Main Project

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

32

>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

39

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

37

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.

45

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.

49

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.

51

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