Disability insurance underwriting focuses on three key areas: occupation, health history, and overinsurance. Occupation classification is the most fundamental factor — it determines not only the premium but the types and quality of provisions available. Financial underwriting ensures the insured retains sufficient motivation to return to work, while medical underwriting adjusts terms for applicants with health histories that increase morbidity risk.
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Review Questions
The amount of benefit available
The disability premium
The maximum benefit period available
✓The minimum elimination period available
✓It is difficult to determine if someone is unable to work
Working from home presents a greater than normal hazard
The policy’s incontestable provision is affected by employment from home
Personal and business expenses are commingled, making financial underwriting less precise
The insured will be financially motivated to return to work following a period of disability
✓The insured will be able to pay the premium
The insured will be overinsured
The insured will malinger
I & II only
I & III only
II & III only
✓I, II & III
Reject the risk
Exclude coverage
✓Increase the premium
Issue the policy with a split elimination period
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