Health Insurance Mastery Practice Exam

What is the most critical factor in underwriting disability income insurance?

1. Age of the applicant

2. Health history

3. Occupation

4. Income level

The correct answer is: Occupation

The most critical factor in underwriting disability income insurance is the occupation of the applicant. This is because the risk of becoming disabled often varies significantly based on the type of job a person holds. Certain occupations are inherently riskier than others; for instance, someone working in construction or as an electrician may face a higher likelihood of injury compared to someone working in a desk job. Insurers assess the nature of the work, including the physical demands, exposure to hazards, and overall job security, to determine how likely an applicant is to be unable to work due to a disability. This assessment influences underwriting decisions, policy terms, and premium costs. Consequently, understanding an applicant's occupation is essential for accurately evaluating the risk associated with providing disability income insurance. While other factors such as age, health history, and income level do play roles in the underwriting process, they are secondary when it comes to estimating the potential for claims based on occupational hazards and the associated risks.