PSI Life Exam Practice Test

Which method is NOT typically used by insurers to determine underwriting guidelines?

1. Age and Gender Analysis

2. Health Questionnaire

3. Morbidity Tables

4. Client Financial Assessment

The correct answer is: Morbidity Tables

Morbidity tables are statistical tools used to measure the incidence and prevalence of disease within a given population. While they provide valuable information regarding health risks and life expectancy, they are not typically used directly by insurers to establish underwriting guidelines for individual applicants. Instead, underwriting guidelines focus more on the individual characteristics and circumstances of clients, such as age and gender, health status as revealed in questionnaires, and financial assessments. In contrast, age and gender analysis helps insurers predict risk since certain demographics may carry different risk profiles. Health questionnaires provide detailed information about an individual's medical history and present health, which is essential for evaluating potential risks associated with insuring that person. Client financial assessments are crucial for determining the appropriateness of coverage options and ensuring that clients can maintain their policies without financial strain. Understanding these methods is key for grasping how insurers accurately gauge risks when underwriting policies.