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.

Note: Each of the following question comes with multiple answer choices. Select the most appropriate option and test your understanding of Life Underwriting Principles and Concepts Part 1. You can click on an option to test your knowledge before viewing the solution for a MCQ. Happy learning!

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Life Underwriting Principles and Concepts Part 1 MCQs | Page 4 of 12

Discover more Topics under IC22 Life Insurance Underwriting

Q31.
What happens if an applicant has a history of a certain medical condition in life insurance underwriting?

a.

The proposal will be accepted without further assessment

b.

The proposal will be declined without further assessment

c.

The proposal will be evaluated and the decision to grant cover will be made based on the current medical condition and other factors

d.

None of the above

Discuss
Answer: (c).The proposal will be evaluated and the decision to grant cover will be made based on the current medical condition and other factors Explanation:The decision to grant cover in life insurance underwriting is based on various factors, including the applicant's current medical condition, medical history, and other relevant information. If an applicant has a history of a certain medical condition, the proposal will be evaluated, and a decision will be made based on the overall assessment. The proposal may be accepted, declined, or accepted on modified terms based on the assessment of the applicant's risk factors.
Q32.
What may happen if an applicant has high-risk hobbies or habits in life insurance underwriting?

a.

The proposal may be accepted without further assessment

b.

The proposal may be accepted by charging a higher premium to cover the additional risk

c.

The proposal will be declined without further assessment

d.

None of the above

Discuss
Answer: (b).The proposal may be accepted by charging a higher premium to cover the additional risk Explanation:When an applicant has high-risk hobbies or habits, the proposal may still be accepted, but the insurance company may charge a higher premium to cover the additional risk.
Q33.
What factors related to occupation are considered in life insurance underwriting?

a.

Nature of occupation

b.

Salary earned

c.

Number of years employed

d.

All of the above

Discuss
Answer: (a).Nature of occupation Explanation:When evaluating an individual's occupation for life insurance underwriting, the nature of the occupation is considered as a factor. Certain occupations may carry a higher risk of injury or illness, and may therefore affect the underwriting decision. For example, someone working in a high-risk occupation like mining or construction may be considered a higher risk than someone in a low-risk occupation like office work.
Q34.
What financial factors are evaluated in life insurance underwriting?

a.

Income and expenses

b.

Assets and liabilities

c.

Existing insurance cover

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:In life insurance underwriting, various financial factors are evaluated, including income and expenses, assets and liabilities, and existing insurance cover. These factors help the underwriter assess the applicant's financial stability and capacity to pay premiums for the policy. The number of dependents may also be considered, as it can affect the applicant's financial situation. The underwriter may use this information to decide whether to approve the application, reject it, or approve it with modified terms.
Q35.
How does an individual's place of residence and foreign travel impact life insurance underwriting?

a.

It has no impact on life insurance underwriting

b.

It impacts the risk levels for the individual

c.

It only impacts the risk levels for foreign travel

d.

None of the above

Discuss
Answer: (b).It impacts the risk levels for the individual Explanation:An individual's place of residence and foreign travel can impact the risk levels for the individual in life insurance underwriting. Insurance companies evaluate the risk levels relating to the location where the individual resides, as well as the risk levels relating to the location to where the individual is traveling. For example, if an individual resides in an area where crime rates are high or there are high instances of natural disasters, it can impact the risk levels for the individual. Similarly, if an individual travels to foreign locations where the medical infrastructure is poor or there is political instability, it can also impact the risk levels for the individual. Based on these evaluations, the underwriter may either reject the proposal or accept it with modified terms.
Q36.
What happens if an individual has a high-risk occupation in life insurance underwriting?

a.

The proposal will be accepted without further assessment

b.

The proposal will be declined without further assessment

c.

The proposal will be evaluated and the decision to grant cover will be made based on the nature of the occupation and other factors

d.

None of the above

Discuss
Answer: (c).The proposal will be evaluated and the decision to grant cover will be made based on the nature of the occupation and other factors Explanation:When an individual has a high-risk occupation in life insurance underwriting, the proposal will be evaluated, and the decision to grant cover will be made based on the nature of the occupation and other factors. The underwriter will assess the risks associated with the occupation and take into consideration factors such as the level of physical risk involved, the risk of injury or illness, and the frequency of exposure to hazards. The underwriter may also consider the safety measures in place to mitigate these risks, such as safety equipment or training programs. Depending on the evaluation, the underwriter may either accept the proposal or charge a higher premium to cover the additional risk. In some cases, the proposal may be declined.
Q37.
How can an individual's financial condition impact life insurance underwriting?

a.

It has no impact on life insurance underwriting

b.

It can result in a lower premium for the individual

c.

It can result in a higher premium for the individual

d.

It can result in the proposal being declined or accepted with modified terms

Discuss
Answer: (d).It can result in the proposal being declined or accepted with modified terms Explanation:An individual's financial condition can impact life insurance underwriting in many ways, and it can even result in the proposal being declined or accepted with modified terms. For example, if an individual has a poor financial record, is continuously in debt, and their expenses consistently exceed their income and assets, the underwriter may reject the proposal for insurance cover or even recommend a reduction in the quantum of cover that can be granted. This is because the individual may not be able to pay the premiums for the selected tenure/term of the policy, which may tantamount to over-insurance, invoking an element of moral hazard. On the other hand, if the individual has a good financial record, it can result in a lower premium or a better policy offer.
Q38.
What happens if an individual travels to high-risk locations in life insurance underwriting?

a.

It has no impact on life insurance underwriting

b.

The proposal will be declined without further assessment

c.

The proposal will be evaluated and the decision to grant cover will be made based on the risk levels of the location and other factors

d.

None of the above

Discuss
Answer: (c).The proposal will be evaluated and the decision to grant cover will be made based on the risk levels of the location and other factors Explanation:When an individual travels to high-risk locations, it may impact their risk levels and therefore the underwriting decision for their life insurance proposal. The proposal will be evaluated, and the decision to grant cover will be made based on the risk levels of the location and other factors.
Q39.
How does an individual's income impact life insurance underwriting?

a.

It has no impact on life insurance underwriting

b.

It is the only factor evaluated for underwriting

c.

It is considered along with other financial factors for underwriting

d.

None of the above

Discuss
Answer: (c).It is considered along with other financial factors for underwriting Explanation:In life insurance underwriting, an individual's income is one of the financial factors evaluated along with expenses, assets, liabilities, and existing insurance cover. The underwriter considers all these factors to determine the risk associated with granting life insurance cover to the individual.
Q40.
_________________ is charged to individuals if the predictive mortality does not deviate much as compared to that indicated in the mortality table provided by the actuaries.

a.

Sub-standard premium

b.

Standard premium

c.

Extra premium

d.

Loaded premium

Discuss
Answer: (b).Standard premium Explanation:In life insurance, actuaries use mortality tables to predict the probability of death at a given age. If an individual's predicted mortality does not deviate much from that indicated in the mortality table, they will be charged the standard premium. The standard premium is the basic premium charged by the insurance company to provide coverage based on the risk profile of the individual. If an individual is deemed to have a higher risk profile, they may be charged an extra premium (option C), which is also known as a rating or a surcharge. A sub-standard premium (option A) is charged to individuals who are considered to be high risk due to medical conditions or other factors that increase the likelihood of death. A loaded premium (option D) refers to the premium charged by an insurance company that includes expenses and fees in addition to the risk premium.
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