1.Review scenario 161: While reviewing a policy file, these facts apply: Underwriting evaluates an applicant's risk and determines whether and on what terms coverage may be issued. Which option best identifies the concept being tested?
Underwriting evaluates an applicant's risk and determines whether and on what terms coverage may be issued.
Example: A client or producer applies this rule in a policy situation. The correct concept is Risk selection and classification. Underwriting evaluates an applicant's risk and determines whether and on what terms coverage may be issued.
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2.Review scenario 162: During a coverage discussion, these facts apply: The producer gathers and submits information and may report observations relevant to underwriting. Which option best identifies the concept being tested?
The producer gathers and submits information and may report observations relevant to underwriting.
Example: A client or producer applies this rule in a policy situation. The correct concept is Collects application information and observes the applicant. The producer gathers and submits information and may report observations relevant to underwriting.
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3.Review scenario 163: In a case-study question, complete this life-insurance rule: ___ is an insurance-industry information source used to help detect omissions and inconsistencies in underwriting. Which option belongs in the blank?
MIB is an insurance-industry information source used to help detect omissions and inconsistencies in underwriting.
Example: A client or producer applies this rule in a policy situation. The correct concept is MIB. MIB is an insurance-industry information source used to help detect omissions and inconsistencies in underwriting.
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4.Review scenario 164: While advising a policyowner, complete this life-insurance rule: FCRA establishes requirements for obtaining and using ___ and providing required notices. Which option belongs in the blank?
FCRA establishes requirements for obtaining and using consumer reports and providing required notices.
Example: A client or producer applies this rule in a policy situation. The correct concept is Consumer reports. FCRA establishes requirements for obtaining and using consumer reports and providing required notices.
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5.Review scenario 165: During an underwriting discussion, these facts apply: Investigative consumer reports can include interviews with associates about reputation, habits, and lifestyle, subject to law. Which option best identifies the concept being tested?
Investigative consumer reports can include interviews with associates about reputation, habits, and lifestyle, subject to law.
Example: A client or producer applies this rule in a policy situation. The correct concept is Interviews about the applicant's character and lifestyle. Investigative consumer reports can include interviews with associates about reputation, habits, and lifestyle, subject to law.
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6.For review, identify risk class generally represents lower-than-average expected mortality.
Preferred risks generally have favorable characteristics and may qualify for lower premiums.
Example: A client or producer applies this rule in a policy situation. The correct concept is Preferred. Preferred risks generally have favorable characteristics and may qualify for lower premiums.
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7.For review, identify risk class generally presents higher-than-average expected mortality and may be issued at a higher premium.
Substandard applicants may be offered coverage with a rating, higher premium, or other underwriting terms.
Example: A client or producer applies this rule in a policy situation. The correct concept is Substandard. Substandard applicants may be offered coverage with a rating, higher premium, or other underwriting terms.
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8.Review scenario 168: Adverse selection refers to the tendency of:
Adverse selection occurs when those more likely to suffer loss are more inclined to seek coverage.
Example: A client or producer applies this rule in a policy situation. The correct concept is Higher-risk individuals to seek or retain more insurance than lower-risk individuals. Adverse selection occurs when those more likely to suffer loss are more inclined to seek coverage.
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9.Review scenario 169: If the policyowner and insured are different people, underwriting will pay special attention to:
Third-party ownership requires a legitimate insurable interest at policy inception.
Example: A client or producer applies this rule in a policy situation. The correct concept is Insurable interest. Third-party ownership requires a legitimate insurable interest at policy inception.
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10.Review scenario 170: A material misrepresentation is important because it could:
A fact is material when accurate disclosure could influence whether or how the insurer issues coverage.
Example: A client or producer applies this rule in a policy situation. The correct concept is Affect the insurer's underwriting decision. A fact is material when accurate disclosure could influence whether or how the insurer issues coverage.
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