Washington Life Producer Practice Exam

Which condition often leads to challenges during the underwriting process?

1. A low credit score

2. Misrepresentation of health status

3. High sum insured request

4. Absence of prior claims

The correct answer is: Misrepresentation of health status

The underwriting process involves assessing the risk of insuring an individual and determining the premium that reflects that risk. Misrepresentation of health status is particularly problematic as it can lead to significant challenges for underwriters. When an applicant provides inaccurate or incomplete information about their health, it may prevent the underwriter from fully understanding the individual's risk profile. This misrepresentation can result in the underwriting team making decisions based on incorrect assumptions, which could lead to higher financial exposure for the insurance company if the true health status poses greater risks than disclosed. Moreover, if it is discovered that a misrepresentation has occurred after a claim is made, it can lead to denial of the claim or cancellation of the policy. This aspect underscores why insurers emphasize the necessity for honesty in the application process, making misrepresentation a key focus during underwriting. In contrast, while a low credit score, a high sum insured request, and an absence of prior claims may also raise concerns, they do not inherently involve deception and can often be addressed through additional information or adjustments in the policy terms. Misrepresentation fundamentally undermines the integrity of the underwriting process, creating a more substantial barrier to obtaining insurance coverage.