Page 87 - Ebook health insurance IC27

Sashi Publications

for a final rate, which would classify the applicant as standard, substandard, or an
uninsurable risk.

So Net debit or credit comes to
100 + 50 - 10 = 140. Premium will be based on the factor of 140.

Advantages of Numerical rating method
1. Ensures consistency in decision making between different underwriters
2. More uniform treatment of risk depending on the risk profile
3. Liability of error is reduced since each risk is subjected to rating
4. No need to take expert medical advice in each case and job can be interested to

trained underwriter.
5. Expenses of taking medical advice is reduced
6. Underwriting is more sound since rating is done on a standard rating system
7. Underwriting can be done with the speed
8. Facilitates in gathering data
9. Provides a working rule to assess the combined effect of a number of impairments
10. Since underwriting is a standardised knowledge of medical science is not required
11. Very helpful while reviewing the case

Dis-advantages of numerical rating method
1. The rating system does not work when percentage of increasing claim experiences

for adverse features cannot be fixed. Such cases still must be referred to medical
referee.
2. Every adverse feature may not increase in result of mortality rates, hence the rate
arrived may not be truly correct.

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