-The application for insurance is the main source of insurability information thatthe underwriter of the life insurance company evaluates first. Applications are generally collected by thefield officers, the agents. A typical life insurance consists of:º
The general information consists of general aspects like name, age, address, dateof birth, sex, income, marital status and occupation of the applicant. It also includes the details of requested insurance cover like type of policy, amount of insurance, name and relationship of the nominee,other insurance policies that the customer owns and the pending insurance applications as on date.º
The medical information consists of consumer‟s health condition and several
queries about health history and family history. The medical section of the application is comprehensiveand it is mandatory to fill it completely with relevant information. Information is also collected through amedical examination, depending on age and face value of the policy.2)
The medical report
An average medical test is compulsory (which is free of cost to the applicantexcept in case of revivals). Depending on the information filed in the application, an insurance companymay ask the physician of the consumer for further information. Gathering information is a standardmethod used in all domestic insurance companies. Basically, life insurance companies have severalsources of medical and financial information to assist them in the underwriting process. These include personal medical records and physicians, the medical information department, inspection reports andcredit records.3)
After collecting all the relevant information about the applicant, anunderwriter from the insurance company evaluates the information. During this evaluation, theunderwriter will organise the risk offered to the company and also determines the premium for the policydepending upon the primary and secondary factors influencing the premium. The premium rates are set by
the company‟s registrars depending upon the applicants risk profil
e. During each step of the underwriting process, the life insurance agent usually provides details, and is well-informed about the insured status inthe process. If the applicant offers more risk than the insurance company standards, then the underwriter rejects the application.4)
A special department writes the policy, whose main function is to issue writtencontracts according to the instructions from the underwriting departments. A register must be maintainedas most policies are long-term. Insurance companies generally use computerised systems to maintain therecords of the customers, premium payments, and they to verify that all the requirements of underwritinghave been met
Q4. Describe factors affecting claim management, and the importance of time element inclaims payment.
The factors that affect claim settlement are:
The risk and cause of event covered in the policy.
The cause of event is directly related to the loss, a remote cause cannot be placed in thesettlement.
The policy should be valid on the date of event.
If conditions and warranties are not fulfilled according to the cover of the policy, the cover of insurance does not come into effect even though premium is paid.
The loss occurred should not be intentional in order to make profit.