ALU 202 QUESTIONS WITH VERIFIED ANSWERS
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 - Answers - All are correct
(Chapter 1)
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 - Answers - Asset risk
(Chapter 1)
The relationship of mortality savings from a requirement to the cost of administering the
requirement is... - Answers - Protective value
(Chapter 1)
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" - Answers - It should
measure the difference between select and ultimate mortality
(Chapter 1)
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... - Answers - Risk-based capital
(Chapter 1)
,For direct carriers, the average percent of premium assigned to cover mortality is... -
Answers - 50%
(Chapter 2)
Companies will update existing cost benefit studies for which of the following reasons?
(A) Changes in pricing
(B) Competitive landscape
(C) Actual experience - Answers - All are correct
(Chapter 2)
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 - Answers - 6% increase in mortality
(Chapter 2)
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 - Answers - B only is
correct
(Chapter 2)
Actuaries will create a double decrement table that takes which of the following two
factors into consideration?
(A) Ratings and declines
(B) Lapses and deaths
(C) Placed and non-placed cases
(D) Declines and non-placed cases - Answers - Lapses and deaths
(Chapter 2)
The insured lives mortality table used to establish life insurance policy reserves is:
(A) Group life
(B) Standard and ordinary
,(C) Individual annuity
(D) Individual ultimate - Answers - Standard and ordinary
(Chapter 3)
All of the following statements regarding population life tables are correct EXCEPT:
(A) They are based on death rates calculated for large segments of the population
(B) They do not separate out smokers
(C) They distinguish between the employed and the unemployed
(D) They are often segmented by gender - Answers - They distinguish between the
employed and the unemployed
(Chapter 3)
When calculating mortality rates, the future values of a fixed death benefit is affected by
which of the following?
(A) Inflation
(B) Anticipated lapse rates
(C) Anticipated interest - Answers - A only is correct
(Chapter 3)
The insured lives mortality table that will typically have the lowest mortality rate is:
(A) Individual annuity
(B) Group life
(C) Pension life
(D) Disabled lives life - Answers - Individual annuity
(Chapter 3)
In calculating mortality rates, the symbol "dx" refers to the number of individuals:
(A) Applying for insurance during a specified interval
(B) Dying during a specified interval
(C) Exposed to the risk of dying
(D) Alive at the beginning of a specified interval - Answers - Dying during a specified
interval
(Chapter 3)
All of the following are coronary risk factors in the Framingham Study EXCEPT:
(A) Build
, (B) Cholesterol
(C) Gender
(D) Blood pressure - Answers - Build
(Chapter 4)
Which of the following statements regarding multivariate regression is/are correct?
(A) Many variables are considered at the same time
(B) It is a technique employed by the Framingham Study
(C) It finds the most significant preferred risk factor and ignores the rest - Answers - A
and B are correct
(Chapter 4)
The risk stratification model that uses debits and credits to determine the risk classes is:
(A) Knock-out
(B) Point system
(C) Weighted average
(D) Excess mortality - Answers - Point system
(Chapter 4)
All of the following risk factors are used by many companies to mitigate the accidental
death hazard in setting their preferred criteria EXCEPT:
(A) Gender
(B) Avocations
(C) Criminal history
(D) Hazardous occupations - Answers - Gender
(Chapter 4)
A multivariate Cox proportional hazard model studies mortality for BMI, BP, and
cholesterol and reports hazard ratios (HR) for each factor. Which of the following
statements are true:
(A) The three HRs represent both the individual risk plus overlap risk associated with
the other two factors studied in the article
(B) An individual can only die of one thing so only the largest hazard ratio should be
applied when underwriting
(C) Each HR has controlled for the hazard associated with the other two - Answers - C
only is correct
(Chapter 4)
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 - Answers - All are correct
(Chapter 1)
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 - Answers - Asset risk
(Chapter 1)
The relationship of mortality savings from a requirement to the cost of administering the
requirement is... - Answers - Protective value
(Chapter 1)
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" - Answers - It should
measure the difference between select and ultimate mortality
(Chapter 1)
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... - Answers - Risk-based capital
(Chapter 1)
,For direct carriers, the average percent of premium assigned to cover mortality is... -
Answers - 50%
(Chapter 2)
Companies will update existing cost benefit studies for which of the following reasons?
(A) Changes in pricing
(B) Competitive landscape
(C) Actual experience - Answers - All are correct
(Chapter 2)
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 - Answers - 6% increase in mortality
(Chapter 2)
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 - Answers - B only is
correct
(Chapter 2)
Actuaries will create a double decrement table that takes which of the following two
factors into consideration?
(A) Ratings and declines
(B) Lapses and deaths
(C) Placed and non-placed cases
(D) Declines and non-placed cases - Answers - Lapses and deaths
(Chapter 2)
The insured lives mortality table used to establish life insurance policy reserves is:
(A) Group life
(B) Standard and ordinary
,(C) Individual annuity
(D) Individual ultimate - Answers - Standard and ordinary
(Chapter 3)
All of the following statements regarding population life tables are correct EXCEPT:
(A) They are based on death rates calculated for large segments of the population
(B) They do not separate out smokers
(C) They distinguish between the employed and the unemployed
(D) They are often segmented by gender - Answers - They distinguish between the
employed and the unemployed
(Chapter 3)
When calculating mortality rates, the future values of a fixed death benefit is affected by
which of the following?
(A) Inflation
(B) Anticipated lapse rates
(C) Anticipated interest - Answers - A only is correct
(Chapter 3)
The insured lives mortality table that will typically have the lowest mortality rate is:
(A) Individual annuity
(B) Group life
(C) Pension life
(D) Disabled lives life - Answers - Individual annuity
(Chapter 3)
In calculating mortality rates, the symbol "dx" refers to the number of individuals:
(A) Applying for insurance during a specified interval
(B) Dying during a specified interval
(C) Exposed to the risk of dying
(D) Alive at the beginning of a specified interval - Answers - Dying during a specified
interval
(Chapter 3)
All of the following are coronary risk factors in the Framingham Study EXCEPT:
(A) Build
, (B) Cholesterol
(C) Gender
(D) Blood pressure - Answers - Build
(Chapter 4)
Which of the following statements regarding multivariate regression is/are correct?
(A) Many variables are considered at the same time
(B) It is a technique employed by the Framingham Study
(C) It finds the most significant preferred risk factor and ignores the rest - Answers - A
and B are correct
(Chapter 4)
The risk stratification model that uses debits and credits to determine the risk classes is:
(A) Knock-out
(B) Point system
(C) Weighted average
(D) Excess mortality - Answers - Point system
(Chapter 4)
All of the following risk factors are used by many companies to mitigate the accidental
death hazard in setting their preferred criteria EXCEPT:
(A) Gender
(B) Avocations
(C) Criminal history
(D) Hazardous occupations - Answers - Gender
(Chapter 4)
A multivariate Cox proportional hazard model studies mortality for BMI, BP, and
cholesterol and reports hazard ratios (HR) for each factor. Which of the following
statements are true:
(A) The three HRs represent both the individual risk plus overlap risk associated with
the other two factors studied in the article
(B) An individual can only die of one thing so only the largest hazard ratio should be
applied when underwriting
(C) Each HR has controlled for the hazard associated with the other two - Answers - C
only is correct
(Chapter 4)
