Which term refers to an individual characteristic that increases the chance of a loss due to physical condition or past medical history (e.g., blindness)?

Which term refers to an individual characteristic that increases the chance of a loss due to physical condition or past medical history (e.g., blindness)?

• A. Moral hazard
• B. Peril
• C. Physical hazard
• D. Life insurance

Answer: (C)

A physical hazard is an individual characteristic that raises the likelihood of a loss because of a physical condition or past medical history. Underwriting looks at factors like blindness, obesity, or chronic illnesses because these conditions increase the chance that a claim will occur. This differs from a peril, which is the actual event causing the loss (like a fire or an accident), and from moral hazard, which involves changes in behavior or dishonesty after obtaining insurance. Life insurance is the product itself, not a risk factor. So the described concept is a physical hazard.

A physical hazard is an individual characteristic that raises the likelihood of a loss because of a physical condition or past medical history. Underwriting looks at factors like blindness, obesity, or chronic illnesses because these conditions increase the chance that a claim will occur. This differs from a peril, which is the actual event causing the loss (like a fire or an accident), and from moral hazard, which involves changes in behavior or dishonesty after obtaining insurance. Life insurance is the product itself, not a risk factor. So the described concept is a physical hazard.