Non Medical Underwriting

A Large number of life insurance proposals may typically get selected for insurance without conducting a medical examination to check the insurability of a life to be insured. such cases are termed as non medical proposals.

Conditions for Non Medical Underwriting

• Only certain categories of fema;es, like working women may be eligible.
• Upper limits on Sum insured may be imposed(SA beyond 5 lakhs need medicals)
• Age at entry ( 40 or above need medicals)
• Certain plans of insurance (term insurance)
• Maximum term of insurance (from 20 years to age of 60)
• Class of lives with proper leave record and having periodic medical examinations.

Rating factors in underewriting

 Factors like income, occupation, lifestyle and habits which contribute to moral hazard, are assessed as part of financial underwriting, while medical aspects of health are appraised as part of medical underwriting.

Underwriting Decisions

Lien

It is a kind of hold which insurance company can exercise on the amount of benefit. Lien implies that if the life assured dies from a specified cause within a given period, only a decreased amount of DB may be payable.

Methods of Underwriting

Judgement Method

• Under this methods, subjective judgement is used.
• Example: Deciding whether to give insurance to someone who has acute diabetes and on what terms.
• In such situations, department may get expert opinion of medical doctor or medical referee.

Numerical Method

• Under this method underwriting assign positive rating points for all negative or adverse factors.
• The total number of points so assigned will decide how much extra mortality rating (EMR) it has been given. If EMR is high, insurance may even be declined.

Risk Classification

Standard Lives
These consist of those whose anticipated mortality corresponds to the standard lives represented by the mortality table.

Preferred risks
These are the ones whose anticipated mortality is significantly lower than standard lives and hence could be charged a lower premium.

Substandard lives
These are the ones whose anticipated mortality is higher than the average or standard lives, but are still considered to be insurable. They may be accepted for insurance with higher (or extra) premiums or subjected to certain restrictions.

Declined Lives
These are the ones whose impairments and  anticipated extra mortality are so great that they could not be provided insurance coverage at an affordable cost. Sometimes an individuals proposal may also be temporarily declined if he or she has been exposed to a recent medical event, like an operation.