Which of the following is true regarding free insurance issued in the state

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C Birthplace

correct! This is permitted by the Code if no discrimination is made against the applicant. (CIC 10142)

Unfairly Discriminatory Practices

In insurance, there are two types of discrimination. Fair discrimination occurs when an insurer's underwriting department finds information which indicates an increase of risk which can be verified through actuarial (statistical) proof. When that insurer then decides to limit coverage or other policy benefits, increase premiums or refuse coverage for that client (discriminate), it is appropriate for them to do so and the law allows it.

Unfair discrimination is morally unacceptable and illegal. One step in enabling insurers to avoid unfair discrimination is to place insureds and applicants in classifications based on actuarially acceptable guidelines. Such classifications upon which risk and insurability can be based will naturally vary with the specific type of coverage. Generally, they may include the following:

Gender;
Age;
Tobacco use;
Height/weight ratio;
Geographic location; or
Profession and avocations (hobbies).
A combination of these may be used, but only if statistics prove that the classification increases the risk for a claim on the specific type of insurance being considered.

For example, it would not be acceptable to charge life insurance clients a higher premium based on their ZIP code since their geographic location, as long as it is within the United States, does not increase their risk of death. It would, however, be acceptable to charge the same clients a higher or lower premium for health insurance if the costs of health care in their ZIP code are higher or lower than the average. For this reason, it is common for insurers to apply a rating factor to raise or lower a health insurance premium based solely on ZIP code.

Once a client's actuarial classifications have been determined, that client must be treated the same as all other clients within the same classifications. The person may not be provided with different policy benefits or charged a different premium than everyone else in those classifications.

The specific classifications which cannot exist include the following:

Race;
Color;
Religion;
National origin;
Ancestry;
Sexual orientation; and
Physical and mental impairments which do not increase risk or vision impairment, including blindness.
Classifying people according to these would be unfair as these characteristics have no effect on the client's risk. It is forbidden for insurers or their representatives to acquire, request or share such information. It is acceptable to ask an applicant for their place of birth, if that information is used only for identification purposes.

In regard to sexual orientation, it would be a blatant violation for an insurer to ask an applicant any question regarding the subject. However, it has been noticed that, while an insurer won't ask a direct question, it may attempt to reach a conclusion concerning sexual orientation through analysis of other factors in the applicant's life and then adjust benefits or premium based on a presumption of an increased risk of AIDS. Therefore, insurers cannot use the following to attempt to make a judgment about sexual orientation:

Marital status;
Living arrangement;
Jobs;
Gender;
Beneficiary;
ZIP code or any other geographic classification; or
Any combination of these.
It is therefore necessary, if an insurer is concerned about the risk of claims resulting from AIDS and desires to test for HIV, to test everyone under the same guidelines.

If an insured who has a condition which is expected to cause death within 1 year requests an experimental treatment and is refused by their insurer, the insurer must provide the following:

The specific medical and scientific reasons for the denial and specific references to pertinent policy provisions upon which the denial is based;
A description of the alternative medical procedures or treatments covered by the policy, if any; and
A description of the appeal/review process within 30 days or 5 days if delaying treatment would be detrimental.
Insurers that provide life or health insurance are not allowed to do anything which affects the coverage or premium of anyone because the insurer suspects that the person may become a victim of domestic violence, even if the person has been a victim in the past. Underwriters are, however, allowed to take into consideration an actual medical condition that does exist, as long as they don't consider whether the condition was caused by domestic violence. Intentional acts of the insured can still result in loss of benefits.

Domestic violence is defined by Section 6211 of the California Family Code as abuse perpetrated against any of the following:

A spouse or former spouse;
A cohabitant or former cohabitant;
A person with whom the respondent is having or has had dating or engagement relationship;
A person with whom the respondent has had a child, where the presumption applies that the male parent is the father of the child of the female parent under the Uniform Parentage Act;
A child of a party or a child who is the subject of an action under the Uniform Parentage Act, where the presumption applies that the male parent is the father of the child to be protected; or
Any other person related by blood or affinity within the second degree.
Medical policies must include coverage for diagnosing and treating severe mental illness for all insureds and serious emotional disturbances of a child just as they do any other condition. This then excludes insurers from providing coverage for such conditions any specific-coverage policy, such as accident only, dental, etc.

End Quiz Chapter Quiz -Question 6 of 12
Chapter: The Insurance Marketplace
If the information is used only for identification and not for underwriting purposes, which of the following information about the applicant may be listed on a life insurance application?
AMother's maiden name
BName, age, height, and weight
CBirthplace
DHair and eye color
Incorrect! This is permitted by the Code if no discrimination is made against the applicant. (CIC 10142)
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