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A
PROJECT REPORT
on
STUDY OF THE PROCESS OF UNDERWRITING
of
FUTURE GENERALI INDIA LIFE INSURANCE COMPANY PVT LTD.
Submitted To
PUNE UNIVERSITY
BY
TAUSIF AHMED SHAIKH
In Partial Fulfillment of
Master of Business Administration (MBA)
Guided by
Prof Kavita Shendker
Unique Institute of Management
S.No. 36/3C, Gokul Nagar , Katraj Kondhwa Road, Katraj, Pune 411046
2012-2013
CERTIFICATE
This is to be certified that project report titled “Study of the process of
Underwriting” is a benefice work carried out by Mr Tausif A Shaikh Student of M.B.A – II
of our institute for fulfillment of M.B.A degree of University of Pune. He has worked under
our guidance and supervision.
Signature of the Guide:-
Date:-
Place:-
DECLARATION
I Tausif Ahmed Shaikh student of Unique Institute of Management
MBA (2011-2013) solemnly declares that the project work on “Study of the process of
Underwriting” at Future Generali India Life Insurance Company Private Limited was
carried out by the partial fulfillment of the Master of Business Administration Degree, to the
University of Pune. It is a bonafied piece of research work carried out by me and no part of
this have been submitted earlier, either to this University or any other institution for
fulfillment of the requirement of any Degree or Diploma.
This project was undertaken as a part of the academic curriculum
according to the University Rules and by no commercial interest or motives.
Date:
Place: Pune Signature of Candidate
ACKNOWLEDGEMENT
This project is a product of encouragement and motivation from various sources. I am
sincerely thankful to everyone who has contributed to the successful completion of this
project. I would like to thank all who have helped me in the implementation of this project at
all stages.
I offer my profound gratitude to the management for giving me an immense opportunity of
exposure to use my theoretical knowledge with my practical experience, in a professional
environment.
I would like to express my honest and sincere gratitude to my mentor Mr Rajiv Sudan
(Regional Manager) and my reporting officer Mr Shakeel Ahmed (Branch Manager) for
the confidence shown in me and guiding & motivating me throughout the project. With their
helpful attitude, they added to my thoughts, provided some timely suggestions and cleared
my doubts to perfection.
This project could not have been completed without the guidance of Mr Irfan Shaikh
(learning & development Manager). I express my sincere thanks and gratitude to the above
stated persons and also to my colleagues in operation department who have helped me
directly and also to those who have indirectly helped me.
I am thankful to Prof Kavita Shendkar (internal guide) for her support in completion of
project work and I am also thankful to Dr P.B Kumbhar (Director, UIM) for his support
and opportunity given to express my knowledge. Under their valuable guidance & suggestion
I am able to bring my project to a successful completion.
Sincerely
EXECUTIVE SUMMARY
INDEX
Sr No. Chapter Name Page No
1. Introduction to the study
2. Company profile
3. Objective of the study
4. Review of literature
5. Research Methodology
6. Data Analysis & Interpretation
7. Observation and Finding
8. Conclusion and Suggestion
9. Bibliography
10. Annexure
CHAPTER NO 1
INTRODUCTION TO THE STUDY
1
INTRODUCTION TO THE STUDY
Meaning of Life Insurance.
Life insurance is a contract, whereby, for an agreed payment (premium), the
insuring company agrees to pay the insured, or his beneficiaries, a fixed sum or an income
upon the death of the insured. In addition, life insurance can be used as a means of
investment or savings. There are four people involved in the contract: the insurer - who draws
out the contract and pledges to offer a service to the beneficiary the policy holder - a person,
natural or legal who signs the contract, pays the premium and selects the nominated
beneficiaries the insured - the person’s whose death is covered
There are four people involved in the contract:
The insurer - who draws out the contract and pledges to offer a service to the
beneficiary
The policy holder - a person, natural or legal who signs the contract, pays the
premium and selects the nominated beneficiaries
The insured - the person’s whose death is covered by the policy
The nominated beneficiaries or next of kin - persons, natural or legal who will receive
the fixed sum or income as agreed by the contract.
Taking out a life insurance policy is a long-term investment and can be a good
way to: build up your savings get additional income for your retirement get returns on your
capital pass on your capital.
Meaning of life Insurance Underwriting
Life insurance underwriting is a crucial process for determining the risk profile and
estimating the premium amount of a policyholder. The underwriting guidelines for insurance
companies may differ from one another. When you purchase any type of insurance quote, be
life, health, or motor insurance, you might have come across the underwriting process.
Underwriting can be considered as a process to scrutinize an applicant, whether he/she is
eligible for issuing a life insurance policy underwriting ( underwriters ) consider a series of
factors to determine the risk of the applicant for death ( especially premature death). Based on
the risks involved, the pricing of the insurance quote or premium amount is decided.
Life insurance underwriting Process
The guidelines and regulations for underwriting are different for
different insurance companies. As already mentioned the life insurance underwriting process
takes a series of factors into consideration to decide the premium amount for an applicant for
a particular coverage policy. After an individual applies for a Life insurance quote, the
insurance company will circulate a questionnaire form that the applicant has to fill up with
the answers. Underwriting is confidential, which is maintained under strict regulations.
Depending upon the underwriting standards of the insurance company, the question may
vary. Nevertheless some of the common factors for life insurance underwriting are age, sex,
height, and weight, medical history, marital status, profession or occupation, annual income
and personal habits like smoking, alcohol consumption and hobbies. After the applicant fills
up the answers to these queries, the form is sent back to the insurance company.
Once the form is received, the underwriting of the Life insurance
company review the risk profile of the applicant and accordingly, the final premium amount
is charged to the policyholder. In general there are four categories of risks, which are
classified accordingly to the standard underwriting guidelines. The four risk classification
includes proffered (charge with low premium), standard (standard premium amount), rated
(relatively high premium amount) and declined (uninsurable). This way, life insurance
underwriting process is a crucial step to calculate the premium amount for the policyholders.
For better understanding about life insurance underwriting let’s take an example of 2
individuals applying for the Life insurance quote. Let’s consider the first is below 30 years
without any underlying health condition (low death risk), while the second applicant is above
45 years with hypertension condition (high death risk). With underwriting process, the death
risks for the two applicants are examined, after which the insurance company will charge a
low premium for the first applicant (preferred), while charging a higher premium rate for the
second policyholder (rated) It is to be borne in mind that some insurance companies set
stringent guidelines for the underwriting than others. For example, you may not be qualified
for low premium Life insurance coverage in a particular company. This does not mean that
you will not qualify for other company’s Life insurance quote for nearly the same premium.
The best way is to do research and gather information regarding the insurance policies, which
come under your budget. Doing so, you can get a good deal after comparing the premium
rates, and regulation of each company.
