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1.
Which of the following is NOT a variable that influences the premium charge for insurance coverage?
Uninsurable conditions. An uninsurable condition would make it impossible to set a premium. It is not a variable; it is a roadblock.
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.
Insurers are required to set long-term care insurance premiums high enough to minimize the likelihood of future rate increases.
True. The regulations require insurance companies to set adequate premiums on new policies when sold, to minimize the chance of rate hikes in years to come.
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.
The process by which an insurance company evaluates the risks of customers who want to buy insurance to determine whether to accept them and at what premium is called _______.
Underwriting. This is the process by which an insurance company evaluates the risks for which would-be customers want to buy coverage and determines which applicants will be accepted and rejected for policies.