INS 312 Final: INS 312 Final Study Guide.docx
Document Summary
The primary purpose of risk selection is to protect the insurer from anti-selection. An insurer provides greater equity amount the risks in the standard class by widening the spread between the best and worst risks in the class. The most important factor influencing individual mortality expectations is a person"s build. The plan of insurance is taken into account in the risk selection process because policies differ not only as to the amount at risk but also as to mortality rates. With overweight male applicants, the insurer is also interested in the distribution of the excess weight. Insurers report their underwriting decisions to the medical information bureau. Although the applicant cannot see the medical examiner"s report, the applicant has the right to review the contents of an inspection report. At present, most insurers, particularly the larger ones, use the judgment method of rating, rather than the older numerical rating system, for selecting and classifying risks.