Life insurance Underwriting: jobs
For Life insurance underwriting jobs, most companies prefer finance background candidates
with good communication and computer skills. If you are interested in insurance as a career
and meet these requirement and then, a career as insurance underwriter may be lucrative
option. The pay scale is high even though the professional growth rate is comparatively slow
than other jobs. On an average, an underwriter earns more than $50,000 in America, while an
experienced profession in a reputed company may earn as high as $80,000 annually.
Definition of ‘Insurance Underwriter’
A financial professional that evaluates the risks of insuring a particular person or asset and
uses that information to set premium pricing for insurance policies. Insurance underwriters
are employed by insurance companies to help price Life insurance, health insurance,
property/casualty insurance and homeowners insurance, among others.
By Ningthoujam Sandhyarani
Life insurance underwriting is the assessment of the information that has been provided
through an application for life insurance and the recognition of any need to obtain further
information. This is in order to make a fair and accurate underwriting decision on the
applicant so as to determine the exact terms the insurer is willing to offer them. In short is
risk evaluation.
4
CHAPTER NO 2
COMPANY PROFILE
5
COMPANY PROFILE
FUTURE GENERALI INDIA LIFE INSURANCE CO
BLOCK A HERITAGE HOUSE, 6 RAMABAI AMBEDKAR ROAD
NEAR PUNE RAILWAY STATION, PUNE- 411001
IRDA REGISTRATION NO 133
Future Generali is a joint venture between the India-based Future Group
and the Italy-based Generali Group.
Future Generali is present in India in both the life and Non-life businesses as
Future Generali India Life Insurance Co. Ltd and Future Generali India Insurance Co. Ltd.
FUTURE GROUP
Future Group, led by its founder and Group CEO Mr Kishore Biyani,
is one of India’s leading business houses with multiple businesses spanning across the
consumption space. While retail forms the core business activity of Future group, group
subsidiaries are present in consumer finance, capital, insurance, leisure and entertainment,
brand development, retail estate development, retail media and logistics.
Led by its flagship enterprise, Pantaloon Retail, the group operates over
12 million square feet of retail space in 71 cities and town and 65 rural locations across India.
Headquartered in Mumbai (Bombay), Pantaloon Retail employs around 30000 people and is
listed on the Indian stock exchanges. The company follow a multi-format retail strategy that
captures almost the entire consumption basket of Indian customers. In the lifestyle segment,
6
the group operates Pantaloons, a fashion retail chain and central, a chain of seamless malls. In
the value segment, its marquee brand, Big Bazaar is a hypermarket format that combines the
look, touch and feel of Indian bazaars with the choice and convenience of modern retail.
The group’s specialty retail formats include sportswear retailer, planet sports, electronics
retailer, eZone, home improvement chain, Home town and retail chain, Aadhaar, among
others. It also operates popular shopping portal, www.futurebazaar.com.
Future Capital Holdings, the group’s financial arm, provides investment advisory to assets
worth over$ 1 billion that are being invested in consumer brands and companies, real estate,
hotels and logistics. It also operates a consumer finance arm with branches in 150 locations.
Other group companies include, Future Generali, the group’s insurance venture in partnership
with Italy’s Generali Group, Future Brands, a brand development and IPR
Company, Future logistics, providing logistics and distribution solution to group companies
and business partners and Future Media, a retail media initiative
The group’s presence in leisure & Entertainment segment is led through, Mumbai-based
listed company Galaxy Entertainment Limited. Galaxy leading leisure chains, sports bar and
bowling o. and family entertainment centre, F123. Through its partner company, Blue Foods
the group operates around 100 restaurants and food courts through brands like Bombay
Blues, Spaghetti Kitchen, Noodle Bar, The Spoon, Copper Chimney and Gelato.
Future Group’s joint venture partners include US-based stationery products retailers, staples
and Middle East-based Axiom Communications. Future Group believes in developing strong
insights on Indian consumers and building businesses based on the Indian ideas, as espoused
in the group’s core value of ‘Indianness’. The group’s corporate credo is Rewrite rules,
Retain values’.
7
THE GENERALI GROUP
The Generali Group is a leading player in the global insurance and financial
markets. Established in Trieste in 1831, today the Group is one of Europe’s largest insurance
providers and the European biggest Life insurer. It is also one of the world’s top asset
managers with assets totalling more than € 400 billion. With an employed sales force of more
than 100,000 people serving 70 million clients in 68 countries, the Group occupies a
leadership position in Western Europe and an increasingly important place in Eastern Europe
and Asia.
IDENTITY CARD
Since its establishment, the Generali group has always held a reputation for its capital and
financial strength. Its solidity derives from prudent investment management and a focus on
achieving a correct match between risk and medium/ long-term profitability.
Generali Group is one of the leading insurance groups in Europe, with a 2009 total
premium income of more than €70 billion
It is present in 68 countries
It has 85,322 employees(15,956 in Italy)
It has over € 400 billion of assets under management
High rating assigned by the international rating agencies:
A.M. BEST: A+ STABLE
Standard & Poor’s: AA- STABLE
Fitch Ibca: AA- NEGATIVE
Moody’s: Aa3 STABLE
VISION STATEMENT
“Pledged to provide financial security to all people & enterprises through total insurance
solution”
8
VALUES
Respect:
For all stakeholders-employees, customers, for all rules and regulations both
internal and external
Indianess:
We understand India in all its diversity and different facets and will use for our
local understanding to respond to our specific markets, design our products and craft
our processes.
Nimbleness :
A combination of speed and quality, and ability to overcome all obstacles
which come in the way of the achievement of our vision
Can Do :
An attitude which demonstrate our passion, entrepreneurship, and positive
thinking
POSITIONING
Knowledge organisation with Leadership Approach
One Stop Total Insurance Solution & Service Provider
Customer Centric Model embracing Passion, Convenience and Service Excellence
OBJECTIVES
To provide superior customer service through our knowledge-based business partners
and employees supported by the innovative products and services.
9
CHAPTER NO 3
OBJECTIVES OF THE PROJECT WORK
10
OBJECTIVES OF THE PROJECT WORK
Objectives of the study
To know the process of underwriting of Life Insurance Policy in detail.
To know about various categories of underwriting
To know the risk and factors affecting the risk.
To understand the calculation of the premium for the policy.
To know the term of admission / issuance of the policy.
11
CHAPTER NO 4
REVIEW OF LITERATURE
12
REVIEW OF LITERATURE
Meaning of Life Insurance.
Life insurance is a contract, whereby, for an agreed payment (premium),
the insuring company agrees to pay the insured, or his beneficiaries, a fixed sum or an income
upon the death of the insured. In addition, life insurance can be used as a means of
investment or savings. There are four people involved in the contract: the insurer - who draws
out the contract and pledges to offer a service to the beneficiary the policy holder - a person,
natural or legal who signs the contract, pays the premium and selects the nominated
beneficiaries the insured - the person’s whose death is covered.
