Health Insurance Underwriting Flashcards

Questions and Answers

What is the primary importance of an applicant's physical condition in health insurance underwriting?

An applicant's present physical condition is of primary importance when evaluating health risks.

What are moral hazards in health insurance underwriting?

Moral hazards are habits or lifestyles of applicants that signal additional risk for the insurer.

What types of occupations represent a high degree of risk for health insurers?

Occupations involving heavy machinery, strong chemicals, or high electrical voltage represent a high degree of risk.

What are some additional risk factors considered in health insurance underwriting?

Age, sex, medical history, family history, and avocations. Signup and view all the answers

What is the definition of insurable interest in health insurance?

An insurable interest exists if the applicant is in a position to suffer a loss should the insured incur medical expenses or be unable to work due to a disability. Signup and view all the answers

Applicants can be classified as a preferred risk, standard risk, ____, or uninsurable risk.

substandard risk Signup and view all the answers

What role does interest play in health insurance premiums?

Interest earned on premiums reduces the amount that policyholders would otherwise need to pay. Signup and view all the answers

What must every health insurance policy carry its proportionate share of?

Costs for employees' salaries, agents' commissions, utilities, rent, and other administrative expenses. Signup and view all the answers

What secondary premium factors affect health insurance premiums?

Benefits provided under the policy, past claims experience, age, sex, occupation, and hobbies. Signup and view all the answers

How do the number and kinds of benefits provided by a policy affect the premium rate?

The greater the benefits, the higher the premium. Signup and view all the answers

What must insurers know to establish realistic premium rates for health insurance?

The expected dollar amount of future claims. Signup and view all the answers

Study Notes

Health Insurance Underwriting Key Concepts

Physical Condition: Primary aspect in assessing health risks; current health status of the applicant is crucial for evaluation.
Moral Hazards: Refers to applicant habits and lifestyles indicating potential risks to the insurer; includes behaviors like excessive drinking, drug use, and accident proneness which raise risk levels, especially for disability insurance.
Occupation: Risk varies by occupation; lower risk is associated with office jobs while high-risk jobs involve heavy machinery or chemicals. Changing to a less hazardous job may result in a refund of unearned premium, whereas moving to a more hazardous job leads to proportional benefit reduction.
Other Risk Factors: Includes age, sex, medical and family history, and avocations. Generally, older individuals pose higher risks; men have lower disability rates than women until later ages; medical/family history influencing recurrence of conditions and hobbies like extreme sports increasing risk.
Insurable Interest: Essential for issuing health policies; exists when the applicant could suffer financial loss if the insured faces medical expenses or disability.
Classification of Applicants: Applicants are categorized as preferred, standard, substandard, or uninsurable. Standard risks receive policies at standard rates, preferred risks get lower rates, substandard risks may face higher premiums or exclusions, and uninsurable risks are denied coverage.
Interest: A significant factor in determining health insurance premiums; interest earned on premiums reduces the overall premium cost to policyholders.
Expenses: Health insurance policies must account for operational costs including salaries, commissions, utilities, and administrative expenses, affecting premium rates.
Secondary Premium Factors: Influencers of premium rates include the benefits provided, historical claims experience, insured age and sex, and the applicant's occupation and hobbies.
Benefits: Direct correlation between the number and types of benefits in a policy and its premium; more extensive benefits generally lead to higher premiums as they represent greater risk for the insurer.
Claims Experience: Understanding past claims is vital for estimating future claims costs, with claims tables helping insurers establish realistic premium rates.

Description

Explore key concepts in health insurance underwriting with these flashcards. Understand terms like 'Physical Condition' and 'Moral Hazards' that are crucial in evaluating health risks. Perfect for students in health insurance or underwriting courses.