1. After hearing the advice that it is usually best to buy life insurance from a
ID: 2715154 • Letter: 1
Question
1. After hearing the advice that it is usually best to buy life insurance from a person who has been in the business at least five years, a life insurance company general agent became upset and said rather vehemently, “How do you think we could recruit an agency force if everybody took your advice?” How would you answer that question?
2. Is the inherently discriminatory nature of underwriting acceptable from a public policy standpoint? Would shifting to a primarily behavior-based approach to risk assessment be feasible?
3. What actuarial adjustments are built into the pricing of life insurance premiums?
4. Occasionally, Insurer X will reinsure part of Insurer Y’s risks, and Insurer Y will reinsure part of Insurer X’s risks. Doesn’t this seem like merely trading dollars? Explain.
Explanation / Answer
1. It is better to buy a life insurance policy from the agent having experience in this industry. This is because the agent would have good knowledge about the policies and the structured benefits. Also, the given advice would be worthy.
The same kind of prudent advice a qualified person can provide to the buyer of life insurance policy. The qualification that should be checked before recruiting unexperienced personnel is ChFC (Chartered Financial Consultant) awarded by American College in the field of life/health insurance.
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