An applicant who participates in a hazardous avocation such as private flying or scuba diving applies for life insurance. The usual underwriting approach for such a risk is:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Hazardous avocations and occupations are typically handled through an endorsement or rider that excludes coverage for death resulting from the hazardous activity. If the applicant refuses to accept the exclusion, the insurer may decline the application. The exclusion must be disclosed to the applicant at the time the policy is issued, and the premium is adjusted to reflect the reduced scope of coverage. This approach lets the insurer accept the overall risk while carving out the portion it will not cover. Alternatively, the insurer may charge a substandard premium instead of excluding the activity, depending on the risk and company practice.
Why the other options are wrong
- No standard practice doubles the death benefit for hazardous activities; the elevated risk is instead excluded, rated, or declined.
- Waiving premiums is a separate rider triggered by disability, and it does not address the death risk created by the avocation.
- Ignoring the hazardous activity would misclassify the risk and underprice the policy, which is why an endorsement or rating is used.
Memory hook
Hazardous hobby? An endorsement carves out that risk. Do not want the carve-out? No policy.