Page 11 - Life Insurance underwriting Ebook IC 22

CHAPTER –2

Life Underwriting - Principles & Concepts (Part-2)

1. Discuss underwriting methods.

1.1 Methods of underwriting

For decision making underwriters follow two methods:

a) Judgment method

b) Numerical rating method

1.2 Judgment method

This method is rarely used in under riling in present times, as tinder this

method the decision to accept or decline the risk depends upon the personal
judgment of the underwriter based on his experience.

1.3 Numerical rating method

 The numerical rating method was originally devised in the USA in
the 1960s, and has gained popularity around the world.

 The biggest advantage of this method is that it ensures
consistency in risk classification by achieving a consistent basic
mortality assessment by treating all similar lives in a similar

manner.

1.4 Factors considered for pricing of risks

Other than health related factors there are other factors that are used for
assessment by underwriters. In fact, these factors can be bifurcated into:

a) 1st phase: personal factors

These include:

 personal medical history (current and past history)

 physical build
 habits and lifestyle

Sashi Publications Pvt Ltd Call 8443808873/ 8232083010