Insurance Underwriting Is Best Described As

Question: The basic purpose of insurance is to _____.

protect your health

protect yourself from economic losses

supplement your income

shield you from bad decisions

protect yourself from non-financial losses

Answer: protect yourself from economic losses

Question: The purchase of insurance is a common form of _____ by the insured.

risk retention

risk transfer

risk assumption

risk avoidance

loss control

Answer: risk transfer

Question:

Answer: the process used by insurers to decide who can be insured and to determine applicable rates that will be charged for premiums.

Question: The probability of a loss occurring can be reduced by_____.

risk observance

loss prevention

risk assumption

risk retention

insurance

Answer: loss prevention

Question: The primary purpose of life insurance is to provide:

financial security for dependents in the event of death.

protection from creditors and lawsuits.

tax-advantaged investments.

high-yield investments.

liquidity to expand business operations.

Answer: financial security for dependents in the event of death.

Question: Actuarial data is used to measure:

the creditworthiness of a population.

the risk of loss for a population.

the wealth of a population.

the gross productivity of a population.

the consumer price index of a population.

Answer: the risk of loss for a population.

Question: _____ is an activity that reduces the chance that a loss will occur.

Risk avoidance

Loss prevention

Loss control

Risk assumption

Premium collection

Answer: Loss prevention

Question:

Answer: assessing the family’s total economic needs and subtracting the financial resources available to meet those needs.

Question:

Answer: The multiple-of-earnings method considers the insurance coverage to be 5 to 10 times the annual income.

Question: Term life insurance is characterized by _____.

level annual premiums throughout one’s life

premium amounts related to age

its inappropriateness for most people’s life insurance needs

non-convertibility

cash value

Answer: premium amounts related to age