By Anup Seth
The life insurance business is one of risk protection. When you buy life insurance, you buy it with the idea that your family will be financially cared for if the incident results in your unfortunate death. In other words, you buy insurance. Because after your death, the risk of your family being left without a financial support system outweighs the cost of paying insurance premiums.
Similarly, insurance companies protect themselves from the risks posed by performing the day-to-day business of issuing insurance policies to their customers. The reinsurer protects the insurer’s financial risk in the way that the life insurer acts as a financial risk manager for you. These reinsurers provide guidelines for life insurers to follow before issuing insurance policies to their customers. Basically, a life insurer assesses the risks associated with every individual trying to purchase an insurance policy and determines a fair premium rate that matches those risks.
In summary, underwriting is the process by which a life insurer determines a customer’s eligibility for a particular insurance policy. Careful and accurate risk assessment is the most important aspect of issuing a life insurance policy, as life insurers can provide best-in-class services to their customers, innovate new solutions and insure as many people as possible. It is one of. Effectively resolve complaints.
Types of underwriting
Life insurance companies evaluate insurance eligibility by considering various factors such as age, income, occupation, lifestyle, underlying medical condition, weight, and obesity index. Companies typically fall into two major categories of underwriting.
The company will consider your income, work, life stage, and ability to pay premiums for the insurance period to determine if the amount of life insurance you want to buy fits the needs of you and your dependents. ..
Commonly referred to in the industry as mortality assessment, this aspect of underwriting describes trends in underlying illness based on age, lifestyle, smoking, habits such as drinking, and family history.
Financial underwriting
Underwriting is the process that insurance companies use to calculate the amount of life insurance that suits your situation. After showing interest in buying a certain amount of life insurance, the insurance company will thoroughly analyze your financial situation. At this stage, you will need to submit various documents such as pay slips, bank statements, telephone bills, electricity bills, passports, adher cards, and income tax returns.
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If you have previously purchased insurance policies in your name, you may also need to provide details about them. Some customers may find this process cumbersome, but the insurance company can determine your exact risk appetite. You inadvertently overestimate your life insurance needs, which may lead you to pay unnecessarily high premiums. On the contrary, if you are overly conservative in estimating your life insurance needs, the company can offer you even better value insurance. Underwriting enables insurers to avoid any of these pitfalls and provide better service.
Underwriting medical care: Don’t hide anything from your doctor … and your life insurance company
The importance of disclosing your medical history when purchasing a policy cannot be underestimated. This includes medications taken on a regular basis, hospitalizations that may have been received in the past, upcoming minor or major surgery, and existing conditions.
When you take out life insurance, a representative of the company will request a medical examination and sampling. These tests are very important as they serve as snapshots of your health at that time. The results of the tests form the basis of all transactions with the company, from premium pricing to bill settlement.
All of the above factors are taken into account when issuing a policy. If the medical examination finds a discrepancy between the results and the information disclosed during the policy application, the issuance may be unnecessarily delayed and the policy application may be rejected. In addition, when you agree to the terms of the policy, you are considered transparent about your medical history. This is called the “maximum integrity” principle. The deliberate non-disclosure of important health information during a purchase can affect the claim resolution process.
Some buyers believe that revealing existing terms will increase the premiums that are not covered or paid. However, most insurance companies cover such illnesses after a short waiting period. Therefore, protecting things from insurance companies may give you the peace of mind that you have avoided a slight increase in premiums, but much more if such non-disclosures are discovered at a later stage. It can be costly. As a result, you are exposed to the financial risks you have set to cover for your loved ones.
We recommend that you be as comprehensive as possible when reporting your health status to your insurance company. It determines the fairest premium prices, expedites the issuance of insurance policies, minimizes the risk of insurance policies and / or denial of claims, and maximizes the long-term value proposition of insurance policies. This will help the underwriting system to work in your favor.
(The author is the Chief Distribution Officer of Edelweist Kio Life Insurance. The above views are those of the author, not necessarily those of financialexpress.com).
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