Life Underwriting Principles and Concepts Part 2 MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Life Underwriting Principles and Concepts Part 2, 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 2 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 2 mcq questions that explore various aspects of Life Underwriting Principles and Concepts Part 2 problems. Each MCQ is crafted to challenge your understanding of Life Underwriting Principles and Concepts Part 2 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 2 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 2. 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 2 MCQs | Page 6 of 14

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Q51.
How is an individual categorized if their assessment value is more than 125% in the risk classification process?

a.

Standard risk

b.

Sub-standard risk

c.

Highly sub-standard risk

d.

Risk is not classified for values above 125%

Discuss
Answer: (c).Highly sub-standard risk Explanation:If an individual's assessment value is more than 125%, they will be categorized as highly sub-standard risk.
Q52.
What does an individual having an extra mortality rating of 100% imply?

a.

They have no extra mortality risk

b.

They are likely to face double the mortality risk of an individual accepted on standard terms

c.

They have a 100% chance of dying

d.

They are likely to live longer than an individual accepted on standard terms

Discuss
Answer: (b).They are likely to face double the mortality risk of an individual accepted on standard terms Explanation:An individual having an extra mortality rating of 100% implies that they are likely to face double the mortality risk of an individual who has been accepted on standard terms.
Q53.
What is the combined effect of unfavourable factors in the risk classification process?

a.

The total of individual unfavourable factors is considered in isolation

b.

The combination effect of unfavourable factors is not considered

c.

The combination effect of unfavourable factors may give a much higher extra mortality rate than individual unfavourable factors

d.

The combination effect of unfavourable factors gives the same extra mortality rate as individual unfavourable factors

Discuss
Answer: (c).The combination effect of unfavourable factors may give a much higher extra mortality rate than individual unfavourable factors Explanation:The combination effect of unfavourable factors may give a much higher extra mortality rate than individual unfavourable factors.
Q54.
How is the total credit rating for extra mortality calculated for an individual with multiple unfavourable factors?

a.

Each unfavourable factor is considered in isolation and the total is calculated

b.

The combined effect of all unfavourable factors is calculated, which may give a much higher extra mortality rate

c.

Only the highest rated unfavourable factor is considered for calculating the total credit rating

d.

The total credit rating for extra mortality is not calculated for individuals with multiple unfavourable factors

Discuss
Answer: (b).The combined effect of all unfavourable factors is calculated, which may give a much higher extra mortality rate Explanation:When an individual has multiple unfavourable factors, the combined effect of these factors needs to be considered cautiously in underwriting. The total of the individual unfavourable factors that are considered in isolation may not give true results; a combination effect of these factors may give a much higher extra mortality rate than for the individual unfavourable/adverse factors.
Q55.
What is the "combination factor" in underwriting?

a.

An additional rating for the combined effect of unfavourable factors in an individual

b.

A factor that only applies to favourable attributes

c.

A rating system for assessing creditworthiness

d.

An underwriting rule that only applies to individuals with multiple diseases

Discuss
Answer: (a).An additional rating for the combined effect of unfavourable factors in an individual Explanation:The "combination factor" refers to an additional rating for the combined effect of unfavourable factors in an individual. When multiple unfavourable factors co-exist, the combined effect may increase the mortality rate manifold, hence the additional rating is required to classify the extra risk appropriately.
Q56.
What are some advantages of the numerical rating system in underwriting?

a.

It eliminates personal judgment of the underwriters to a large extent.

b.

It helps in assessing the combined effect of multiple adverse factors together.

c.

It increases speed and efficiency in handling large volumes of business.

d.

All of the above.

Discuss
Answer: (d).All of the above. Explanation:Multiple advantages of the numerical rating system in underwriting, including eliminating personal judgment of underwriters, assessing the combined effect of multiple adverse factors, and increasing speed and efficiency in handling large volumes of business.
Q57.
Why is charging a level extra premium for substandard lives throughout the term of the policy contract considered unfair for some individuals?

a.

They may have a category of extra-risk that diminishes over time.

b.

They may have multiple impairments that are not accounted for.

c.

They may not have a high enough sum-assured.

d.

All of the above.

Discuss
Answer: (a).They may have a category of extra-risk that diminishes over time. Explanation:Charging a level extra premium for substandard lives throughout the term of the policy contract is unfair for individuals whose category of extra-risk is of decreasing type, meaning their extra risk diminishes over time.
Q58.
What is a temporary extra in the context of the numerical rating system?

a.

A temporary increase in the sum-assured.

b.

A temporary reduction in the extra mortality rating.

c.

A temporary extra premium imposed for a short period along with the normal extra mortality rating.

d.

None of the above.

Discuss
Answer: (c).A temporary extra premium imposed for a short period along with the normal extra mortality rating. Explanation:A temporary extra is imposed for a short period along with the normal extra mortality rating when charging for the extra risk in the initial years of the policy but which decreases with the passage of time.
Q59.
What is a limitation of the numerical rating system?

a.

It does not account for the effect of the presence of co-morbidity factors.

b.

It involves too much personal judgment by underwriters.

c.

It is inefficient in handling large volumes of business.

d.

All of the above.

Discuss
Answer: (a).It does not account for the effect of the presence of co-morbidity factors. Explanation:The numerical rating system, while helpful in the risk assessment of individual impairments, does not account for the effect of the presence of co-morbidity factors, which is a limitation.
Q60.
How does an individual's occupation impact their risk profile?

a.

It does not impact their risk profile

b.

It impacts their risk profile to a small extent

c.

It impacts their risk profile to a large extent

d.

It only impacts their risk profile if they work in hazardous industries

Discuss
Answer: (c).It impacts their risk profile to a large extent Explanation:The occupation of an individual can impact their risk profile to a large extent.
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