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 7 of 12

Discover more Topics under IC22 Life Insurance Underwriting

Q61.
What is the reason for declining coverage for an individual with severe medical conditions?

a.

To avoid legal action from the insured individual

b.

To increase profits for the insurance company

c.

Due to the high risk of an early claim

d.

None of the above

Discuss
Answer: (c).Due to the high risk of an early claim Explanation:Underwriters may decline coverage for an individual with severe medical conditions because the risk of an early claim is high, which may result in a financial loss for the insurance company.
Q62.
What is the purpose of postponing life insurance offers for individuals with initial high-risk period?

a.

To increase the premium amount for the policy

b.

To reduce the risk for the insurance company

c.

To avoid insuring high-risk individuals

d.

To make the underwriting process more efficient

Discuss
Answer: (b).To reduce the risk for the insurance company Explanation:When the initial risk associated with an individual is unacceptable at the time of underwriting, but is expected to improve over a period of time, then the life insurance offer can be postponed for a certain period. After the initial high-risk period has elapsed, the applicant would be evaluated and assessed afresh at that point of time. This helps the insurance company deal with reduced risk after the period of high risk has elapsed, thus reducing the overall risk for the company.
Q63.
How long can the life insurance offer be postponed for individuals with initial high-risk period?

a.

Between 2-5 years

b.

Between 1-3 years

c.

Between 6 months to 2 years

d.

Indefinitely

Discuss
Answer: (c).Between 6 months to 2 years Explanation:When the initial risk associated with an individual is unacceptable at the time of underwriting, but is expected to improve over a period of time, the life insurance offer can be postponed for a certain period, typically between 6 months to 2 years depending on the medical condition. After the initial high-risk period has elapsed, the applicant would be evaluated and assessed afresh at that point of time. This allows the insurance company to deal with reduced risk after the period of high risk has elapsed, and it's a win-win situation for both the individual and the insurance company.
Q64.
What does it mean to accept the risk with exclusion in insurance?

a.

The insurer will not be liable to make any payment for a specific risk

b.

The insurer will only pay a reduced amount in the event of a claim

c.

The policy will only be valid for a limited period of time

d.

The insurer will provide coverage for all risks associated with the individual

Discuss
Answer: (a).The insurer will not be liable to make any payment for a specific risk Explanation:When the insurer accepts the risk with exclusion, it means that they will not be liable to make any payment for a specific risk that is excluded from the policy. For example, if a person has a pre-existing medical condition that is excluded from their health insurance policy, the insurer will not be responsible for paying any claims related to that particular condition. This allows the insurer to offer coverage to individuals who may have a higher risk of making a claim while still managing their overall risk.
Q65.
In what situation would exclusions be used in health insurance?

a.

To grant coverage to individuals with pre-existing impairments

b.

To reduce the premium amount for the policy

c.

To increase the profits for the insurance company

d.

To avoid legal action from the insured individual

Discuss
Answer: (a).To grant coverage to individuals with pre-existing impairments Explanation:Exclusions are often used in health insurance to grant coverage to individuals with pre-existing impairments, as the insurance company may not want to decline the case entirely but cannot assume the entire risk associated with the pre-existing condition.
Q66.
What happens if an individual with an exclusion clause experiences a recurrence of symptoms directly connected to the excluded risk?

a.

The insurance company will be liable to pay the claim

b.

The policy will become null and void

c.

The insurance company will only pay a reduced amount in the event of a claim

d.

The insurance company will not be liable to pay the claim

Discuss
Answer: (d).The insurance company will not be liable to pay the claim Explanation:If an individual with an exclusion clause experiences a recurrence of symptoms directly connected to the excluded risk, the insurance company will not be liable to pay the claim as per the special exclusions accepted by the applicant at the stage of policy issuance.
Q67.
___________ is the frequency with which a disease appears in a given group of people on the basis of their age. gender and occupation.

a.

Mortality rate

b.

Morbidity rate

c.

Mortality table

d.

Morbidity risk

Discuss
Answer: (b).Morbidity rate Explanation:Morbidity rate refers to the frequency with which a particular disease or health condition appears in a particular group of people based on factors such as age, gender, and occupation. It is a measure of the number of people who are affected by a disease or health condition in a given population over a specific period of time. Mortality rate, on the other hand, refers to the frequency with which death occurs in a particular population due to a particular cause or causes. A mortality table is a statistical table that shows the probability of dying at various ages and is used in life insurance underwriting. Morbidity risk is the likelihood of experiencing illness or disease.
Q68.
What is the fundamental principle of life assurance?

a.

Standard risk

b.

Sub-standard risk

c.

Utmost good faith

d.

Actuarial assumptions

Discuss
Answer: (c).Utmost good faith Explanation:Life assurance is guided on the fundamental principle of "utmost good faith (uberrima fides)", whereby the insurer relies on the information given by the proposer, supported by necessary medical evidence, wherever applicable.
Q69.
What is standard risk?

a.

A risk associated with an individual that is considered to be high

b.

A risk associated with an individual that cannot be insured at standard premium rates

c.

A risk associated with an individual that is considered to be low and insurable at standard premium rates

d.

A risk associated with an individual that is not covered by insurance companies

Discuss
Answer: (c).A risk associated with an individual that is considered to be low and insurable at standard premium rates Explanation:If the risk associated with an individual is considered to be low and insurable at standard premium rates by insurance companies, then it is known as standard risk.
Q70.
What is sub-standard risk?

a.

A risk associated with an individual that is considered to be high

b.

A risk associated with an individual that cannot be insured at standard premium rates

c.

A risk associated with an individual that is considered to be low and insurable at standard premium rates

d.

A risk associated with an individual that is not covered by insurance companies

Discuss
Answer: (a).A risk associated with an individual that is considered to be high Explanation:If the risk associated with an individual is considered to be high and cannot be insured at standard premium rates by insurance companies, then it is known as sub-standard risk.
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