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1.
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.
2.
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.
3.
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.
4.
Insurance applicants who are neither ideal customers nor completely uninsurable are called _______.
Substandard risks. Substandard risk applicants seeking coverage are those who are neither ideal nor completely uninsurable.
5.
With long-term care insurance, sound underwriting is crucial to all of the following except _______.
Investing cash reserves. Sound underwriting is crucial to forecasting and setting adequate premiums.