Chartered Life Underwriter Exam 2025 – 400 Free Practice Questions to Pass the Exam

Assessable risk in life insurance refers to the process of evaluating health and lifestyle factors during the underwriting phase to determine the insurability of an applicant. Insurers must gather detailed information about the applicant's medical history, current health status, lifestyle choices (such as smoking or physical activity), and family medical background. This assessment helps the insurer to calculate the likelihood of a policyholder making a claim during their lifetime and establishes appropriate premium rates based on the risk profile.

Understanding assessable risk is crucial for insurers because it enables them to distinguish between applicants who represent higher risks and those who are likely to live longer, thereby resulting in lower likelihoods of claims. This evaluation ultimately aids in ensuring the sustainability and profitability of the insurance company.

The other choices reflect different concepts that do not specifically pertain to the evaluation of individual applicants' life insurance risks. Identifying natural disaster risks pertains more to property insurance, while evaluating financial investments and calculating return on investments relate to financial analysis rather than assessing individual life insurance applicants.