South Carolina Life Insurance Practice Exam

Which document serves as a basis for underwriting a life insurance policy?

1. The application form filled by the policyholder

2. Statement of health

3. The insurance producer's notes

4. The underwriting manual

The correct answer is: The application form filled by the policyholder

The application form filled out by the policyholder is indeed the fundamental document used in underwriting a life insurance policy. This form gathers essential information about the applicant's personal details, medical history, lifestyle choices, and other relevant factors that help the insurer assess risk. It is a comprehensive representation of the applicant's profile and serves as the primary tool for underwriters to evaluate the likelihood of claims occurring and to set the terms of coverage, including premium rates and exclusions. In the underwriting process, although other documents like the statement of health or an insurance producer's notes may also provide useful information, they are typically supplementary to the application form. The underwriting manual, while it contains guidelines for assessors on how to interpret various health and lifestyle indicators, does not pertain directly to an individual policyholder's application. Thus, the application form remains central in determining the risk associated with insuring the applicant.