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1.
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.
2.
The most important principle of insurance underwriting is that the covered risk must be _______.
Either accidental or unforeseen. The most important principle of all insurance underwriting is that the loss to be covered must be accidental or unforeseeable by the party seeking to buy the insurance.
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.
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.
5.
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.