Meaning of Underwriting
The process of verifying the level of risk in each new entrant [ life to be
insured ] and determining the terms of admission [policy issuance] is called ‘Selection’ or
‘Underwriting’.
Underwriting is the Process by which applicants for insurance are selected
and are classified according to the level of risk that each one represents.
13
Risk is the possibility of adverse consequences that might result in a claim [Death,
sickness or disability].
Underwriting involves evaluation of risk exposure and determining the premium
that needs to be charged to insure that risk.
Life insurance underwriting is a crucial process for determining the risk profile and
estimating the premium amount of a policyholder. The underwriting guidelines for insurance
companies may differ from one another.
When you purchase any type of insurance quote, be life, health, or motor insurance, you
might have come across the underwriting process. Underwriting can be considered as a
process to scrutinize an applicant, whether he/she is eligible for issuing a life insurance policy
underwriting ( underwriters ) consider a series of factors to determine the risk of the applicant
for death ( especially premature death). Based on the risks involved, the pricing of the
insurance quote or premium amount is decided
Importance of Underwriting
A decision to charge premium higher than necessary would not be fair to the
proposer.
Also, the cost of additional risk [if any], not recovered from the proposer would have
to be borne by the rest of the policyholders. That is not fair to them.
Thus, if the risk is wrongly assessed, the premium charged would not be appropriate.
Hence underwriting helps to –
Ensure that appropriate premium is charged for the particular risk involved.
Maintain equity between policy holders
Protect the company from wrong selection [antiselection]
Remain competitive
Offer cover to as wide a group of lives as Possible
14
Various Types of Underwriting
Underwriting
Financial Underwriting
Occupational Underwriting
Major Student Lives Underwriting
Minor Life Underwriting
Female Life Underwriting
Medical Underwriting
Non-Medical Underwriting
15
VARIOUS UNDERWRITING DECISIONS
On the basis of the assessment of the risk, the underwriter will decide on the acceptance of
the proposal.
THE DECISION MAY BE ONE OF THE FOLLOWING
Standard
Accept as proposed at OR [ Ordinary Rates ]
Substandard / Counter offer:
Accept with Extra [ revised] premium
Accept with a lien of [to be specified ]
Accept with modified terms
Accept with [ specific ] clause
Postpone for specific period
Decline
VARIOUS UNDERWRITING TOOLS
The underwriter makes decision on the basis of the information sourced through various tools
16
UNDERWRITING TOOLS
Application Form
Medical Reports
Agent’s Confidential Report
Moral hazard Report
Age proof
Documents
Photo Identity proof
Residential proof
Income proof
Additional questionnaires[ if required]
Once the application form is submitted with necessary documents, proofs, reports and
questionnaires; the as-
Non-Medical case
Medical case
Let us now understand each tool in detail
APPLICATION FORM
What does it tell us?
S Primary source of underwriting information contains 2 basic parts:
1] Non-medical factors / personal factors
2] Other insurance existing or applied for Medical information
Important Of Application Form
Is a part of the legal contract between the company and policyholder
17
MEDICAL REPORTS
Non-Medical Underwriting
It is underwriting a life without a medical examination on the basis of the Application
Form and the Agents report.
Non-medical cases are being processed subject to limit on the:
Sum Assured
Age at entry
However if needed, medical reports can be called for .e.g. if the to be insured is
Diabetic we can call for relevant medical tests.
Medical Underwriting
It is underwriting a life with a medical examination conducted by TPAs at the
approved diagnostic centre.
The type of medical test that the Life to be insured needs to undergo can be identified
from the grid based on the Sum Assured and age of LA.
However, if needed, underwriter may call for additional medical test depending on the
information provided in the application form and the medical test already conducted.
MEDICAL GRID
For medical underwriting the following medical grid is use
18
The above medical grid is to be used for all of Future Generali except the Term Plan.
19[MSA] Medical Sum Assured =
[1* Basic sum assured]
+
[1.5* CI Rider sum assured]
+
[1* Term rider sum assured]
MSA/AGE In yrs. Up to
13
14-17 18-35 36-45 46-50 51-55 >55yrs
UPTO 1 Lac N N N N N N N
1 Lac-2 Lacs N N N N N N N
2 Lacs-5 Lacs N N N N N N B
5 Lacs-10 Lacs N N N N N B B
10 lacs – 15 lacs N N N N B B D
15 lacs – 20 lacs N N N N D D E
20 lacs – 30 lacs N N N C D D E
30 lacs – 50 lacs G A C D E E E
50 lacs-10 lacs D E E E E
10 lacs and above D E F F F
A MRF
B MRF, FBS, RUA, ECG-R, LIPID PROFILE
C MRF, HIV, FBS, FGI-15, RUA
D MRF, HIV, FBS, FGI-15, RUA, ECG-R
E MRF, HIV, FBS, FGI-15, RUA, TMT
F MRF, HIV, FBS, FGI-15, RUA, TMT+(CXR)
G JME
N Non-Medical
ABBREVIATIONS
MRF - Medical Review Form
FBS - Fasting Blood Sugar
FGI-15 - Combination of various biochemical blood tests
RUA - Routine Urine analysis
ECG - Electro cardiogram
HIV - Human Immunodeficiency Virus
TMT - Tread Mill Test
JME - Juvenile medical Examination
CXR - Chest X-Ray
20
MEDICAL GRID FOR FUTURE CARE PLUS [TERM PLAN]
[MSA] Medical Sum Assured =
[1* Basic sum assured]
+
[1.5* CI Rider sum assured]
+
[1* Term rider sum assured]
Medical Requirement for Future Care Plus
AGE
MSA 18 – 35 36 – 45 46 - 50 51 - 55 55 – 60
10 lacs-15 lacs A A B B D
15 lacs -25 lacs A C D D E
25 lacs – 50 lacs C D E E E
50 lacs – 1 Cr D E E E E
> = 1 Cr D E F F F
Type of Test Medical Tests
A MRF, FBS
B MRF, FBS, RUA, ECG-R, LIPID PROFILE
C MRF, FBS, RUA, HIV, FGI-15
D MRF, FBS, RUA, HIV, FGI-15, ECG-R
E MRF, FBS, RUA, HIV, FGI-15, TMT
F MRF, FBS, RUA, HIV, FGI-15, TMT +(CXR)
21
MEDICAL DISCRIPTION
Sr.
No.
Name of
Medical test
Description
1 MRF
Physical examination of the client which includes Height,
Weight Blood pressure reading etc…..
2 FBS
Check the glucose level in blood after fasting period of 12
hours
3 RUA A microscopic examination of urine
4 ECG(R)
Electro cardio gram – cardiac evaluation of the heart
(resting)
5 TMT
Cardiac evaluation of heart under stress condition
6 Chest X- Ray
Radiological image of the lung
7 FGI-15
A combination of different test ( listed as below) which
require blood sample
Lipids Detects Fats concentration
Liver
Function’s
Test
Detects any Liver related abnormality
Proteins Detects the normal or abnormal
concentration of proteins in the blood
Rental
Function
test
Detects any kidney related abnormality
HbA1c Give the idea about the blood sugar control
in last 3 months
CBS Complete Blood Count
22
AGENT’S CONFIDENTIAL REPORT
The agent’s report is a source of information for the underwriter in the office.
