Alabama Life and Health Insurance State Practice Exam

The correct choice indicates that the insurer is not liable for claims arising from illegal occupations. This reflects standard provisions found in health insurance policies. Insurers generally include clauses that exclude coverage for injuries or illnesses resulting from illegal activities. This is designed to protect the insurance company from having to pay out claims associated with activities that are illegal, as they fall outside the scope of risk that the insurer is willing to underwrite.

By excluding claims related to illegal occupations, insurers aim to discourage individuals from engaging in dangerous behaviors or activities that could result in harmful situations needing insurance coverage. This aligns with the principle of insurance that does not support or enable unlawful behavior while maintaining the integrity of the insurance process. Such provisions ensure that policyholders are aware of the limitations of their coverage and the consequences of illegal actions.

In contrast, options implying liability for claims, increased premiums, or penalties do not align with standard insurance practices regarding illegal occupations, as they suggest a willingness to cover or adapt to such risks rather than excluding them altogether. Thus, the assertion that the insurer is not liable is consistent with industry standards and protective measures in health policies.