| Many people today have a small amount of
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| | company must be able to identify and
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| life insurance as a benefit of
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| | distinguish the risks each applicant
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| employment; however, it is seldom
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| | poses, assess these risks, charge the
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| sufficient to provide for total family
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| | appropriate premium to cover the risks,
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| protection, college education, or
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| | and invest wisely so that sufficient
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| business coverage in the event of
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| | moneys exist to pay all present and
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| premature death.
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| | future claims. Different groups of
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| To cover these financial needs people buy
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| | insured's with different life
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| individually underwritten life insurance
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| | expectations must be distinct based on
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| from the private market in different
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| | real differences in mortality
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| amounts and at different times throughout
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| | expectation.
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| their life. People seeking this
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| | Life expectancy varies by age, gender,
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| protection are free to choose when to
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| | medical and family histories, avocation,
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| buy, what to buy, and how much to pay for
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| | and lifestyle. Applicants for life
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| coverage. They can buy when they are
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| | insurance have different medical
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| young and healthy, or wait until middle
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| | histories and risk factors for future
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| age hoping their health will stay good,
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| | disease that affect life expectancy. Each
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| or they can buy at a higher premium if
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| | group of insurance underwriters is
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| they develop a chronic illness.
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| | charged a premium sufficient to cover
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| Based on their financial portfolio and
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| | costs associated wt its expected rate of
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| coverage needs, they can choose products
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| | death. The primary task of an underwriter
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| ranging from an inexpensive term
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| | is to assess life expectancy based on
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| insurance product to high cash value
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| | medical, occupational a vocational
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| (whole life) product. The private life
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| | factors significant to life expectancy.
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| insurance system provides an important
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| | It is vital that the insurer have a full
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| financial safety net, but it is entirely
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| | understanding, and particularly the same
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| voluntary and unsubsidized. An individual
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| | knowledge, as the applicant in order to
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| life insurance policy is, in effect, a
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| | assess accurately that risk equitably.
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| commercial transaction in which the
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| | Before offering coverage to an applicant,
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| insurer agrees to pay a specified death
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| | life insurers attempt to identify factors
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| benefit in exchange for payment of a
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| | that may shorten the person's usual life
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| premium proportional to the mortality
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| | expectancy at a given age. If
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| risk assumed by the insurer.
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| | identifiable risks exist, the underwriter
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| The one characteristic common to all
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| | uses actuarial and medical information to
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| individual life insurance products is
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| | calculate life expectancy and determine
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| transfer of the financial loss caused by
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| | an appropriate premium.
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| unexpected death to the life insurance
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| | There are many different types of life
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| company. The real product is payment of
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| | insurance products and their particular
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| the death benefit regardless of when that
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| | features play different roles in
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| death occurs during the lifetime of the
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| | determining the price of each one.
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| product. The death benefit for each
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| | Because life expectancy is defined as the
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| individual far exceeds annual and
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| | age at which half the insured's will have
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| cumulative premiums plus earnings for
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| | died, it's a moving target that increases
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| several years, particularly for young
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| | with the age of the individual at the
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| applicants.
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| | time of application.
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| To offer this financial protection, the
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