Maryland Life and Health Insurance License Practice Exam

What factor is NOT typically considered in the underwriting process for a life insurance policy?

1. Medical history

2. Occupation

3. Age

4. Current location

The correct answer is: Current location

The underwriting process for a life insurance policy involves evaluating various factors that can affect the risk associated with insuring an individual. These factors help insurers determine the likelihood of a claim being made and the appropriate premiums to charge. Medical history, occupation, and age are critical components that underwriters analyze. Medical history provides insights into an applicant's health and potential risks associated with pre-existing conditions. An individual’s occupation is considered because certain jobs may carry higher mortality risks (e.g., hazardous or high-stress jobs), and age is a significant determinant of life expectancy and risk levels, with older applicants typically facing higher premiums due to increased mortality risk. In contrast, while current location can have some influence on underwriting — for instance, due to local health trends or crime rates — it is not a fundamental factor usually weighted as heavily as the other three. The primary focus tends to be on aspects that most directly correlate with health and life expectancy. Therefore, current location is not typically considered a critical component in the underwriting process for life insurance policies.