Underwriting, Claims, and Policy Servicing
What this domain tests
Underwriting, Claims, and Policy Servicing tests the life cycle after application: how risk is classified and priced, how claims are proved and paid, and how policies are changed, reinstated or terminated.
Core rules
- Underwriting classifies risk as standard, preferred, substandard (rated or with exclusions), postponed or declined.
- Sources include the application, medical examination, attending physician's statement, financial questionnaires and inspection reports.
- Moral hazard indicators include adverse financial history, over-insurance and concealment.
- Claims flow: notice, proof of loss or death, investigation, decision, payment. Life claims require a death certificate and claimant proof.
- Contestable claims are reviewed for misrepresentation; non-contestable claims are paid subject to exclusions.
- Servicing includes beneficiary changes, assignments, policy loans, surrenders, reinstatements, endorsements and renewals.
- Reinstatement usually requires evidence of insurability and payment of overdue premiums; contestability may restart.
Worked example
An applicant with type 2 diabetes and a stable HbA1c is offered a substandard rating of +50% and an exclusion for diabetes-related complications. Two years later he claims for a kidney condition. Reasoning: the underwriter priced the known risk rather than declining it; the exclusion governs only what it expressly names. If the kidney condition is a diabetes complication, the exclusion applies; if unrelated, the base policy responds. The insurer cannot retroactively add exclusions after issue.
Traps that cost marks
- Saying a substandard risk is uninsurable.
- Paying a claim without checking premium payment status and exclusions.
- Assuming the contestability clock restarts on every reinstatement without checking policy terms.
- Changing a beneficiary without required consent when the designation is irrevocable.