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.

UnderWriting

Underwriting Purpose

• To Prevent anti-selection or selection against the insurer
• To classify risks and ensure equity among risks

Selection of Risk

Refers to the process of evaluating each proposal for life insurance in terms of the degree of risk it represents and then deciding whether or not to grant insurance and on what terms

Anti- Selection

Tendency of people, who suspect or know that their chance of experiencing a  loss is high, to seek out insurance eagerly and to gain in the process.

Duplicate Policy

If the insured person loses the original life insurance policy document, the insurance company document, the insurance company will issue a duplicate policy without making any changes to the contract.

The claim may be ettled on furnishing an indemnity bond with or without surety.

Alterations

Policy holder may seek to effect alteration in policy terms and conditions.

It is subject to the consent of both insurer and insured.

Normally alterations may not be permitted during 1st year of policy Except for some simple ones like change of mode of payment  of premium, change in name, address, request for grant of DAB or PDB etc

Main Types of alterations that are permitted are:

1. Change in certain classes of insurance or term [where risk is not increased]
2. Reduction in the sum assured
3. Change in the mode of payment of premium
4. Change in the date of commencement of the policy
5. Splitting up of the policy into two or more policies
6. Removal of an extra premium or restrictive clause
7. Change from without profits to with profits plan
8. Correction in name
9. Settlement option for payment of claim and grant of double accident benefit.

Assignment

Transfer the rights of the property(Policy)

Provision of Section 38(Assignment);

Nomination

• It is the process of life insured proposing the name of the person(s) to whom the sum insured should be paid by the insurance company after his/her death.
• A nominee does not have any right to whole (or part) of the claim.
• For an insurance policy nomination is allowed under Section 39 of the insurance Act 1938.

Provisions of Section 39

• Nomination can be made when the policy is bought or thereafter
• Nomination is not applicable to sec 6 of MWP Act
• Policy moneys payment is made to surviving nominees
• Assignment cancels nomination
• Addition, change or cancellation of nomination is allowed.
• Nomination shall be by endorsement 
• Where the nominee is a minor, an Appointee needs to be appointed by policy holder
• The appointee loses the status when the nominee reaches majority age.
• No specific share of nominee can be made