LIFE INSURANCE UNDERWRITING RISK

Harpreet Singh Roll no. 14059

Meaning of underwriting risk

Each person that is insured under a policy

represents a certain degree of risk for an insurance company. Underwriting is the process insurance companies use to determine the amount of risk a particular person represents. Insurance companies evaluate each person by considering certain risk factors that will determine if the insurance company can accept the risk or if the insurance company should decline the risk. "Underwriting" is a term that is used by insurance companies that describes the insurance companys process for reviewing and approving, modifying, or rejecting your life insurance

LIFE INSURANCE UNDERWRITING CRITERIA

Verify age and income. Determine if the

occupation could have health consequences. Find out the illness and personal accident history. Have a certified physican or medical centre conduct a medical examination to determine any pre-existing conditions. Assess the risk profile to determine a premium. Analyse the overall composition of the group, in the case of group insurance, to assess the aggregate risk and to ensure it is acceptable.

Underwriting Factor
Underwriting Factor Face Amount Policy Type Age Sex Tobacco Use Height State of Residence Total Cholesterol Cholesterol Ratio Systolic Pressure Diastolic Pressure Weight Family Diagnosis Average Profile Comparison Profile

Family Death
Driving Record

Age Verification
Age: As you get older, your risk of dying goes up,

so your premium trends up as well. If proper proof of age is not given then it may condition for the claim to provide the proof. If it is found the is higher the difference of the premium will be charged with interest If it is found lower the excess premium will be refunded without interest

OCCUPATION
Generally a person's occupation is not considered

when an insurance company considers risk unless a person's occupation has been defined as hazardous. An occupation could be hazardous because a person has a greater likelihood of getting into an accident, or an occupation could be hazardous to a person's health. Foreign travel: You will be asked if you have travelled, or plan to travel to foreign countries, as well as where and how long you plan to stay. Travelling and staying abroad for a period of time increases your risk factor. Certain hobbies (such

FAMILY HISTORY
The health records of both the insured and his

family are considered important in the selection of risks. Life Insurance companies look at your medical records and ask you questions about your parents and siblings medical history. The type of medical history and the age that your parent or sibling had the medical condition will affect the best life insurance rate available to you.

Physique and Physical Conditions

Physical condition has a direct effect upon

longevity. The insurance companies want to know about an applicants sight, hearing, heart, arteries, nervous system, lungs, teeth, kidneys.

Medical Information
The application of medical policy consists of

the physicians answers to question based on his examination of the applicant. The agents certification The inspection report

Financial Status
A person's income and net worth are considered

when they apply for insurance coverage. An insurance company wants to determine whether a person will be able to pay for the insurance coverage because policies that are lapsed are expensive for the insurance company since there is no way for the insurance company to recoup their underwriting costs associated with issuing the policy. Size ,source and stability of the applicants income is cause for underwriting suspicion. The purpose of the insurance (such as for estate planning, or business or for family protection),

Plan of insurance
Before

the development of substandard underwriting it was common practice for companies to be considerably more liberal in underwriting higher premium plans of insurance. Higher premiums plans require higher reserves, and consequently the company has progressively less at risk under these plans. Other insurance: You will be asked to disclose all insurance you have with other carriers. If you have a significantly higher amount of insurance on your life than can be justified, the company will be very suspicious.

THANK YOU