What could be an underwriting adjustment due to excess mortality?

Revising pricing strategies for new policies is a necessary response to excess mortality observed in the underwriting process. When insurers encounter conditions leading to a higher-than-anticipated mortality rate among policyholders, they must adapt their pricing to maintain profitability and ensure the sustainability of their offerings. This adjustment can involve increasing premiums to reflect the increased risk associated with insuring individuals who may be more likely to pass away within the policy term.

Such revisions are critical as they help the insurance company balance the risk they are taking on with a fair premium that reflects that risk. This strategic decision is key for maintaining competitiveness while also safeguarding against potential losses that could arise from underwriting risks that manifest as high mortality rates.

The other options do not directly relate to the underwriting adjustments needed due to excess mortality. Allowing applicants to bypass medical exams would actually increase risk levels, which is counterproductive in light of excess mortality. Incentivizing healthier lifestyles, while beneficial for long-term risk management, is not an immediate underwriting adjustment that addresses current excess mortality issues. Reducing coverage limits for wealthy individuals might not effectively align with the overall underwriting strategy needed in response to excess mortality.