Texas Life Agent Practice Exam

Under what condition may life insurance be offered at different rates to partially or totally blind individuals?

1. When the blindness does not complicate the insurance process

2. When the individual is a first-time policyholder

3. When such handicap is relevant to the risk of loss

4. When the applicant has a secondary insurance policy

The correct answer is: When such handicap is relevant to the risk of loss

Life insurance may be offered at different rates to partially or totally blind individuals when their handicap is relevant to the risk of loss. This means that the insurer must assess how the blindness impacts the applicant's overall health and mortality risk. Insurance companies evaluate various factors that could affect the likelihood of a claim being made, and certain disabilities or health conditions can lead to a higher or lower perceived risk. If the blindness does indeed affect the individual's health or life expectancy in a way that is quantifiable, then it becomes pertinent in determining the insurance premiums. Conversely, if the individual's blindness is not related to the risk of loss—meaning it does not significantly affect their life expectancy compared to sighted individuals—then it may not warrant a different rate. The other conditions mentioned do not directly address the risk assessment process. For example, first-time policyholders or having a secondary insurance policy do not inherently impact the relevance of the individual's blindness in evaluating their risk. Hence, understanding the relationship between the handicap and the risk of loss is crucial for appropriate rate determination in life insurance.