Life underwriting is a process whereby a Proposal for Life Assurance is examined and assessed using the information provided in the proposal form, the relevant medical reports, the financial reports and surrounding circumstances (e.g. Occupation and Hobbies).
This process enables a prudent underwriter to determine whether to accept or reject the proposed life and if it is to be accepted, at what rate of premium, terms and conditions.
The purpose of Life insurance underwriting is;
- To classify Proposed Lives in a risk category
- To ensure consistent evaluation of risks
- To maintain equity among policy holders – Charge the right premium for the level of risk a Proposer brings to the pool
- To counter anti-selection otherwise people who are less healthy would buy Life Policies for large amounts
- To provide insurance cover to a wider range of Lives
- To achieve Profitability by ensuring that actual mortality and morbidity experience is in line with Actuarial assumptions used in Pricing/Premium
