General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
An individual health insurer requires a detailed medical history questionnaire before issuing a policy. This requirement primarily helps the insurer:
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
The medical questionnaire is an underwriting tool. It lets the insurer detect health conditions that increase the expected cost of coverage so that it can classify, price, or decline the risk. By screening applicants at the point of application, the insurer controls adverse selection, which is the tendency of those most likely to need benefits to seek coverage most aggressively. This protects the soundness of the risk pool and the fairness of rates.
Why the other options are wrong
- A) Investment income comes from the insurer's asset management, not from applicant questionnaires.
- B) No underwriting can eliminate the possibility of claims; it only prices or limits the risk.
- D) Medicare marketing rules govern sales to Medicare beneficiaries, not individual underwriting questionnaires.
Memory hook
Underwriting is the gate that keeps adverse selection out.