C05 Underwriting and Rating MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on C05 Underwriting and Rating, a fundamental topic in the field of IC38 Life Insurance Agent Exam. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our C05 Underwriting and Rating 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 C05 Underwriting and Rating mcq questions that explore various aspects of C05 Underwriting and Rating problems. Each MCQ is crafted to challenge your understanding of C05 Underwriting and Rating principles, enabling you to refine your problem-solving techniques. Whether you're a student aiming to ace IC38 Life Insurance Agent Exam tests, a job seeker preparing for interviews, or someone simply interested in sharpening their skills, our C05 Underwriting and Rating MCQs are your pathway to success in mastering this essential IC38 Life Insurance Agent Exam topic.

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C05 Underwriting and Rating MCQs | Page 4 of 4

Discover more Topics under IC38 Life Insurance Agent Exam

Q31.
How can an insured potentially lower their insurance premium?

a.

By opting for higher deductibles

b.

By eliminating deductibles entirely

c.

By submitting more frequent claims

d.

By increasing the coverage limits

Discuss
Answer: (a).By opting for higher deductibles Explanation:Insured individuals may lower their insurance premiums by voluntarily choosing higher deductibles, which means they agree to bear a larger portion of the claim costs.
Q32.
Why might health insurers require a deductible in their policies?

a.

To discourage insured individuals from seeking medical treatment

b.

To reduce the need for documentation in medical claims

c.

To ensure that all hospitalization costs are covered

d.

To encourage insured individuals to make cost-conscious decisions regarding medical treatment

Discuss
Answer: (d).To encourage insured individuals to make cost-conscious decisions regarding medical treatment Explanation:Health insurers may include deductibles in their policies to encourage insured individuals to make cost-conscious decisions when seeking medical treatment and avoid overutilization of costly services.
Q33.
In what situations might insurers use deductibles as a risk management strategy?

a.

To reduce their own expenses

b.

To discourage policyholders from filing claims

c.

To prevent the accumulation of small claims

d.

To avoid processing small claims

Discuss
Answer: (c).To prevent the accumulation of small claims Explanation:Insurers may use deductibles as a risk management strategy to prevent the accumulation of numerous small claims, especially in situations where multiple small losses might occur at one location, causing financial stress to the insurer.
Q34.
What is a franchise in insurance terms?

a.

A fast-food restaurant chain

b.

A percentage of the sum insured

c.

The minimum premium for an insurance policy

d.

The full amount of a loss

Discuss
Answer: (b).A percentage of the sum insured Explanation:In insurance, a franchise is a threshold set as a percentage of the sum insured below which no claim is admissible, similar to a deductible.
Q35.
How does a franchise work in insurance claims?

a.

It requires the insured to pay the full claim amount.

b.

It sets the minimum threshold for the insurer's financial responsibility.

c.

It applies only to health insurance claims.

d.

It allows the insured to receive a full claim regardless of the threshold.

Discuss
Answer: (b).It sets the minimum threshold for the insurer's financial responsibility. Explanation:A franchise in insurance determines the minimum threshold of the insurance company's financial responsibility. Claims below this threshold are not admissible.
Q36.
What happens when a claim exceeds the franchise limit?

a.

The insured pays the entire claim.

b.

The insurer pays the entire claim.

c.

Both the insured and the insurer share the claim payment.

d.

The claim is not processed.

Discuss
Answer: (b).The insurer pays the entire claim. Explanation:When a claim exceeds the franchise limit, the entire claim is admissible, and the insurer pays the full amount of the loss.
Q37.
What are rating factors used for in insurance?

a.

To determine the risk and price of insurance policies

b.

To establish the insured's occupation

c.

To calculate the deductible for each policy

d.

To apply discounts for claims

Discuss
Answer: (a).To determine the risk and price of insurance policies Explanation:Rating factors in insurance are used to assess the risk and decide the pricing of insurance policies.
Q38.
How does an insurer use rating factors to determine rates?

a.

By adding loadings for positive features

b.

By applying discounts for adverse features

c.

By establishing a base rate and adjusting it

d.

By increasing the deductible for all policies

Discuss
Answer: (c).By establishing a base rate and adjusting it Explanation:Insurers use rating factors to establish a base rate and then adjust it with discounts for positive features and loadings for adverse features.
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