Review the following life insurance applicant profiles. Match each applicant's specific risk characteristics to the most appropriate underwriting classification and premium rating strategy.
- An applicant with an unmanaged, progressive cardiovascular disease presenting an immediate and severe mortality risk.Declined Risk
- An applicant in perfect health who actively participates in competitive skydiving on weekends, presenting a constant, non-health-related hazard.Substandard Risk with a Flat Extra Premium
- An applicant with a well-documented history of chronic hypertension and slightly elevated cholesterol, where the mortality risk incrementally increases with age.Substandard Risk with a Tabular (Table) Rating
- An applicant with an exceptional family medical history, optimal body mass index, zero tobacco usage, and a sedentary clerical occupation.Preferred Risk
Answer
Severe unmanaged disease matches with Declined Risk. Skydiving (constant hazard) matches with Flat Extra Premium. Chronic hypertension (increasing hazard) matches with Tabular Rating. Exceptional health matches with Preferred Risk.
The correct matches accurately align specific applicant hazards with their corresponding actuarial treatments. Severe unmanageable conditions are uninsurable (Declined). Constant avocational hazards warrant a static Flat Extra Premium, while health conditions that compound over time necessitate a percentage-based Tabular Rating. Flawless health metrics qualify for Preferred status.
Step-by-Step Solution
Key Concept
Underwriting Risk Classifications and Rating Methods