Page 35 - Life Insurance underwriting Ebook IC 22

 the number of dependents
 The number of years the income will be needed
 Inflation etc.

The choice of the method will depend upon the company's underwriting
`philosophy.

3. Discuss insurance for housewives, minors and key persons.

3.1 Insurance on housewives / women with no earned income

This presents a special challenge to the underwriter. It is difficult to arrive at the
insurable value where the services of housewives are not compensated financially.
Need analysis approach can be adopted to arrive at the cover.

There can be significant amount of adverse claims experience if due care is not
taken while granting insurance to non-working women, with little or no income.

Generally, small sums assured are granted if there is an equal cover on the husband's
life.

For moderate or large covers, special consideration needs to be given to the overall
profile of the life to be insured. This can comprise of

 Educational background: if a woman is educated, then there is a good possibility
of her being aware of the cover and the risk on her life.

 Insurance on other family members i.e. spouse, children etc.: there can be a
possibility of moral hazard when she is the only person being insured in the
family.

 Marital status and the nominee: if the woman is married, there needs to be an
equal amount of insurance on the spouse. If she is unmarried or a widow then
the insurance on other family members needs to be known to co-relate the
understanding of the need for insurance. It is important to understand who the
beneficiary of the insurance policy is.
 Nature of plan requested for: whether there is a request for an Investment type of
plan or a Term plan is also an important aspect to be looked upon-because if the
reason for insurance is future savings, then one needs to address why the
cheapest form of insurance(Term Plan) has been proposed.

Diagram 3: Factors to be considered for insurance for women with no income

 Educational background
 Insurance on other family members

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