Chapter 4

Question 1

Preferred Risks

Answer 1

Individuals demonstrating lower mortality risk features

Question 2

Framingham Risk factors

Answer 2

Age, gender, and smoking status, blood pressure, cholesterol, HDL, diabetes and LVH on resting EKG

Question 3

Conservation of Deaths Method

Answer 3

1. Range of mortality in a standard class
2. Mortality is defined as 100%
3. if a subset of those risks have lower mortality expectation
4. by definition the remaining risks will have higher mortality

Question 4

According to the conservation of deaths method, the fewer individuals that qualify for the preferred class:

Answer 4

The greater the mortality discount

Question 5

A method of setting mortality which assumes a correlation between the percent qualifying for a preferred risk class and the mortality discount

Answer 5

Conservation of deaths method

Question 6

Accidental death risk

Answer 6

driving, hazardous avocations, occupations

Question 7

The risk stratification model that uses debits and credits to determine risk classes is:

Answer 7

point system

Question 8

The risk stratification model that uses a series of rules associated with each factor whereby the proposed insured either qualifies for the risk or is “knocked out”

Answer 8

Knock-out

Question 9

Challenges of preferred risk underwriting (6)

Answer 9

1. build, blood pressure and lipid panels are required
2. additional testing increases expenses
3. more potential for proposed insured’s to be disappointed
4. Underwriters are under additional scrutiny to stay within the guidelines
5. More potential for underwriter error
6. appeals from the field are more common

Question 10

A coronary artery disease (CAD) risk factor not included in the Framingham CAD risk factors:

Answer 10

build