As advisor is the primary underwriter, it is his / her major responsibility to inform the
insurer about the factors that affect the risk of the life to insured to avoid adverse
selection
This is an obligation that the advisor owes to the insurer as well as life to be insured.
The agent has to make sure of this by submitting an unambiguous report and also by
ensuring that the proposal papers do not conceal any information.
Agent confidential report needs to be filled by the advisor who is sourcing the
business.
Please note if life to be insured is related to the advisor or is the advisor himself,
Agent Confidential Report to be filled by the immediate manager.
MORAL HAZARD REPORT
Signing limits of the moral hazard report
For all other cases, MHR is to be provided as per the following Authority Matrix
Signing Authority Limits of Sum Assured
Sales Manager Sum Assured from 10 – 15 lakhs
Branch Manager Sum Assured above 15to 50 lakhs
Area Manager / City Manger Sum Assured above 15to 50 lakhs
Regional Manager Sum Assured above 50 lakhs to 1 Crore
Zonal Business Head Sum Assured above 1 Crore
For cases sourced from Blacklisted area, need MHR from ZBH for agency cases
For Alternate/ Alliances Channel we issue the case & send it for Address Verification
check. Meanwhile the Dispatch of policy bond will be kept on hold. For all case
above 30 lakhs MHR will be called from Relationship Manager for that Alliance
partner.
23
All other norms pertaining to MHR will remain the same
For Housewife / Major Student cases need the MHR to be given by AM for all the
cases
For employee cases MHR [wherever required] needs to be provided by his / he
superior
AGE PROOFS
As age increases, the probability of death increases.
These probabilities are taken into consideration while deciding the premium rate.
Certain risks increase with age. Certain other risks decrease with age.
For example, being little overweight is a positive or favourable factor among young
children, while it may not be so among older persons. Younger persons who are
underweight need closer scrutiny than elders who are underweight.
Hence, knowing the exact age of the life to be insured is very important.
Therefore, it is very important to have a valid document that reveals the
date of birth of life to be insured.
Hence, documents having DOB or age are classified into two categories:
STANDARD
NON STANDARD
Nonstandard age proofs are those where DOB / age is not verified while issuing
the same. Hence, it is an additional risk to the company when exact DOB is not known.
Therefore, in such cases extra premium is charged to the customer for the additional risk the
company is undertaking.
24
NON STANDARD AGE PROOF RESTRICTION [TRADITIONAL]
Restriction under non proposal [traditional plans only] received with Non Standard Age proof
Restrictions Traditional Plans
Maximum age at entry 55 years
Maximum age at maturity 65 years
NSAP charges
Up to age 50 – Rs 2 per thousand of sum
assured
50-55 – Rs 3 per thousand of sum assured
Maximum Term 25 years
Maximum Sum Assured
Up to age 45 – Rs 10 lakh
Age 46 to 55 – Rs 5 lakh
Product not offered Term insurance, whole life insurance
NSAP not allowed Minors
Riders
Only ADB, ATPD and WOP on disability
will be allowed. CI Term & LG riders will
not be allowed
NON STANDARD AGE PROOF RESTRICTIONS [ULIP]
A loading would be levied as non-standard age extra as per the following Grid
Age Band Charges per thousand of SA
18-50 years Rs.2
51-55 years Rs.3
RIDERS : Only Accidental Death Rider [ ADB], Accidental Total and Permanent disability
Rider[ATPD] and waiver of premium [ WOP] on disability Rider will be allowed.
Critical Illness [CI], Term & Life Guardian Rider [ LG] will not be allowed.
25
RESTRICTIONS REGULAR PREMIUMS
For Non Standard Age Proof
Age Band
( years ) Minimum multiplier
Age Band
(years) Maximum Multiplier
18-44
Higher of (0.5times
policy term or 10)*
annualized
18-40 15
45-55 Higher of ( 0.25 times
policy term or 7)*
annualized premium
41-45 12
46-55 10
Multiples will not go above the maximum multiplier or the product specifications, whichever
is lower
RESTRICTIONS SINGLE PREMIUMS
Minimum multiplier Maximum Multiplier
1.25* single premium 1.25* single premium
QUICK CHECKS ON AGE PROOFS
Age Proof Description Checks on the proof
PAN card A pan card is used for Income
Tax filing which has the name
& DOB mentioned
Name of LA with the name
written on the PF
DOB mentioned is matching
with the DOB mentioned on
the application form
Birth certificate A birth certificate is document
which has the record of birth
Check the registration num
Check for registration date
Check for seal and stamp and
sign of the issuing authority
Voter ID Voter’s ID enables the
individual to use his voting
rights which has the name &
the age mentioned
The age calculated as per the
voter id should match with the
age mentioned in the PF
Name of LA matches with the
name written on the PF
Ration card A ration card is used to
acquire rationed goods which
mentions the name and age of
the individual
Check for date of issue. The
calculated age as per ration
card should match with the
age mentioned on the PF
Pension order for self Pension order is the document
which enales a retired
individual to get pensions
Check for name & DOB
written on the pension order
Any age proof Should not be half
computerized and half
manually written
Gram Panchayat certificate Gram Panchayat is a
document which is issued in
villages
It should be an extract from
Gram panchayat Register with
Seal, Serial no, otherwise will
be considered as NSAP
School certificate A school certificate is given to
the individual on completion
of the study tenure in school
which has the individual’s
name
Any correction needs to be
countersigned by the issuing
authority with the seal
Please note if age proof is vernacular then translation for the same needs to be provided with
BM/SM /AM/City Head signature and employee code
27
Documents
Documents as per AML guidelines are required to be collected based on amount of
Annualized Premium
AML is applicable for all Life Insurance policies taken including term plans
[excluding health & group insurance] by Individual for AML adherence
In case the premium or the receipted amount exceeds Rs 1 lakh, Income proof needs
to be obtained on account of AML.
For Example -
A. Annualized Premium is Rs.99,999 and receipted amount is Rs. 1 lac
B. Annualized Premium is Rs.1 lac and receipted amount is Rs.99,999
Restriction on Cash Transaction and requirement of PAN: To comply with AML
regulation, if a case is logged for a premium of Rs.50000/- and receipting in cash has been
done of Rs.49999/- then requirement will be raised in this case for PAN
AML Grid
Up to Rs 10000 Rs 10001 to 99999 Rs 100000 and above
1. Photo Id Proof
1 Recent Photograph
2 Photo Id Proof
3 Address Proof
1 Recent Photograph
2 Photo Id Poof
3 Address Proof
4 Proof of Source of Income
5 PAN card
[If annualized premium is
greater than 1 lakh
on a per policy basis] Note: If
PAN copy is
not provided, LA/ Proposer
needs to submit
an acknowledgement form
49A along with
declaration stating that the
PAN card copy
will be submitted post receipt
of the same.
