Illinois Insurance State Practice Exam

What four reasons must insurance companies avoid discrimination in premium charges?

1. Age, Gender, Health Status, Occupation

2. Marital Status, Social Security, Political Affiliation, Health Status

3. Physical handicap, Total or partial blindness, Military status, Travel plans

4. Employment status, Substance abuse, Credit history, Age

The correct answer is: Physical handicap, Total or partial blindness, Military status, Travel plans

The correct reasoning for the response revolves around the types of characteristics that should not influence insurance premium rates under anti-discrimination laws. Typically, insurance companies are prohibited from using certain personal characteristics and statuses to determine eligibility and pricing because doing so could lead to unfair treatment of individuals. In this context, the factors included in the right answer pertain to conditions that could be deemed discriminatory or outside the individual's control. Characteristics like physical handicap and total or partial blindness represent aspects of a person's condition that should not factor into how they are charged for insurance, as these could lead to unjust disparities in access to coverage. Additionally, military status might also reflect systemic biases that can unfairly penalize those who have served their country. Travel plans are less relevant in this context as they do not typically pertain to risk assessment for insurance premiums directly. These factors are widely recognized under various anti-discrimination laws that seek to ensure fairness in how insurance products are offered to consumers. By ensuring that such personal and potentially vulnerable attributes do not affect premium pricing, insurance companies uphold ethical standards and comply with regulations that promote equality and justice in the insurance marketplace.