Texas Life Agent Practice Exam

What type of insurance often requires a risk assessment before issuance?

1. Life insurance

2. Homeowners insurance

3. Travel insurance

4. Health insurance

The correct answer is: Health insurance

Health insurance often requires a risk assessment before issuance because insurers need to evaluate the applicant’s health status, medical history, and potential future health risks. This assessment helps the insurer determine the appropriate premium rates and coverage options. Insurers typically use underwriting processes, which may involve questionnaires, medical exams, or review of medical records, to thoroughly understand the risk they would be assuming by providing coverage. Life insurance and homeowners insurance also involve assessments of risk, but the level of scrutiny in health insurance is usually more detailed because health-related issues can significantly impact the frequency and cost of claims. Travel insurance generally has a more straightforward application process, focusing primarily on the specifics of the travel event rather than an extensive health risk profile.