QUICK CHECKS ON ADDRESS PROOFS
Address Proof Description Checks on the address proof
Bank pass book Bank Pass book is issued by
the bank which gives the
individual
Latest transaction [ within six
months required]
Gazetted officer certificate Check for date of issue
[ within six months ]
DL and Passport if expired
cannot be consider as ID or
address proof
Driving license is used by an
individual to ride/drive a
vehicle
Proofs of source of Income
The income details and the proofs provided by the proposer helps the insurer in financial
underwriting.
29
Meaning Financial Underwriting
Financial underwriting determines whether the proposed sum assured is reasonable
considering the potential financial loss on the happening of the insured event
Importance Financial Underwriting
Good Financial underwriting will prevent:
Fraudulent claims
Adverse claims experience due to anti-selection
Early lapse and surrender due to insured not being able to pay the premium.
Financial underwriting helps in eliminating the moral hazard to a greater extent
Financial underwriting guidelines
Every proposal for insurance should be financially underwritten to ensure the
amount of cover is reasonable in relation to the financial circumstances of the insured and
meets a real insurance need.
Maximum cover available for Major Lives [ males & Females] with verifiable
source of income & occupation
Allowable cover
Age Factor
18-39 20 X average annual income
40-50 15 X average annual income
51-60 12 X average annual income
61 and above 05 X average annual income
For Financial underwriting policies lapsed for more than 2 years from last unpaid premium,
will not be counted.
All riders as per underwriting norms can be given to this category.
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Financial underwriting guideline
Total Insurance Cover Income proof
Proposal is underwritten on the basis of
income stated in proposal form
Detailed report by sales representative
(BM/ADM) For FSA beyond 10
lakhs [This report needs to be lakhs
Less than Rs 25 lakhs [ All plans except Term Plan]
Up to Rs 15 lakhs for Term products
given by the employee i.e. BM /
ADM / SM who is sourcing the
policy. It is similar to the ACR which
has questions like “have you seen the
life assured personally? ”, “is the
health conditions of the life assured
good?” etc. that need to be provided
by the employee]
If the SA<25L but if the annualized
premium exceeds 1L income proof
will be
>Rs 25 lakhs [ All plans except Term Plan]
> Rs 15 lakhs for Term products
- FQ to be sudmitted
SALARIED
Form No 16 issued by employer or
Income tax returns for last 3 years or
Salary slips for last 3 months or
Bank statement showing salary
credited for last 6months or
Salary Certificate issued by the
employer [duly signed / stamped with
issuing authority seal] in case
government public sector / reputed
commercial organizations [limited
Companies] and
Branch Manager’s profile letter
[ providing details of the client ‘s
profile] detailing assets & liabilities
with the credentials of the LA in the
social market
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>Rs 25 lakhs [ All plans except Term Plan]
> Rs 15 lakhs for Term products
- FQ to be submitted
BUSINESS
Form No.16 A or
Income tax returns for last 3 years or
Audited Profit and Loss Account and
Balance Sheet of the firm for the last 3
financial years; or
Chartered Accountant’s certificate
with PAN, GIR No; stating the Annual
Income from all sources forthe last
financial years [duly attested by CA
with his membership number].
CA to mention the list of documents
verified and source from where the
Documents are verified. Branch Manager’s profile letter
[providing details of the client ‘s
profile] detailing assets & liabilities
with the credentials of the LA in the
social market
Occupational Underwriting
Occupation is a critical part for underwriting as it helps in assessing the exact nature
of duties [% admin & % manual] & helps in understanding the profile of the
customer.
Basis the occupation the underwriter to take a call as to whether a case can be
considered standard or needs to be rated up / loaded / extra premium charged or if the
need be give a counter offer.
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Incomplete / incorrect disclosure of occupation will have a significant bearing on
claims & may even lead to a claim repudiation hence it is important to disclose the
correct occupation with the exact nature of duties.
Occupation List
All products will be allowed up to 5 lacs with loading 2 / mille for certain
occupational categories
ATPD, CI ,WOP & Term Rider will be excluded as per guidelines
Fishing & Mining will be excluded as per the given occupational list
Major Students Lives Underwriting
Guidelines:
Points to be remembered while filling proposal form [PF] of Major student:
PF must be signed by Major student & Proposer [if relevant]
Proof of Annual income of parent / guardian [if required]
Previous insurance details of life assured, Parents & other sibling must be filled
Family history & Personal history of life assured should be filled in the respective
personal medical & family history columns of proposal form
Latest Photo ID of Proposer [premium payer].
In case photo ID is not available annexure as per AML guidelines, must be enclosed.
Please note in case of students more than 23 years of age ,then proof of study needs to be
provided [e.g. fee receipt, examination admit card]
Latest photo of Proposer [Premium Payer] duly signed by him must be enclosed in the
Declaration column of PF.
Residence proof of Proposer must be enclosed
Annual Income of Parents shall be stated on the PF;
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FQ must accompany all such cases Income proof of the parent who is paying the
premium would be necessary if the total amount of insurance applied or existing on
student’s s life and on the life of any other person financed through the same source,
exceeds 25 lakhs
Maximum Cover Available – MAJOR STUDENTS
Max Cover without linking to parents insurance – 5 lakhs
Max Cover after linking to parents / other siblings insurance 50 lakhs (basic cover
only) – 50 lakhs allowed only if educational loan is taken [including FGI & non FGI
policies]
Riders
Allowed – Critical Illness Rider & Accident Rider
Not allowed – Term Rider
Minor Lives Underwriting
Guidelines In case of minors
Annual Income of Parents shall be stated on the Proposal Form;
FQ where required must accompany all such cases
Income proof of the proposer parent would be necessary if the total amount of
insurance applied or existing on proposer and child’ s life and on the life of any other
person financed through the same source, exceeds 25 lakhs
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In case of minor life assured, total insurance cover on the life of parents will be
clubbed together to determine the life cover to be given to the child.
For financial underwriting purpose, only proposer's insurance cover (existing and
current) & cover proposed by him on the family members will be considered
Enclosures – MINOR
In case of a minor child who is an NRI, a copy of the passport, duly attested by the
parent is mandatory, irrespective of them Sum-Assured.
Medicals of minor life assured ( if required)
A std. age-proof is a must.
School going proof where age of the child is above 6 years.
Previous insurance details of Minor Life assured, Proposer & other siblings
Minor life addendum must be filled by Proposer.
Latest Photo I.D of Proposer,
Latest photo of Proposer duly signed by him must be enclosed in the declaration
column of proposal form.
