California Life and Health Insurance Practice Exam 2026 – Your All-in-One Guide to Exam Success!

Medically underwritten policies are essentially those that require an assessment of the applicant's health status before coverage is granted. This assessment often involves a health examination or a review of the individual's medical history. The insurance company uses this information to determine the risk associated with insuring the individual, which in turn affects the premium and terms of the policy.

When a policy is medically underwritten, the insurer can more accurately gauge the applicant's health risks, allowing them to set premiums that reflect the likelihood of future claims. This practice helps to ensure that those who have higher health risks may face higher costs, while healthier individuals may benefit from lower premiums based on their health status. Therefore, the correct answer directly addresses the fundamental nature of medically underwritten policies.

While lower premiums, approval from agents, and coverage exclusions for pre-existing conditions may be relevant in some contexts, they do not define the specific characteristic of medically underwritten policies. Instead, it's the requirement for a health examination or review of medical history that truly distinguishes these policies from others.