FSI Credit Insurance Practice Test

Underwriting focuses on factors that directly affect mortality risk and how long a person is expected to live, since these drive premium pricing. Tobacco use is a direct risk factor because smoking increases the likelihood of fatal diseases, so it changes the insured’s risk class. Health history is central because past and present medical conditions influence life expectancy and claims risk. Age is fundamental because the probability of death rises with age, affecting overall risk and cost of coverage. Marital status, however, does not change an individual's health risk or life expectancy in a way that actuarial models use for pricing, so it isn’t a standard underwriting factor. It may influence financial planning considerations or coverage decisions, but it doesn’t alter the underwriting risk assessment used to set premiums.