Massachusetts Life Producer Practice Exam

In which situation would a life insurance policy NOT be issued with a preferred insurance premium?

1. Living in a rural area

2. Having a good health profile

3. Being a non-smoker

4. Maintaining a healthy lifestyle

The correct answer is: Living in a rural area

A life insurance policy is typically issued with a preferred premium for applicants who present lower risk to the insurer. This preference is generally granted based on health-related criteria, such as good health profiles or not smoking, as well as lifestyle choices that indicate a lower risk of mortality. Living in a rural area does not provide any specific indication of health or lifestyle risk compared to urban living. Therefore, while residing in a rural area might not inherently imply a higher risk, it does not contribute positively to the criteria commonly associated with preferred premiums. In contrast, the other factors, such as having a good health profile, being a non-smoker, and maintaining a healthy lifestyle, all clearly indicate a lower risk of claims, making these applicants more favorable for receiving preferred premiums. These factors directly contribute to an insurer’s assessment of an individual’s risk level, which is what determines eligibility for preferred rates.