Underwriting Process and Structure MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Underwriting Process and Structure, 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 Underwriting Process and Structure 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 Underwriting Process and Structure mcq questions that explore various aspects of Underwriting Process and Structure problems. Each MCQ is crafted to challenge your understanding of Underwriting Process and Structure 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 Underwriting Process and Structure 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 Underwriting Process and Structure. You can click on an option to test your knowledge before viewing the solution for a MCQ. Happy learning!

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Underwriting Process and Structure MCQs | Page 9 of 12

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Q81.
Who amongst the following persons/teams is responsible for underwriting medical and non-medical proposals according to the guidelines laid down by the insurance company and the regulators?

a.

The CMO

b.

Underwriting support team

c.

Core underwriting team

d.

Medical team

Discuss
Answer: (c).Core underwriting team Explanation:The core underwriting team is responsible for underwriting medical and non-medical proposals according to the guidelines laid down by the insurance company and regulators. The underwriting support team manages and controls the administration of various activities and sub-activities other than underwriting. The CMO or Chief Medical Officer is responsible for providing medical expertise and guidance to the underwriters. The medical team may assist the underwriters in assessing the medical risks associated with a proposal, but the core underwriting team ultimately makes the underwriting decision.
Q82.
What determines the underwriting philosophy of an insurance company?

a.

The extent of risk appetite and thresholds pre-decided by the actuaries and senior management team

b.

The kind of underwriting norms the company follows

c.

The aggressiveness of the company in garnering business

d.

The quality of screening of agents before recruiting them

Discuss
Answer: (a).The extent of risk appetite and thresholds pre-decided by the actuaries and senior management team Explanation:This is because the risk appetite and thresholds set by the actuaries and senior management team determine the company's approach to risk management and underwriting.
Q83.
Why is it important for an insurance company to screen its agents before enrolling them?

a.

To ensure that only ethical agents are hired

b.

To expand aggressively

c.

To generate more business

d.

To prevent unethical practices in the system

Discuss
Answer: (d).To prevent unethical practices in the system Explanation:This is because unethical practices by agents can lead to issues such as mis-selling of policies, which can impact the company's reputation and profitability.
Q84.
Why are service standards important for an insurance company?

a.

To provide customised solutions to individuals

b.

To maintain transparency

c.

To address issues related to policy servicing

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:This is because service standards are important for providing customised solutions to individuals, maintaining transparency, and addressing issues related to policy servicing, all of which impact the customer experience and the company's reputation.
Q85.
What is the role of management in determining an insurance company's underwriting philosophy?

a.

It decides on the long-term policies and strategies to be adopted by the company

b.

It impacts the underwriting rules and guidelines formulated by the company

c.

It plays a pivotal role in terms of the company's outlook and its style of functioning

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:This is because the management's decisions on long-term policies and strategies, outlook, and style of functioning impact the underwriting rules and guidelines formulated by the company, as well as the company's approach to risk management.
Q86.
How does an insurance company's risk appetite impact its underwriting rules and guidelines?

a.

It determines the kind of risks the company decides to undertake under each of its products

b.

It impacts the product-pricing of the company

c.

It impacts the extent of sub-standard risks the company decides to undertake

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:This is because the company's risk appetite impacts the kind of risks the company decides to undertake under each of its products, the product-pricing of the company, and the extent of sub-standard risks the company decides to undertake, all of which impact the underwriting rules and guidelines formulated by the company.
Q87.
What is the importance of underwriting philosophy for an insurance company?

a.

It ensures a fair and prudent risk evaluation process

b.

It determines the premium rates of the products

c.

It ensures maximum profit for the company

d.

It helps in aggressive expansion of the company

Discuss
Answer: (a).It ensures a fair and prudent risk evaluation process Explanation:The underwriting philosophy is important for an insurance company because it ensures a fair and prudent risk evaluation process. It determines the risk appetite and thresholds pre-decided by the actuaries and senior management team, which in turn impacts the underwriting rules and guidelines formulated by the company. This ensures that the risk evaluation process is fair and justified by statistical data available. It also ensures that any gaps in internal processes are identified and addressed, and that there are no major variations in assumptions made by the actuaries while deciding the premium rates under various products. The aim of the underwriting philosophy is not to maximize profit or promote aggressive expansion of the company, but rather to ensure that risks are thoroughly assessed and suitable priced to protect the interests of the company and its customers.
Q88.
What should an insurance company ensure before accepting a risk?

a.

Thorough assessment of the risk

b.

Quick acceptance of the risk

c.

Aggressive pricing of the risk

d.

None of the above

Discuss
Answer: (a).Thorough assessment of the risk Explanation:An insurance company has to ensure that each and every risk is thoroughly assessed before it is accepted and should be suitably priced.
Q89.
What is genetic testing in life insurance?

a.

A process to examine family history of an individual

b.

A process to test for genetic disorders in an individual

c.

A process to examine the enzymes and other proteins in an individual

d.

A process to examine chromosomes of an individual

Discuss
Answer: (b).A process to test for genetic disorders in an individual Explanation:Genetic testing in life insurance is a process to test for genetic disorders in an individual. It involves direct examination of the DNA molecule itself to identify the presence or absence of certain genes that may increase the risk of developing a particular disease. Insurance companies may use the results of genetic testing to screen individuals and determine the appropriate premium rates to charge for accepting the risk of insuring them.
Q90.
How does genetic testing help insurance companies in screening individuals?

a.

It helps in determining an individual's family history

b.

It helps in identifying the presence of certain genes in an individual

c.

It helps in examining the enzymes and other proteins in an individual

d.

It helps in examining chromosomes of an individual

Discuss
Answer: (b).It helps in identifying the presence of certain genes in an individual Explanation:Genetic testing is a process that involves examining an individual's DNA to identify the presence of specific genes associated with certain genetic disorders. Insurance companies can use genetic testing to screen individuals and assess the risks they present for developing certain medical conditions, such as cancer or Alzheimer's disease. If an individual is found to have certain genes associated with a higher risk of developing a medical condition, the insurance company may classify them as a sub-standard risk and charge a higher premium if they choose to accept the risk.
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