Proof of residence of Proposer must be enclosed with proposal form
Previous insurance details of Minor Life assured, Proposer & other siblings
Income proof of Proposer along with the financial questionnaire
In case Proposer is an NRI a copy of passport and NRI Q must be enclosed
Important Points to Remember in Minor Life Underwriting
Only parents can be proposer.
Grandparents if required can only be the premium payer but not party to the contract.
However, grandparent can propose in case of single premium
Can’t cover dependant life [Major who is neither a student nor an income generator]
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Maximum Cover Available – MINOR LIVES
Max Cover without linking to parents insurance – 5 lakhs
Max Cover after linking to parents / other siblings insurance Equal to Parents & other
siblings cover or up to Rs 30 lakhs [ whichever is lower ] provided parent’s income is
sufficient to support the total insurance cover
RIDERS NOT ALLOWED
TERM PLAN NOT ALLOWED
Female lives Underwriting
Description
Professional, salaried, business
Female lives with verifiable evidence of
income, occupation or employment
Maximum Cover Same as major male lives with verifiable
source of income
Riders / Plans Riders allowed as per underwriting norms
Guidelines – FEMALE LIVES
Description:
Female lives with no verifiable evidence of income incomes, occupation or
employment: Non-earning dependent female: [Housewife etc.] Self-employed women with
no verifiable evidence of income, occupation or employment [Tuition, Beauty Parlor,
shopkeeper, Small temporary employment, small business etc.]
Maximum Cover:
Total cover (Total SA of all policies including CI rider) of 5 lakhs will be granted
without linkage to Husband’s insurance.
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Maximum cover available subject to condition:
If total cover exceeds 5 lakhs, it will be linked to Husband’s Insurance and maximum
cover granted will be equal to husband’s insurance, but not more than 10 lakhs [Depending
on Husband’s financial status]
Riders / Plans
Term Products not allowed. Term Riders TPD WOP not Riders, TPD, allowed Critical
Illness rider is allowed [Note: Housewives whose premiums are financed from Husband’s
income can be given CI rider only]
Additional New guidelines for this category
Annual Income of husband and total insurance on his life to be stated in the proposal
form
Income proof of the husband would be necessary if the total amount of insurance
applied or existing on the life of life to be assured , and on the life of any other person
in the family ( including husband) which is financed through husband’s income,
exceeds 20 Lakhs
FQ to be furnished Proposal has to be self-proposed (No Proposer allowed) & there
should be letter from Husband stating that he will pay the premiums to keep the
policy in force.
For Illiterate married women, Insurance cover will be linked to Husband’s Insurance
(mandatory) subject to max. of 5 lakhs
.
Signature Mismatch:
For signature mismatch – Self Declaration ( addendum) will be sufficient
Minimum Premium:
The minimum premium for any mode / any product must be Rs.2500 for New
business log-in with immediate effect.
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In case of only SIP product, the premium for minimum 2 months @ Rs.3000 or
Rs.4000/- is acceptable.
Any exception to above must be approved by ZBH & Channel head
Underwriting Summary
The process of verifying the level of risk in each new entrant [life to be insured] and
Determining the terms of admission [policy issuance] is called ‘Underwriting’..
The factors affecting risk on the life on individual are called Hazards.
Hazards may be Physical Hazards, Occupational hazards, and Moral hazards.
The underwriter makes decision on the basis of information sourced through various
tools - Application form, Medical reports, agent’s confidential report, moral hazard
report, age proof, AML / KYC documents and additional questionnaires.
The various underwriting decisions are Standard, Substandard / Counter offer,
Postpone for specific period, Decline.
The various underwriting categories are: Medical / Non –medical, Financial
underwriting, Occupational underwriting, Major Students lives underwriting, Minor
lives underwriting and Female lives underwriting
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Risk Factor in life Insurance
Risks and uncertainties are not avoidable in life. They threaten the assets and their
earning capacities. The assets may be by human or material. The risks have to be
managed. Management of risk has developed as a subject of specialised study. The
objectives of managing risk are to eliminate, or at least reduce, the effects of, the
risks. To do so, the risks have to be first identified and then analysed, in the same
ways problems are identified and analysed, before attempting solutions. There are
ways of doing these. After identifying and analysing the risks,
The ways of managing risks are
Avoidance or Prevention
Reduction
Retention
Transfer
Risks are not totally preventable, because they are often caused by forces and
situations outside one’s control. Natural perils like cyclones and earthquakes are not
preventable. Even a very careful person will be involved in a motor accident because
someone else makes a mistakes. Buildings collapse because some occupants add more
weight than permitted through alteration and storage. Other suffer In retrospect, it
may be felt that the damage was avoidable. Yet, what is practical does not always
happen. There are limits to prevention.
Reduction of risk may be possible. Segregation of hazardous material and processes,
proper periodical maintenance of electrical and other installations, good
housekeeping, proper packing, regular training for personal handling materials and
safety functions, regular drills creating mock situation, installing sprinklers and heat
detector systems that detect danger signals, easy access for fire engines and
availability of water, fire extinguishers, waterproof or pilfer proof packing, wearing
car seat belts or helmets etc. are some methods to reduce risk.
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Steps towards reduction may aim at situation before a peril has struck as well as
situation after the peril has struck, as reflected by the steps mentioned earlier.
However, reduction of risk is not an alternative to reduction or transfer. The efforts to
find ways of reducing risks should never end. Useful ideas may emerge at any time.
Reduction must continue despite retention or transfer.
Strategies for reduction of risks have to be thought of beforehand, to be put into
operation after the perils has struck. Regular drills simulating likely disaster situations
are essential as preparation to reduce losses. Otherwise, someone would be reading
the instructions on the fire extinguisher after the fire has broken out or searching for
the telephone numbers of emergency services. The extent of loss of lives and property
after a rail crash or a fire, is affected by the speed and quality of reaction and
responses are known to cause more deaths and casualties than the events themselves.
Risk Management
Risk Management begins with identifying the risks and then analysing the risks. MPL
and PML are two factors that helps to identify and analyse the risks. A third factor to
look at is the credibility of the data that have been used in the analysis. Occasional
comparisons of forecasts of losses made in the past with actual losses would establish
credibility as well as the steps necessary to improve credibility.
Risk Management attempts to identify and eliminate, or at least reduce the effects of,
various risks. There are financial risks related to one’s financial resource, arising out
of fluctuations in the stock market or because od exchange rate fluctuations or
because of political disturbances or any other reason.
In practise, risk management will be done through a mix of all the alternatives. They
are not mutually exclusive. Attempts at prevention and reduction will continue even
after transfer is arranged, because the loss will invariably be more than what the
insurer will compensate. Even retention and transfer, which seem to be mutually
exclusive are not. Some risks can be transferred to insurers, retention are possible
through systems of excess. The relevant considerations are costs as well as feasibility.
