Welcome

Life Insurance Underwriting

Presented by

A.K.M. Elias Hussain.

akmeliashussain@live.com

What is Life Insurance ?

Life Insurance is a contract,
whereby the insurer, in
consideration of a premium paid
either in a lump-sum or in periodical
installment, undertakes to pay an
annuity or a certain sum of money.
Either on the death of the insured
or on the expiry of a certain number
of years.

Insurance is a privilege
Sold to lives that are insurable only.
Insurability:

i)
ii)
iii)

Need for insurance

Capacity to pay
Medical fitness

Factors of Premium
Cost of mortality that is Net Prem.
Investment Returns
Management Expenses

Tabular Premium

Net Premium

+ Investment Returns +

Management Expenses

=
Tabular Premium or Ordinary Premium
or Office Premium.

Underwriter is to perform
Asses the risk which people bring to the
pool;
Decide whether or not to accept the risk, or
how much to accept;
Determine terms, conditions and scope of
cover to be offered;
Calculate a suitable premium.

Source of information for underwriters

The proposal form;
A Private Medical Attendants Report
plus any supporting questionnaires;
A medical examination;
Specialist medical tests;
Financial, occupation, leisure and
residency evidence.

Underwriting depend upon

Structure & technical capabilities of
regional/branch offices,
The product mix of the company i.e emphasis
on protection or investment oriented products;
The scope & financial limitations imposed by
the current reassurance treaties;
The nature & influence by the consulting
medical officer team;
The structure of the other administrative
departments- new business & claim deptt.

Factors influencing assessment

Proposers physical condition;
Medical history;
( Chronic diseases & Acute disease )

Family medical history;

( Longevity & Heredity e.g. history of asthma. T.B, Diabetes )

Occupation;
Hobbies & activities of hazardous in nature;
Financial factors.

Factors affecting mortality

Age ( mortality is known to generally increase with age
after puberty )

Sex ( female sex is constitutionally more resistant: more

delicate and complex and has additional risks during child
bearing period )

Race
Occupation (extra hazard due to accident, e.g., Truck
driver, permanent way engineer etc. )

Residence

Contd.,
Environments
Habits
Condition of health as evidenced by
Family history :
i)
Longevity
ii) Heredity ( e.g., history of asthma,
TB, diabetes )
Personal history
i) Chronic diseases
ii) Acute diseases

Contd.,
Standard impairments ( e.g., Deafness,
blindness, loss of teeth, deformity as a result of
some injury or polio )

Build

( Stout, thin or average )

Any other features which can be disclosed

only by a medical examination.

Questions in a proposal

Selection Process
Average lives
Under Average or Substandard

Special termed, Declined

or Deferred

Underwriting Decisions
to accept the insurance, and if
so, at what rate of premium,
to call for further information
to postpone a decision for a
period
to decline.

The basic issues are taken

into consideration at the time
of initial scrutiny

Female lives are divided into three

groups in respect of income
Those having earned income
Those with unearned income
(i.e. income from investment)

With no income of their own.

Address
Whether the proposer has an
independent address of his own. It
may be his place of work or the place
of his residence. An address which is
care of the agent or an employee of
the insurer may not be accepted for
obvious reason.

Occupation
It should be ensured that sufficient data
are given to decide whether extra
premium is chargeable and if so what
further information is required. Insurers
maintain occupational rating schedule
to which reference is for this purpose.

Age

The date of birth is to be checked and will

have to be seen whether a proper proof is
submitted.

Sum to be insured
It is necessary to ensure that
the sum proposed is reasonable
having regard to the income of
the proposer and also with the
previous insurance cover, if any.

Nominee
The particulars of the nominee
mentioned in the proposal are
examined with family history for
ensuring consistency in age and
relationship and to justify insurable
interest and other legal issues

Signature
Signatures are compared with the signature
available in the medical report and the
name stated in the proposal. If the proposer
has signed in a language other than the
language of the proposal form, a
declaration is obtained to the effect that the
contents of the proposal have been
explained to the proposer

Family History
It should be examined whether the
particulars of the Personal statement
are consistent with ages of parents
and or brothers and sisters.

Medical Examiners Report

The medical report is checked up to
ensure that the Examiner has not
contravened any rules in examining the
proposer and that the agent has not
contravened the rules relating to
arranging for the medical examination.

A risk can be abnormal for

Occupation of the person to be insured
Physical condition of the person to be
insured
Medical history- previous injuries or
illness
Family medical history
Hobbies
Moral hazard.

Incidence of Extra Risks

Increasing extra risks
Decreasing extra risks
Constant extra risks

FAMILY HISTORY
Family history for consideration of :

Average longevity of the family

Hereditary tendency to
disease
Exposure to infection.

Better than average when

are of 70 years.

Both parents

Worse than average when both parents

have died before age 50.
OR
If the family history discloses two cases of
alcoholism, apoplexy (a stroke), Brights
disease, diabetes, epilepsy, heart disease,
insanity or suicide before age 60.

UNDERWRITING OF UNDERWEIGHT
Standard weight chart ?
Factors to be considered
Life to be assured is not an illiterate or
semiliterate but has enough basic
knowledge/education which will enable him to
understand the implications of certain major
illness/sickness.
He has adequate means and facilities for
availing medical treatment in the event of
sickness.

Contd.,
Place of employment and area of residence
are not unduly polluted with gas, smoke etc.
which will affect the health very adversely
and the areas are not know for any
contagious or infections diseases.
Chest expansion is at least 5 cms.
The recorded weight should be at least 37
kgs irrespective of percentage of
underweight.
Where the underweight is more than 17.5%

Further for confusion

X-Ray of chest along with

CBC & ESR to find out the
exact situation.

OVER WEIGHT
At younger age over-weight of a moderate
degree is not a serious impairment
Moderate over-weight is considered up to 40
years of age.
Over-Weight (Hazards)
Degenerative diseases of heart
Blood vessels &
Kidneys.
Fat man over 40 years of age are 19 times
as liable to develop diabetes than of thin
man

Effects
Underweight

Over-weight

50% death from

Tuberculosis
Respiratory disease
50% death from
Cardiovascular
Renal diseases.

Method of Rating
1.
2.
3.
4.
5.
6.
7.
8.
9.

Favourable term for a short period

Fixed monetary extra
Addition of years of age
Multiple of premium
Temporary extra
Combination of permanent & temporary extra
Debts or liens
Exclusion clauses
Deferment.

Thank you very much

The End