Chartered Life Underwriter Practice Exam 2026 - Free CLU Practice Questions and Study Guide

The term "naïve underwriting" in life insurance refers to an overly simplistic approach to risk assessment. This concept implies that the underwriting process does not take into account the complexities and nuances associated with evaluating an individual's risk profile. Instead, it may involve applying general assumptions or broad guidelines without delving into specific details about the applicant's health, lifestyle, or other relevant factors.

In life insurance, a thorough risk analysis is essential to accurately determine premiums and coverage options. Naïve underwriting often leads to a one-size-fits-all scenario that may not reflect the true risk, potentially resulting in inadequate coverage or improperly assessed premiums for individuals. Thus, recognizing the importance of a comprehensive underwriting approach is vital in providing fair and personalized life insurance solutions.