L08 Life Insurance Underwriting MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on L08 Life Insurance Underwriting, 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 L08 Life Insurance Underwriting 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 L08 Life Insurance Underwriting mcq questions that explore various aspects of L08 Life Insurance Underwriting problems. Each MCQ is crafted to challenge your understanding of L08 Life Insurance Underwriting 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 L08 Life Insurance Underwriting MCQs are your pathway to success in mastering this essential IC38 Life Insurance Agent Exam topic.

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L08 Life Insurance Underwriting MCQs | Page 3 of 7

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Q21.
What does "Acceptance at ordinary rates (OR)" mean in underwriting decisions?

a.

Accepting the risk without charging any premium

b.

Accepting the risk at a reduced rate of premium

c.

Accepting the risk at the same rate of premium as a standard life

d.

Declining the risk

Discuss
Answer: (c).Accepting the risk at the same rate of premium as a standard life Explanation:"Acceptance at ordinary rates (OR)" means that the risk is accepted at the same rate of premium as would apply to an ordinary or standard life.
Q22.
In underwriting, what is the most common way of dealing with the large majority of sub-standard risks?

a.

Acceptance without any premium

b.

Declining the risk

c.

Acceptance with an extra premium

d.

Acceptance with a restrictive clause

Discuss
Answer: (c).Acceptance with an extra premium Explanation:"Acceptance with an extra" is the most common way of dealing with sub-standard risks and involves charging an extra premium over the tabular rate.
Q23.
What is the purpose of accepting with a lien on the sum assured in underwriting?

a.

To reduce the sum assured

b.

To increase the sum assured

c.

To hold a portion of the death benefit in case of certain events

d.

To lower the premium

Discuss
Answer: (c).To hold a portion of the death benefit in case of certain events Explanation:Acceptance with a lien on the sum assured allows the insurance company to exercise a hold on a portion of the death benefit in specific circumstances.
Q24.
What does a restrictive clause in underwriting do?

a.

Expands the coverage of the policy

b.

Limits the death benefit under specific conditions

c.

Adds extra premiums

d.

Decreases the policy's term

Discuss
Answer: (b).Limits the death benefit under specific conditions Explanation:A restrictive clause in underwriting limits the death benefit under certain circumstances.
Q25.
When might an underwriter decide to postpone acceptance of a risk?

a.

When the risk is very low

b.

When the risk is standard

c.

When the risk has certain adverse features that considerably increase the risk

d.

When the risk is too favorable

Discuss
Answer: (c).When the risk has certain adverse features that considerably increase the risk Explanation:Underwriters may decide to postpone acceptance of a risk when there are certain adverse features that considerably increase the risk, such as a severe health condition.
Q26.
Which of the following cases is likely to be declined or postponed by a life insurer?

a.

A healthy 18 year old

b.

A sports person

c.

A person suffering from AIDS

d.

A housewife with no income of her own

Discuss
Answer: (c).A person suffering from AIDS Explanation:A life insurer is likely to decline or postpone insurance coverage for a person suffering from AIDS because AIDS is a severe and life-threatening medical condition. It significantly increases the risk for the insurer. In such cases, the insurer may decline the proposal for insurance or postpone acceptance until the situation improves or becomes more favorable.
Q27.
What are non-medical underwriting proposals in the context of life insurance?

a.

Proposals that require a thorough medical examination

b.

Proposals that involve high-risk individuals

c.

Proposals that get selected for insurance without a medical examination

d.

Proposals that exclusively cover women's health

Discuss
Answer: (c).Proposals that get selected for insurance without a medical examination Explanation:Non-medical underwriting refers to life insurance proposals that are accepted without requiring a medical examination. This is often the case for certain categories of individuals, specific insurance plans, and under conditions like an upper limit on the sum insured, entry age limits, and maximum insurance term.
Q28.
What conditions are necessary for non-medical underwriting to be applicable?

a.

Low sum insured, limited entry age, and short insurance term

b.

High-risk lifestyles, specific occupation types, and low income

c.

Certain class of lives, particular insurance plans, and specified entry age limits

d.

Minimum income requirements, excellent health records, and premium affordability

Discuss
Answer: (c).Certain class of lives, particular insurance plans, and specified entry age limits Explanation:Non-medical underwriting has specific conditions that need to be met. These conditions can include the class of lives, types of insurance plans, entry age restrictions, sum insured limits, and maximum insurance term, among others.
Q29.
What are rating factors in underwriting?

a.

Factors that contribute to lower premiums

b.

Factors that determine the insurance company's profitability

c.

Factors that evaluate the insured's financial situation and lifestyle

d.

Factors that impact the claim process for beneficiaries

Discuss
Answer: (c).Factors that evaluate the insured's financial situation and lifestyle Explanation:Rating factors in underwriting refer to various aspects of the prospective insured's life that may pose a hazard and increase the risk. These factors can be broadly divided into two categories: those contributing to moral hazard (e.g., financial situation, lifestyle, habits) and those contributing to physical or medical hazards. Underwriters use these factors to classify the risk accordingly.
Q30.
How might women's insurability in life insurance be influenced?

a.

By their marital status

b.

By the number of children they have

c.

By their need for insurance and premium-paying capacity

d.

By their age and occupation

Discuss
Answer: (c).By their need for insurance and premium-paying capacity Explanation:The insurability of women in life insurance is primarily influenced by their need for insurance and their capacity to pay premiums. Women's insurability is determined by their ability to generate income and their affordability for premiums. Insurance companies may impose certain conditions, especially on pregnant women, to address specific risks.
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