Factors Affecting Risk
The factors affecting risk on the life of an individual are called HAZARDS
Hazards may be:-
HAZARDS
PHYSICAL OCCUPATIONAL MORAL
Physical hazards
Age
Sex
Build
Physical condition
Physical impairments
Personal history – Education, Lifestyle, risky hobbies like adventurous sports, habits,
consumption of alcohol / tobacco / narcotics or drugs, financial status, insurable
interest.
Family history
Occupational hazards
Nature of job
E.g. – cashier in shop, pilot, banker, circus artist, driver, etc.( exact nature of duties)
Place in which the job is done
E.g. – working in chemical factories, working with high voltage electricity, working
at heights, working with high speed machines, adventure sports, working in bank, post office
and so on.
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Moral hazards
If the intention is to seek undue advantage through the insurance policy, there is some
moral hazard.
The undue advantage may be to get a lower premium or to make some quick
monetary gains.
Moral hazard is not measurable. It is a matter of opinion.
In the following situation, moral hazard can be suspected:
The proposal is for an amount much larger than what the income would justify
Premium
Meaning of Premium
In a contract of insurance, the insurer promises to pay to the policyholder a
specified sum of money, in the event of a certain specified happening. The policyholder has
to pay a specified amount to the insurer, in consideration of this promise. Premium is the
name given to this consideration that the policyholder has to pay in order to secure the
benefits offered by the insurance contract. It can be looked upon as the price of the insurance
contract. It may be one-time payment. It is then called a ‘single’ premium policy. That is not
common. Often, it has to be paid regularly over a period of time. A default in premium can
endanger the continuance of the policy. If that happens, the policy will be treated as lapsed
and the expected benefits may not be available. The consequences of default are specified in
the policy condition, which will be discussed in a later chapter. Thus, premium has an
important role in the business of insurance. It does not have the meaning of ‘being higher
quality’ or ‘more expensive’ which it has in different contexts.
The calculation of premium is a complex technical process, involving actuarial
and statistical principles. Only trained professional, called actuaries, do it. Tables of premium
rates for each plan of insurance are made available by insurance companies for use in quoting
premiums for a particular policy. This chapter is meant to make students aware of the
rationale behind the premium calculations. The premium is calculated on the basis of
assumption relating to the future experience on mortality, interest rates and expenses. These
assumptions are based on the insurer’s own experience in the past and therefore not arbitrary.
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Yet, they are assumptions as far as the likely future experience is concerned. The margin for
contingencies is provided because of the uncertainty that these assumptions will turn out to be
valid, as the future unfolds.
Types of Premiums
Premium
Risk Net Level Office Extra
Risk Premium
The business of insurance is based on the probabilities of risk. The premium to be
paid by each person is determined on the basis of assumptions made relating to the
probability of the risk for which cover is sought. With regards to each kind of perils and the
associated risks, probabilities are worked out based on past experience. The probability of
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risk will depend partly on how frequently the peril may occur and how severe can its impact
be. Both frequency of occurrence of the perils and extent of damage depend on a number of
factors. Some of these factors may be controllable and some may not be controllable.
The studies on probabilities of risks will not help an insurer to say which one of its
insured persons will suffer from the peril in question. It may however, be possible to say how
many persons, on an average, are likely to be affected by peril insured. Premiums are
determined on that basis. The following example explains the above concept in a very
simplified manner.
Example
There are 1000 persons who are all aged 50 and are healthy. If the probability of
death at age 50 within one year is assumed to be 1% or 10 persons in this case, and if each
person wants to insure for Rs 20,000/- the total loss is expected to be Rs 2,00,00 in one year.
If the person who insured group contribute Rs 200, the common fund would be Rs 2,00,000.
This would be enough to pay Rs 20,000 to the family of each of the persons who die. Thus,
the risks are shared by 1000 persons, although 990 of them did not suffer any loss.
The risk premium is calculated on the basis of an expectation as to how many
persons are likely to die within a year in an age group. This expectation, regarding the
number of persons likely to die within a year, at each age, is calculated by actuaries on the
basis of past experiences and made available as Mortality. Tables Mortality tables prepared
for use of insurance offices, contain data relating to such probabilities. If the mortality tables
shows that X% is the probability of death within one year for any age, (100-X)% persons are
likely to be living at the end of one year, when they would all be one year older. This is a
probability and not a certainly. It does not mean that X% will die. It means that over a long
period of time, if large numbers of people at that age are observed, nearly X% may be dying
within a year. Mortality studies, reflecting the experience of Indians, are made by the
mortality and morbidity investigation bureau (mmib) set up jointly by the Life Insurance
Council and the Actuarial Society of India, to help insurers.
Net Premium or Pure Premium
The premium collected by insurers every year are not utilised for payment of
claims. This is so for many reasons. One is that the real experience may be different from the
probabilities indicated by the mortality tables. Secondly, the portion of the premium is meant
to meet survival benefits and must be kept aside. The balance premium kept aside, after
outgoes of various kinds, will be invested and will earn some interest. To the extent of these
interest earnings, the premium charged can be reduced. The premium worked out after taking
into account the interest likely to be earned, is called the Net premium or Pure premium.
The premium is calculated on the basis of assumptions relating to the future
experience on mortality, interest rates and expenses. These assumptions are based on the
insurer’s own past experience in the past and therefore not arbitrary. Yet, they are
assumptions as, far as the likely future experience is concerned. The margin for contingencies
is provided because of the uncertainty that these assumption will turn out to be valid, as the
future unfolds.
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Level Premium
If it is expected that out of 10,000 persons at a specified age, the probability is
that one may die within one year, the mortality rate at that age is said to be 0.01%. The risk
premium chargeable for person at that age would be Rs 0.10 per Rs 1,000 SA. If a policy has
a term of 20 years, the risk premium and therefore, the premium charged would vary for each
of the 20 years. It would be difficult to administer annual changes in a continuing contract.
Apart from that, the premium at later ages, towards the end of the policy term, would be very
high and people may find it beyond their ability to pay. They will then be without the
protection of insurance at times when they need it most. To offset this problem, insurers
spread the risk premium on a uniform basis, throughout the term of the policy. The premium
will remain constant for 20 years. Such uniform premium is called level premium. This
implies that the premium collected would be more than necessary for the risk in the early
ages, and less than necessary towards the latter part of the policy.
Office Premium
The level premium figures arrived at after loading the net premium or pure premium
is called the office premium. They are now ready for use. The premium figures printed in the
promotional literature and brochures are office premiums. They are also reffered to as the
‘Tabular Premium’. Obviously, the chances, or probability, of a person dying within the next
10 years is more than the chances of his dying in the next year, whatever be the age of the
person. In the other words, the risk (of death) is more in a term. Therefore, at any age, the
premium for a longer term plan like Whole Life would be more than for an endowment plan.
