How does disability income underwriting address adverse selection?

Why A is correct

Adverse selection is the tendency of people who expect to become disabled to seek disability coverage most aggressively. Underwriters counter it by collecting and reviewing occupation, medical history, income, and avocational information during the application process, then classifying the risk as standard, substandard with a premium rating, or declined. Prompt claims handling and other service features do not address selection; underwriting at the point of application is the primary defense, because it keeps the applicant pool balanced and prevents the insurer from subsidizing predictable losses.

Why the other options are wrong

• B) Issuing without medical questions would invite exactly the adverse selection the underwriting process is meant to control, by admitting poor risks at standard rates. 加州法律禁止将与承保风险无关的因素用于定价或拒保。 核保与定价依据的是与风险直接相关的因素，其他信息不能作为依据。 加州法律禁止将与承保风险无关的因素用于定价或拒保。 核保与定价依据的是与风险直接相关的因素，其他信息不能作为依据。 加州法律禁止将与承保风险无关的因素用于定价或拒保。
• C) Prompt claims payment is a service quality feature that builds trust, not a mechanism for controlling who buys the policy at issue. 持证人须在销售相关产品前完成规定学时的专项培训。 专项培训学时的要求独立于一般继续教育学分。 持证人须在销售相关产品前完成规定学时的专项培训。 专项培训学时的要求独立于一般继续教育学分。 持证人须在销售相关产品前完成规定学时的专项培训。 专项培训学时的要求独立于一般继续教育学分。 持证人须在销售相关产品前完成规定学时的专项培训。
• D) Blanket refusal of applicants with prior claims is overbroad and unlawful; underwriting evaluates individual risk fairly rather than applying a categorical bar. 核保与定价依据的是与风险直接相关的因素，其他信息不能作为依据。 加州法律禁止将与承保风险无关的因素用于定价或拒保。 核保与定价依据的是与风险直接相关的因素，其他信息不能作为依据。 加州法律禁止将与承保风险无关的因素用于定价或拒保。 核保与定价依据的是与风险直接相关的因素，其他信息不能作为依据。 加州法律禁止将与承保风险无关的因素用于定价或拒保。 核保与定价依据的是与风险直接相关的因素，其他信息不能作为依据。

Memory hook

Adverse selection = the sickest line up first. Underwriting's job is to look at each one before letting them in.