FIN 341 CH 6 questions with 100%
correct answers
The function of an actuary is to
A) adjust claims.
B) determine premium rates.
C) negotiate reinsurance treaties.
D) invest insurance company assets. - correct answer ✔✔B
) Insurers obtain data which can be used to determine rates from
A) pricing pools.
B) insurance advisory organizations.
C) banks.
D) reciprocal exchanges. - correct answer ✔✔B
Which of the following statements about underwriting policy is (are) true?
I. A company must establish an underwriting policy consistent with company objectives.
II. Underwriting policy is usually subjective and allows the underwriter considerable flexibility with
respect to lines written and forms used.
A) I only
B) II only
C) both I and II
D) neither I nor II - correct answer ✔✔A
Which of the following statements about underwriting standards is (are) true?
I. One purpose of underwriting standards is to reduce adverse selection against the insurer.
II. Equitable rates should be charged so that each group of policyowners pays its own way in terms of
losses and expenses.
, A) I only
B) II only
C) both I and II
D) neither I nor II - correct answer ✔✔C
The underwriting process begins with the
A) agent.
B) desk underwriter.
C) inspection report.
D) acceptance of the application - correct answer ✔✔A
Common sources of underwriting information for life and health insurance include all of the following
EXCEPT
A) the application.
B) a physical examination.
C) the Medical Information Bureau.
D) the applicant's income tax return - correct answer ✔✔D
) If an underwriter suspects moral hazard, the underwriter may ask an outside firm to investigate the
applicant and make a detailed report to the insurer. This report is called a(n)
A) inspection report.
B) application.
C) M.I.B. report.
D) agent's report. - correct answer ✔✔A
One source of life and health insurance underwriting information is an organization that life and health
insurance companies can join. As a member, life and health insurance companies report health
impairments of applicants, and this information is shared with member companies. Although the
information is shared, the underwriting decision of the member company is not disclosed. What is this
organization called?
A) Fair Isaac Corporation (FICO)
correct answers
The function of an actuary is to
A) adjust claims.
B) determine premium rates.
C) negotiate reinsurance treaties.
D) invest insurance company assets. - correct answer ✔✔B
) Insurers obtain data which can be used to determine rates from
A) pricing pools.
B) insurance advisory organizations.
C) banks.
D) reciprocal exchanges. - correct answer ✔✔B
Which of the following statements about underwriting policy is (are) true?
I. A company must establish an underwriting policy consistent with company objectives.
II. Underwriting policy is usually subjective and allows the underwriter considerable flexibility with
respect to lines written and forms used.
A) I only
B) II only
C) both I and II
D) neither I nor II - correct answer ✔✔A
Which of the following statements about underwriting standards is (are) true?
I. One purpose of underwriting standards is to reduce adverse selection against the insurer.
II. Equitable rates should be charged so that each group of policyowners pays its own way in terms of
losses and expenses.
, A) I only
B) II only
C) both I and II
D) neither I nor II - correct answer ✔✔C
The underwriting process begins with the
A) agent.
B) desk underwriter.
C) inspection report.
D) acceptance of the application - correct answer ✔✔A
Common sources of underwriting information for life and health insurance include all of the following
EXCEPT
A) the application.
B) a physical examination.
C) the Medical Information Bureau.
D) the applicant's income tax return - correct answer ✔✔D
) If an underwriter suspects moral hazard, the underwriter may ask an outside firm to investigate the
applicant and make a detailed report to the insurer. This report is called a(n)
A) inspection report.
B) application.
C) M.I.B. report.
D) agent's report. - correct answer ✔✔A
One source of life and health insurance underwriting information is an organization that life and health
insurance companies can join. As a member, life and health insurance companies report health
impairments of applicants, and this information is shared with member companies. Although the
information is shared, the underwriting decision of the member company is not disclosed. What is this
organization called?
A) Fair Isaac Corporation (FICO)