But because of the practise of level premiums, the tabular premium charged (per annum),
would be less for a longer term policy than for a shorter term policy. On the aggregate, the
total premium over the entire term would be higher in the longer term plan than in the shorter
term plan. The tabular premium for an Anticipated Endowment plan would be higher than for
an Endowment plan for the same term, because the insurer may have to pay a higher SA in
the Anticipated Endowment Plan.
46
Extra Premium
Extra premium may be charged on any particular policy. This may happen because
of the grant of some benefits in addition to the basic benefits under this plan, like accidental
benefit or premium waiver benefit. Riders (discussed in a subsequent chapter) provide
additional or supplementary benefits. Extra premium may become chargeable because of
decisions relating to the extent of risk in any particular case. If the risk of the person to be
insured is assessed as more than normal, because of health or because of occupation or habits,
insurers may charge extra premiums. These are usually stated as say, Rs 2 per thousand, and
will be added to the tabular premium otherwise chargeable.
Calculation of Age
The premium to be charged will vary according to the age of the life assured.
Premium rates for each plan of assurance are calculated for each age. If, after the policy is
issued, the age is found to be different from the age stated in the proposal, the premium
mentioned in the policy will be changed from inception. Either the shortfall will be collected
as arrears or the excess will be refunded. Insurers prefer to admit the age to the
commencement of the policy, in order to avoid such problems later.
Age has to be determined as on the date of commencement of the policy. As the
date of commencement of the policy would not be the date of birth of the life insured, and
age has to be reckoned only in complete years, not months and days, three different methods
are followed by insurers. These are age next birthday (birthday coming after the date of
commencement of policy), age last birthday (birthday prior to the date of commencement) or
age nearest birthday (birthday within six months of the date of commencement, whether
before or after). If a person is born on 20 th August 1980 and the policy has commenced on
10th July 2007, the age next birthday would be 27, the age last birthday would be 26 and the
age nearest birthday would be 27. If the date of birth is 17/06/1985, the age next birthday on
25/06/2007 would be 23, the age next birthday on 25/06/2007 would be 23, the age last
birthday would be 22 and the age nearer birthday would be 22.
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Premium Calculation
The following illustrations are based on certain assumptions with regards to
practices of insurers. These assumptions are specified at the appropriate places. While
making calculations for any policy, the practices of that insurer must be conformed to.
Step 1
Find out tabular premium i.e. premium quoted in published premium rates, for given age
(nearer, next or last birthday as the case may be) for the relevant plan and term. This
premium is usally stated as Rs per thousand SA. Assume that the tabular premium is Rs 45.60
Step 2
Deduct adjustment for large SA, if applicable. Assuming that the insurer allows rebates
as follows
Sum assured Rebate per thousand SA
Rs 25,000- Rs 49,999 Re.1/-
Rs 50,000- Rs 99,999 Re.1.50/-
Rs 1,00,000 and over Re. 2/-
In this policy for Rs 75000 SA, the premium would be Rs 44.10 (45.60 less 1.50)
Step 3
Make adjustment for mode of payment of premium. Assuming that the insurer provides
rebates of 1% for yearly mode and that the mode proposed in this case is yearly, the premium
Would decrease by 1% of 44.10 or Rs 0.44 making the premium Rs 43.66
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Step 4
Add extras, assuming that the extras in this case are Rs. 1.50 per thousand for
occupational hazard and Rs. 2 per thousand for supplementary benefits the total addition is
Rs 3.50, making the total premium Rs 47.16
Step 5
Multiply by SA (Rs 47.16* 75) equals Rs. 3537.00
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Note
If the adjustment of 1% for mode (step 3) is made before the adjustment for SA, the
deduction would have been 0.46, instead of 0.44. The difference can be significant, if the
insurance is for a large SA. Insurers would clarify how they want it to be done.
The above calculation was made for yearly mode of premium. Therefore, the figure of 3537
is the premium to be charged. If however, the mode was quarterly, then the annual premium
worked out by the above method, without the rebate of 1% for yearly mode, will have to be
divided by 4 to determine the quarterly instalment premium.
In the calculation shown in the earlier paragraph, the final figure arrived at has no paise. If
there are paise in the final figure, they may be (i) ignored or (ii) rounded off to the next
higher integer, or (iii) rounded off to the nearest integer or (iv) rounded off to the nearest 50
paise or any other adjustment, as the insurer may practice.
A few examples are given below
Plan term S A Age Mode Other riders
1 14-30 Rs. 25,000/- 35 Hly DAB + EPDB
2 5-35 Rs.50,000/- 30 Qly Health extra Rs 3
3 75-20 Rs. 30,000/- 30 Mly DAB +EPDB
Note
DAB stands for Double accidental benefit and EPDB stands for extended permanent
disability benefit. Most insurers combine these two benefits together.
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CHAPTER NO 5
RESEARCH METHODOLOGY
50
RESEARCH METHODOLOGY
Meaning of Research:
Research as a means for gaining knowledge can be carried out either at random or in a systematic fashion. Research is a way of finding new way of looking at familiar things in order to explore ways of changing it.
Research in common manner of speaking refers to a research of knowledge. One can also define research as a scientific and systematic search for relevant information on a specific topic. In fact, research is an act of scientific investigation.
“Research concerns itself with obtaining information through observation that can be used to systematically develop logically related proposition so as to attempt to established casual relationships among variables”
-: Black and Champion.
A] Selection of study area:-
Future Generali India Life Insurance Co
Primary Data
Discussion with Mrs the Underwriter of the company. Collecting the information relating to the Underwriting from other members of
the Underwriting Dept. of the organisation. Discussion with the Branch Manager, Mr Shakeel Ahmed. Discussion with the learning & Development Manager Mr Irfan Shaikh.
B] The secondary data as is provided by the organisation
The needed information is collected from:
Human Resource Methodology by Nirali Prakashan.
The present study is aimed at analysing the Life Insurance Underwriting Method of the Future Generali India Life Insurance Co. Pvt. Ltd.
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Research Design
A research design is a blue point prepared depending on various types of blue point available for the collection, measurement & analysis of data. Every research design must have a scientific base to achieve the desire objective.
A research design is a marter plan or model for the conduct of formal investigation & survey. It decides the sources of information & methods of gathering data. A questionnaire or other forms are rested to use for the collection of data.
Sample design is to be selected. Good research design insure that the information obtained is relevant to the research question & that the collection by objective since research design is simply framework or plan for a blue print is followed in completing for research study.
Research design decision should be in the following order:-
What is study about? Why should is being carried out? What type of plan is required? Where can be the required data found? What period of time shall the study include? How shall be the sample design? What method/technique of data collection will be used? How will the data be analysed?
In what style shall the report prepared?
Research Design is classified for the purpose of survey/ investigation is as follows
Research Design
Exploratory Descriptive Casual Experiment
Here for this research study descriptive method/ design has been used. Survey & interview were used to collect primary data where in secondary data was collected from internet, manuals, magazines etc. this research aims at describing the various sales promotion techniques being used & its effectiveness
52