ALU 202 EXAM PREP |ACTUAL QUESTIONS AND
VERIFIED ANSWERS|BRAND NEW 2026-2027
UPDATE|GRADED A+
Question 1
Underwriting criteria generally used in the pricing of preferred policies include which of
the following?
(A) Blood pressure
(B) Cholesterol/HDL ratios
(C) Family history
CORRECT ANSWER
All are correct
(Chapter 1)
Question 2
All of the following are life insurance pricing components that are established by
regulation EXCEPT:
(A) Reserve basis
(B) Tax law
(C) Non-forfeiture laws
(D) Asset risk
CORRECT ANSWER
Asset risk
1
, (Chapter 1)
Question 3
The relationship of mortality savings from a requirement to the cost of administering the
requirement is...
CORRECT ANSWER
Protective value
(Chapter 1)
Question 4
All of the following statements regarding a protective value study of underwriting
requirements are correct EXCEPT:
(A) It should evaluate which requirement identified the underlying impairment
(B) It should consider the PI's behavior in accepting or rejecting the offered policy
(C) It should measure the difference between select and ultimate mortality
(D) It should ensure that the offered product is "at the market"
CORRECT ANSWER
It should measure the difference between select and ultimate mortality
(Chapter 1)
Question 5
2
,A safety net that needs to be provided beyond the level of reserves being held in case of a
company's mortality experience turns out to eb much worse than expected is referred to
as...
CORRECT ANSWER
Risk-based capital
(Chapter 1)
Question 6
For direct carriers, the average percent of premium assigned to cover mortality is...
CORRECT ANSWER
50%
(Chapter 2)
Question 7
Companies will update existing cost benefit studies for which of the following reasons?
(A) Changes in pricing
(B) Competitive landscape
(C) Actual experience
CORRECT ANSWER
All are correct
(Chapter 2)
3
, Question 8
A hit rate of 3% associated with a table 8 (200 debit) average rating results in which of the
following?
(A) 6% reduction in profit margin
(B) 6% increase in mortality
(C) 3% increase in mortality
(D) 6% reduction in mortality
CORRECT ANSWER
6% increase in mortality
(Chapter 2)
Question 9
Which of the following statements about cost/benefit studies is correct?
(A) It is based on the historical mortality found by a requirement being studied
(B) It assumes mortality plays out according to UW guidelines
(C) Interest and lapse rates are not embedded in to the results
CORRECT ANSWER
B only is correct
(Chapter 2)
Question 10
4
VERIFIED ANSWERS|BRAND NEW 2026-2027
UPDATE|GRADED A+
Question 1
Underwriting criteria generally used in the pricing of preferred policies include which of
the following?
(A) Blood pressure
(B) Cholesterol/HDL ratios
(C) Family history
CORRECT ANSWER
All are correct
(Chapter 1)
Question 2
All of the following are life insurance pricing components that are established by
regulation EXCEPT:
(A) Reserve basis
(B) Tax law
(C) Non-forfeiture laws
(D) Asset risk
CORRECT ANSWER
Asset risk
1
, (Chapter 1)
Question 3
The relationship of mortality savings from a requirement to the cost of administering the
requirement is...
CORRECT ANSWER
Protective value
(Chapter 1)
Question 4
All of the following statements regarding a protective value study of underwriting
requirements are correct EXCEPT:
(A) It should evaluate which requirement identified the underlying impairment
(B) It should consider the PI's behavior in accepting or rejecting the offered policy
(C) It should measure the difference between select and ultimate mortality
(D) It should ensure that the offered product is "at the market"
CORRECT ANSWER
It should measure the difference between select and ultimate mortality
(Chapter 1)
Question 5
2
,A safety net that needs to be provided beyond the level of reserves being held in case of a
company's mortality experience turns out to eb much worse than expected is referred to
as...
CORRECT ANSWER
Risk-based capital
(Chapter 1)
Question 6
For direct carriers, the average percent of premium assigned to cover mortality is...
CORRECT ANSWER
50%
(Chapter 2)
Question 7
Companies will update existing cost benefit studies for which of the following reasons?
(A) Changes in pricing
(B) Competitive landscape
(C) Actual experience
CORRECT ANSWER
All are correct
(Chapter 2)
3
, Question 8
A hit rate of 3% associated with a table 8 (200 debit) average rating results in which of the
following?
(A) 6% reduction in profit margin
(B) 6% increase in mortality
(C) 3% increase in mortality
(D) 6% reduction in mortality
CORRECT ANSWER
6% increase in mortality
(Chapter 2)
Question 9
Which of the following statements about cost/benefit studies is correct?
(A) It is based on the historical mortality found by a requirement being studied
(B) It assumes mortality plays out according to UW guidelines
(C) Interest and lapse rates are not embedded in to the results
CORRECT ANSWER
B only is correct
(Chapter 2)
Question 10
4
