South Carolina Life Insurance Practice Exam

Which of the following factors is NOT used by an underwriter to select and classify risk?

1. Age of the applicant

2. Medical history

3. National origin

4. Occupation of the applicant

The correct answer is: National origin

Underwriters evaluate a variety of factors when selecting and classifying risk in life insurance applications to determine the insurability and appropriate premiums for applicants. Key factors typically include age, medical history, and occupation, as these elements can significantly influence an individual's health and longevity. The age of the applicant is crucial since it directly ties to the statistical probability of mortality and the potential duration of the policy. Medical history provides insights into any pre-existing conditions or risk factors that could affect the applicant's health in the future. The occupation of an applicant also plays a role, as certain jobs may carry greater risks that could lead to higher chances of accidents or health issues. National origin, however, is not typically used as a factor for underwriting in life insurance. This is because underwriting practices aim to assess risk based on measurable health and lifestyle factors rather than demographic characteristics such as national origin. Utilizing national origin could lead to discriminatory practices that are not aligned with fair underwriting standards and legal regulations. Therefore, it is not a relevant criteria for selecting and classifying risk in the underwriting process.