Choose wisely. There is only one correct answer to each question.
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1.
Which of the following is true about long-term care policies with low premiums and permissive medical standards?
All of the above are true. Some companies that were "easy-issue" or competed most aggressively on price have had to sharply increase premiums, or left the business entirely.
2.
Smokers generally pay higher insurance premiums than non-smokers; smoking is considered a(n) _______.
Risk-specific condition. In each application for insurance, the insurer looks for any indication of an above-average (or below-average) risk (such as smoking) that it will have to pay a claim.
3.
The objective of good insurance underwriting is to eliminate customers who are likely to have a claim.
False. The underwriters do not expect to issue policies to only those people who will never file a claim.
4.
If you are turned down for life insurance, you will not qualify for long-term care insurance either.
False. Some people who have unsuccessfully applied for life insurance incorrectly assume they cannot qualify for long-term care insurance either.
5.
The entire insurance industry is based upon _______.
Actuarial calculations. The entire insurance industry is based upon actuarial calculations that would be completely unreliable without the ability to identify, exclude, or charge a higher premium for those who are almost sure to suffer a covered loss.