LLQP Life Insurance · Component 3.1 · 25% of the exam
A group of employees is being underwritten for a new group life plan. Which factor would raise the insurer's concern?
- A small group with a high proportion of older members and poor prior claims experience
- BMandatory participation by every eligible employee, since the insurer cannot exclude the poorer risks
- CA wide spread of ages among the members, since the insurer cannot price the group to a single age
- DA stable industry with low turnover, since members stay long enough to reach the ages at which claims rise
Correct answer: A) A small group with a high proportion of older members and poor prior claims experience
Group underwriting considers size, age distribution, industry, participation and claims history. Small, old and claim-heavy groups are priced higher or may be declined. Broad age spread and full participation are favourable.
Why the other options are wrong
- BMandatory participation is favourable.
- CA wide age spread is favourable.
- DStable industries are favourable.
Exam tip
Group underwriting factors: size, ages, industry, participation, experience.
Common mistake
Assuming any employer can get group life at standard rates.
What this tests
CISRO competency component 3.1 — Implement a recommendation adapted to the client's needs and situation — which is weighted at 25% of the Life Insurance module. Written against the published curriculum.
More from component 3
- At policy delivery, the agent should obtain:
- The effective date of a life insurance policy is generally:
- A client's application is approved but he has not paid the first premium when the policy is delivered. The agent should:
- A pre-authorized debit form is part of implementation because:
- During implementation, the agent learns the client wants the policy owned by her corporation instead of personally, as first applied for. The correct step is:
- Which of the following is a legitimate reason an insurer might refuse to issue a policy even after favourable underwriting?
Practice the whole Life Insurance module
Timed sets weighted like the exam, and review of every question you miss. Free to start.