Page 5 - Life Insurance underwriting Ebook IC 22

Underwriters evaluate whether the risk associated with an individual can be
accepted at standard rates or not, based on several factors already mentioned

above.

The practices followed by underwrites must be consistent and conforming to the
business guidelines laid down by the company. The decision as to whether a
certain risk is standard or not is always subject to a degree of personal judgment

with rationalised decisions. Hence each of the underwriting decisions taken by an
underwriter should be backed with adequate rationale and supporting

documentation on the underwriting review sheet with regard to the final terms of
acceptance, and these should not be judgmental or biased.

The following decisions may be taken by an underwriter after assessing an
individual's risks:

a) Low Risk Cases

b) High Risk Cases
 Declining the risk

 Accepting the risk with loading
 Accepting the risk after a period of time (postponement)
 Accepting the risk with exclusion

3. Understand the classification of risks.

3.1 Risk classification

Life assurance is guided on the fundamental principle of "utmost good faith

(uberrima fides)" whereby the insurer relies on the information given by the
proposer supported by necessary medical evidence, wherever applicable. Based

on the information collected on an individual risk associated with an individual
can be classified as:

a) standard risk
b) sub-standard risk

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