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 6 of 12

Discover more Topics under IC22 Life Insurance Underwriting

Q51.
What does morbidity rate help insurers predict?

a.

The likelihood that an insured will die

b.

The likelihood that an insured will be involved in an accident

c.

The likelihood that an insured will contract or develop any number of specified diseases

d.

The likelihood that an insured will commit fraud

Discuss
Answer: (c).The likelihood that an insured will contract or develop any number of specified diseases Explanation:Morbidity rate is the expected number of people becoming ill or sick over a defined period, usually a year, and these rates help insurers predict the likelihood that an insured will contract or develop specific diseases.
Q52.
What is morbidity risk?

a.

The probability of an individual likely to become ill or contracting an adverse medical condition

b.

The ratio of total deaths that occurred in a given group of people in a certain area over a specified/defined period of time

c.

The expected number of people becoming ill or sick over a defined period

d.

The probability that a certain individual will die before his next birthday, on the basis of his age

Discuss
Answer: (a).The probability of an individual likely to become ill or contracting an adverse medical condition Explanation:Morbidity risk refers to the probability of an individual becoming ill or contracting an adverse medical condition. This risk is important for insurers to consider when underwriting policies, as it affects the likelihood that the insured will make a claim.
Q53.
How can an insurance company mitigate morbidity risk for an individual with a high risk of illness?

a.

Exclude critical illness from the policy and only grant base cover with or without an appropriate loading

b.

Grant full coverage with no modifications

c.

Decline coverage altogether

d.

Increase premiums for all customers to cover the potential risk

Discuss
Answer: (a).Exclude critical illness from the policy and only grant base cover with or without an appropriate loading Explanation:An insurance company can mitigate morbidity risk for an individual with a high risk of illness by excluding critical illness from the policy and only granting base cover with or without an appropriate loading. This means that the insurance company will only provide coverage for basic medical expenses and exclude coverage for more serious or expensive illnesses, which can help reduce their potential risk.
Q54.
How do insurance companies assess the risk associated with an individual?

a.

Based on the individual's age, gender, and occupation

b.

Based on assumptions of mortality and morbidity rates

c.

Based on the underwriter's personal judgement

d.

Based on the individual's income and credit score

Discuss
Answer: (b).Based on assumptions of mortality and morbidity rates Explanation:Insurance companies assess the risk associated with an individual based on assumptions of mortality and morbidity rates.
Q55.
What factors do underwriters consider when evaluating an individual's risk?

a.

Age and gender

b.

Occupation and income

c.

Medical history and lifestyle

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:Underwriters evaluate an individual's risk based on factors such as medical history, lifestyle, age, gender, and occupation.
Q56.
What should underwriting decisions be backed with?

a.

Adequate rationale and supporting documentation

b.

Personal judgement and biases

c.

Company guidelines and policies

d.

None of the above

Discuss
Answer: (a).Adequate rationale and supporting documentation Explanation:Each underwriting decision should be backed with adequate rationale and supporting documentation, and should not be judgmental or biased.
Q57.
In what circumstances may an individual be declined for insurance coverage?

a.

If the individual has an adverse medical condition

b.

If the individual has a high-risk occupation

c.

If the individual has a low income

d.

If the individual is too young or too old

Discuss
Answer: (a).If the individual has an adverse medical condition Explanation:If an individual is suffering from medical conditions that are so severe at the time of underwriting that risk cannot be accepted even with extra premium because an early claim is foreseen, such cases are declined.
Q58.
What is meant by accepting the risk with loading?

a.

Providing insurance cover to an individual with appropriate loading (i.e. extra premium)

b.

Providing insurance cover to an individual at standard rates

c.

Providing insurance cover to an individual with no modifications

d.

Declining insurance coverage for an individual

Discuss
Answer: (a).Providing insurance cover to an individual with appropriate loading (i.e. extra premium) Explanation:If an individual is suffering from some existing medical condition and the risk is high but can be accepted by the insurance company, then insurance cover can be provided to the individual with appropriate loading (i.e. extra premium).
Q59.
What factors do underwriters consider when assessing the risk associated with an individual?

a.

Mortality and morbidity rates

b.

Personal judgment and bias

c.

Company guidelines and policies

d.

None of the above

Discuss
Answer: (a).Mortality and morbidity rates Explanation:When assessing the risk associated with an individual, underwriters consider factors based on mortality and morbidity rates. These rates help insurance companies estimate the likelihood of an individual becoming ill or dying based on their age, gender, occupation, lifestyle, and other factors. Underwriters evaluate whether the risk associated with an individual can be accepted at standard rates or not based on these factors. Personal judgment and bias should not influence the decision of underwriters, and their decisions must be backed by adequate rationale and supporting documentation. Ultimately, the company guidelines and policies must be followed, and rationalized decisions should be made.
Q60.
What is the rationale behind requiring underwriting decisions to be backed by supporting documentation?

a.

To prevent bias and ensure consistency

b.

To increase profits for the insurance company

c.

To avoid legal action from the insured individual

d.

To make the underwriting process more efficient

Discuss
Answer: (a).To prevent bias and ensure consistency Explanation:By requiring underwriting decisions to be backed by supporting documentation, it helps to prevent bias and ensure consistency in the decision-making process. This is important to ensure that all individuals are assessed fairly and objectively based on their level of risk. It also helps to provide a clear record of the decision-making process in case of any disputes or legal action in the future.
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