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Life Underwriting Principles and Concepts Part 1 MCQs | Page 2 of 12

Discover more Topics under IC22 Life Insurance Underwriting

Q11.
When can the risk be postponed?

a.

If the mortality risk is found to be higher than the standard mortality table

b.

If the mortality risk is found to be substantially high when compared to the mortality table

c.

If the mortality risk is of a kind that may reduce with the passage of time

d.

If the risk is very high and is either predicted to remain static or may increase in the future

Discuss
Answer: (c).If the mortality risk is of a kind that may reduce with the passage of time Explanation:The risk can be postponed if the mortality risk is found to be substantially high when compared to the mortality table at the time of applying for a policy, and his condition is likely to improve after a period. This is done in cases where the risk is of a kind that may reduce with the passage of time.
Q12.
What decision is taken if the mortality risk is found to be substantially high when compared to the mortality table and is either predicted to remain static or may increase in the future?

a.

Accept the risk

b.

Accept the risk with special terms

c.

Postpone the risk

d.

Decline the risk

Discuss
Answer: (d).Decline the risk Explanation:If the mortality risk is found to be substantially high when compared to the mortality table and is either predicted to remain static or may increase in the future, then the risk may be declined.
Q13.
What is the purpose of underwriting in life insurance?

a.

To reject all insurance applications

b.

To accept all insurance applications

c.

To classify the risk associated with an individual

d.

To collect premiums from policyholders

Discuss
Answer: (c).To classify the risk associated with an individual Explanation:Underwriting in life insurance is the process of assessing the risk associated with an individual and deciding whether to accept or reject their insurance application. The underwriter classifies the risk based on various factors such as medical history, income statements, etc.
Q14.
Who are the professionals hired by insurance companies to perform underwriting?

a.

Actuaries

b.

Policyholders

c.

Underwriters

d.

Insurance agents

Discuss
Answer: (c).Underwriters Explanation:Insurance companies hire professionals known as underwriters to perform the task of underwriting in life insurance. Underwriters assess the risk associated with an individual's insurance application and make a decision based on their assessment.
Q15.
What are the sources of information that underwriters use to assess the risk associated with an individual?

a.

Proposal form

b.

Insurance agent's confidential report

c.

Medical history and medical examination reports

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:Underwriters use various sources of information to assess the risk associated with an individual. These sources include the proposal form, insurance agent's confidential report, and medical history and medical examination reports.
Q16.
What is the purpose of rating the risk in life insurance underwriting?

a.

To accept all insurance applications

b.

To measure the level of risk associated with an individual proposal

c.

To charge higher premiums to policyholders

d.

To decline all insurance applications

Discuss
Answer: (b).To measure the level of risk associated with an individual proposal Explanation:The underwriter rates the risk associated with an individual proposal to measure the level of risk. The rating is based on actuarial means and is used to compare the predicted mortality to the mortality tables. The premium charged is then based on this rating.
Q17.
Why does the underwriter need to ensure that the premium charged to the policyholder is sufficient to cover the risk associated with the policyholder?

a.

To collect more premiums from policyholders

b.

To avoid accepting high-risk policyholders

c.

To ensure that claims can be paid from the common pool

d.

None of the above

Discuss
Answer: (c).To ensure that claims can be paid from the common pool Explanation:The premium charged by the insurance company becomes a part of a common pool from which claims are paid. If the premium charged to an individual is lower than the risk they present, the insurance company may have to suffer a loss or under-estimation of the risk. Therefore, the underwriter needs to ensure that the premium charged to the policyholder is sufficient to cover the risk associated with the policyholder.
Q18.
Who performs the task of underwriting?

a.

Policyholders

b.

Insurance agents

c.

Actuaries

d.

Underwriters

Discuss
Answer: (d).Underwriters Explanation:The underwriters are professionals hired by insurance companies to perform the task of underwriting.
Q19.
What is the first step in life insurance underwriting?

a.

Classification of risk

b.

Rating the risk

c.

Taking a decision on the risk

d.

Determining the premium to be charged

Discuss
Answer: (a).Classification of risk Explanation:The first step in life insurance underwriting is the classification of risk.
Q20.
How does an underwriter measure the level of risk associated with an individual proposal?

a.

By determining the commission payable to the insurance agent

b.

By determining the claims that will be paid to the policyholder

c.

By actuarial means

d.

By determining the premium to be charged to the proposer

Discuss
Answer: (c).By actuarial means Explanation:An underwriter measures the level of risk associated with an individual proposal by actuarial means.
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