ALU 202 Chapter 2 Cost-Benefit
Analysis of Underwriting
Requirements Comprehensive
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Solutions Graded A+
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A cost-benefit (cost/benefit) study compares the - Answer: cost
(expenses) associated with gathering and analyzing
underwriting requirement information, with the benefit derived
from the identification of extra mortality found by the
requirement.
Benefit refers to - Answer: insurance benefit dollars that would
be paid out if the requirement were not ordered. These studies
are also referred to as protective value studies.
Cost/benefit studies are an integral part of the risk-
management process. Such studies provide information to
assess - Answer: whether the dollars invested in obtaining
evidence to assess a risk are producing an adequate return on
the company's investment.
Underwriting requirement expenses can often be challenged
due to high or increasing costs to the organization. In many
companies, vendor expenses are a - Answer: budgetary item
found within the new business and underwriting department.
The underwriter needs full grasp of both the expenses paid out
as well as benefits derived from underwriting requirements.
,Underwriters who have developed skills enabling them to
communicate and defend both the expense and the savings
bring value to their organization. All too often, some of these
skills are - Answer: lacking. Underwriters who walk into the
chief actuary's office claiming a requirement should be
removed because their study determined only 3% of cases
contained mortality hits, have not yet mastered the benefit side
of the equation.
At most companies, expenses are easily - Answer: defined. A
primary objective of this chapter is to help underwriters
become comfortable in understanding both sides of the
equation, with a focus on the mortality benefit side of the
equation. This broader understanding enhances underwriters'
value to their organization.
Underwriting is always evolving. Cost/benefit studies are an
integral component used by - Answer: companies to set
direction for the underwriting department. Existing studies
need updating due to changes in pricing, underlying mortality
tables, actual experience, and the competitive landscape.
There are new vendors entering the life insurance industry all
the time with new and different ideas on what information is -
, Answer: relevant to the underwriter. In many cases, these new
data elements need to be valued by the underwriting
department to determine if, when, and where, these
requirements bring value. Cost/benefit studies can help.
Insurance companies create tables for age-and-amount
underwriting requirements that indicate when a requirement is
needed. These tables are based on a variety of factors, one of
which is - Answer: cost/benefit studies, where break-even
points define at what age and face amount a requirement is
justified. Cost per case is a fixed number. The mortality rate by
age is also a fixed number, for example, a mortality rate of two
deaths per thousand.
That, by itself, is meaningless in a cost/ benefit study if it is not
tied to some face amount. For example, when the face amount
is - Answer: $1 million, two extra deaths mean $2 million in
payment and when the face amount is $100,000, then two
extra deaths adds up to $200,000. In a break-even calculation,
the cost of testing will be balanced by the benefit the mortality
dollars saved, which depends on face amount. That is why both
age and face amount matter in age-and-amount requirement
tables.
Analysis of Underwriting
Requirements Comprehensive
Study Guide + Exam Questions &
Solutions Graded A+
Professional Academic Assistance Services
Services Offered
• Proctored Exam Assistance
• Online Class Management (Full Course Support)
• Exam Preparation & Study Materials
• Assignments and Coursework Support
• Essay and Research Paper Writing
• Discussion Posts & Responses
• Editing and Proofreading
• Confidential Academic Consultation
Contact Information
Email:
WhatsApp link: https://wa.me/254704846336
Fast Response | Confidential | Reliable Academic
, Support
Helping Students Achieve Academic Excellence
A cost-benefit (cost/benefit) study compares the - Answer: cost
(expenses) associated with gathering and analyzing
underwriting requirement information, with the benefit derived
from the identification of extra mortality found by the
requirement.
Benefit refers to - Answer: insurance benefit dollars that would
be paid out if the requirement were not ordered. These studies
are also referred to as protective value studies.
Cost/benefit studies are an integral part of the risk-
management process. Such studies provide information to
assess - Answer: whether the dollars invested in obtaining
evidence to assess a risk are producing an adequate return on
the company's investment.
Underwriting requirement expenses can often be challenged
due to high or increasing costs to the organization. In many
companies, vendor expenses are a - Answer: budgetary item
found within the new business and underwriting department.
The underwriter needs full grasp of both the expenses paid out
as well as benefits derived from underwriting requirements.
,Underwriters who have developed skills enabling them to
communicate and defend both the expense and the savings
bring value to their organization. All too often, some of these
skills are - Answer: lacking. Underwriters who walk into the
chief actuary's office claiming a requirement should be
removed because their study determined only 3% of cases
contained mortality hits, have not yet mastered the benefit side
of the equation.
At most companies, expenses are easily - Answer: defined. A
primary objective of this chapter is to help underwriters
become comfortable in understanding both sides of the
equation, with a focus on the mortality benefit side of the
equation. This broader understanding enhances underwriters'
value to their organization.
Underwriting is always evolving. Cost/benefit studies are an
integral component used by - Answer: companies to set
direction for the underwriting department. Existing studies
need updating due to changes in pricing, underlying mortality
tables, actual experience, and the competitive landscape.
There are new vendors entering the life insurance industry all
the time with new and different ideas on what information is -
, Answer: relevant to the underwriter. In many cases, these new
data elements need to be valued by the underwriting
department to determine if, when, and where, these
requirements bring value. Cost/benefit studies can help.
Insurance companies create tables for age-and-amount
underwriting requirements that indicate when a requirement is
needed. These tables are based on a variety of factors, one of
which is - Answer: cost/benefit studies, where break-even
points define at what age and face amount a requirement is
justified. Cost per case is a fixed number. The mortality rate by
age is also a fixed number, for example, a mortality rate of two
deaths per thousand.
That, by itself, is meaningless in a cost/ benefit study if it is not
tied to some face amount. For example, when the face amount
is - Answer: $1 million, two extra deaths mean $2 million in
payment and when the face amount is $100,000, then two
extra deaths adds up to $200,000. In a break-even calculation,
the cost of testing will be balanced by the benefit the mortality
dollars saved, which depends on face amount. That is why both
age and face amount matter in age-and-amount requirement
tables.
