Connecticut Life Producer Practice exam

Which of the following are important group characteristics for underwriting?

1. Size, age, and geographical location

2. Purpose, size, turnover, and financial strength

3. Turnover, claims history, and age

4. Size, demographics, and health assessments

The correct answer is: Purpose, size, turnover, and financial strength

The correct answer focuses on important characteristics that underwriting evaluates when assessing a group for insurance coverage, particularly in a life insurance context. Purpose refers to the reason the group is seeking insurance, which can affect the risk profile. Different groups have different risks associated with their activities. For instance, a group formed for high-risk activities may present additional underwriting challenges compared to a more low-risk group. Size is significant because larger groups often dilute risk more effectively than smaller groups. A broader risk pool allows underwriters to balance the overall risk better, thereby impacting the pricing and availability of coverage. Turnover is relevant as it indicates how frequently members leave and join the group. High turnover can be a risk factor that impacts claims, as a rapidly changing demographic can lead to less predictable health outcomes. Financial strength is a crucial factor as it demonstrates the group’s ability to pay premiums and maintain solvency, which is essential for the longevity of the insurance arrangement. In summary, the emphasis on purpose, size, turnover, and financial strength outlines the essential risk factors that underwriters consider for evaluating whether to provide coverage and under what terms. Each characteristic can significantly impact the overall assessment of risk associated with insuring the group.