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 7 of 14

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Q61.
Which of the following is an example of how an occupation can impact an individual's risk profile?

a.

The individual's education level

b.

The individual's marital status

c.

The individual's work experience

d.

The working environment and risk factors associated with their job

Discuss
Answer: (d).The working environment and risk factors associated with their job Explanation:An individual's occupation can impact their risk profile by exposing them to different working environments and risk factors associated with their job.
Q62.
What does an underwriter need to review when assessing the risk of an individual's occupation?

a.

The individual's job title

b.

The size of the company the individual works for

c.

The exact nature of the individual's occupation

d.

The individual's salary

Discuss
Answer: (c).The exact nature of the individual's occupation Explanation:An underwriter needs to review the exact nature of an individual's occupation when assessing their risk profile.
Q63.
What is the impact of traveling to foreign countries on an individual's underwriting decision?

a.

It has no impact on the underwriting decision

b.

It can result in a decline of the policy in some cases

c.

It can result in an extra premium for the extra risk in some cases

d.

It can result in a waiver of the extra premium in some cases

Discuss
Answer: (c).It can result in an extra premium for the extra risk in some cases Explanation:Traveling to foreign countries that appear on the "restricted" list can result in an extra premium for the extra risk or may warrant declinature in a few cases.
Q64.
In the numerical rating method, which of the following factors is assessed for risk evaluation?

a.

Personal factors

b.

Environmental factors

c.

Hereditary factors

d.

All ofthe above

Discuss
Answer: (d).All ofthe above Explanation:In the numerical rating method, all three factors, i.e., personal factors, environmental factors, and hereditary factors, are assessed for risk evaluation. Personal factors include habits such as smoking, alcohol consumption, etc., while environmental factors include pollution, occupation, etc. Hereditary factors include diseases that are inherited genetically, such as cancer, diabetes, etc. By assessing these factors, the underwriters can determine the level of risk associated with each factor and accordingly decide on the extra premium charged for the policy.
Q65.
What is the underwriter's role in assessing the insurance cover applied for by the client?

a.

Ensuring that the insurance cover is unreasonably high

b.

Ensuring that the insurance cover is commensurate to the occupation stated in the proposal form

c.

Ignoring the applicant's existing insurance cover and declared financial strength

d.

None of the above

Discuss
Answer: (b).Ensuring that the insurance cover is commensurate to the occupation stated in the proposal form Explanation:The underwriter's role is to ensure that the insurance cover applied for by the client is reasonable and commensurate to the type of occupation stated in the proposal form, his existing insurance cover and declared financial strength.
Q66.
What is "moral hazard" in insurance underwriting?

a.

The risk that the applicant will pass away before the policy term ends

b.

The risk that the life assured's worth to his family is perceived to be more when he is dead than when he is alive

c.

The risk that the applicant will not disclose his occupation truthfully

d.

The risk that the applicant will not pay the premiums on time

Discuss
Answer: (b).The risk that the life assured's worth to his family is perceived to be more when he is dead than when he is alive Explanation:"Moral hazard" is the risk that the life assured's worth to his family is perceived to be more when he is dead than when he is alive. This needs to be underwritten with caution.
Q67.
What is taken into account when looking at the financial aspects of the applicant's insurance application?

a.

The total existing insurance cover with all the insurance companies

b.

The amount of insurance cover sought by the applicant

c.

Both a and b

d.

None of the above

Discuss
Answer: (c).Both a and b Explanation:The total existing insurance cover with all the insurance companies and the amount of cover sought by the applicant are taken into account when looking at the financial aspects of the application.
Q68.
What are the documents necessary for risk selection?

a.

duly filled proposal application form

b.

age-proof documents

c.

medical reports used as pre-insurance screening

d.

all of the above

Discuss
Answer: (d).all of the above Explanation:The underwriter needs to review several documents necessary for risk selection, such as duly filled proposal application form, age-proof documents, medical reports used as pre-insurance screening, personal health records of the client (if any), financial documents etc. (income proof and other business income statements etc.), and moral hazard reports from competent authorities of the insurance company.
Q69.
What does the underwriter do after assessing extra mortality rates?

a.

Classifies the risk as standard, sub-standard or highly sub-standard

b.

Accepts the risk without any additional requirements

c.

Rejects the risk without any additional requirements

d.

None of the above

Discuss
Answer: (a).Classifies the risk as standard, sub-standard or highly sub-standard Explanation:After assessment of extra mortality rates, the underwriter classifies the risk as standard, sub-standard or highly sub-standard. Based on the level of risk, the underwriter can choose to accept or reject the risk.
Q70.
What is an underwriter's decision when accepting a sub-standard risk?

a.

Reject the risk

b.

Accept the risk without any additional requirements

c.

Accept the risk with exclusions

d.

Accept the risk with no extra premium

Discuss
Answer: (c).Accept the risk with exclusions Explanation:An underwriter can choose to accept a sub-standard risk by charging extra premium or by accepting the risk with exclusions. The extra premium can be charged either for the entire policy term or for a limited period, depending upon the adverse factors.
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