California Life and Health Insurance Practice Exam

The evaluation of insurability primarily hinges on the applicant's physical health and medical history. Insurers assess this information to gauge the risk associated with providing coverage. A thorough understanding of the applicant's health conditions, past medical issues, lifestyle choices, and family medical history helps underwriters predict the likelihood of future claims. This comprehensive assessment is crucial because health-related factors significantly influence mortality and morbidity rates, which in turn affect the premium rates the insurer will set.

While the number of insurance policies already held might provide some context about the applicant's overall risk portfolio, it is not the primary focus of insurability assessments. Likewise, the amount of coverage desired is important for determining premium costs but does not fundamentally assess the risk posed by the applicant’s health. Financial status is relevant to underwriting, particularly in evaluating the applicant's ability to pay premiums, yet it is not the main criterion for insurability. Hence, focusing on the applicant's physical health and medical history remains central to assessing their eligibility for insurance coverage.