Re: Underwriting Practices
It has been decided to make the following changes in the underwriting practices: 1. AGE PROOF:
A. Standard Age Proof
Identity Cards (provided date of birth is mentioned therein) issued by Government, Quasi-Government, reputed commercial and industrial undertakings to their employees will be treated as standard age proof.
B. Non-standard age proof
Driving License and PAN (Permanent Account No) Card issued by Income Tax Authorities will be treated as non-standard age proofs with the usual extra for non-standard age proof and other restrictions.
The restrictions for non-standard age proofs a. Driving License
b. Pan Card c. E.S.I.S. Card
d. Marriage certificate in the case of Muslims
e. Service record where age record is not verified at the time of entry into service or where only year of birth is mentioned
are as shown overleaf:
i. Age proof Extra equivalent to Class I extra, subject to a minimum of Rs. 1.50 %0 will be charged for all non-standard age proofs.
ii. Plans involving term assurance element will not be granted iii. Whole Life Insurance plans (i.e. Table No. 2) will not be offered iv. Maximum age at entry will not exceed 50 years of age
v. Maximum policy term will be 25 years
vi. Maximum maturity age / premium ceasing age shall be restricted as under:
For Endowment type (Table Nos. 14, 90, 91, 95) – 65 years For Money Back type (Table Nos. 75, 93, 154, 155, 156, 157) – 60 years
For Ltd Whole Life – (premium ceasing age) – 60 years
However if any two of the above non-standard age proofs are produced, extra for non-standard age proof will not be charged. Driving License for such purpose should have been issued at least six months prior to the date of proposal.
Further, if age / date of birth differs in the above two types of non-standard age proofs, higher of the two ages should be admitted.
The restrictions for non-standard age proofs - a. Horoscope
b. Elder’s Declaration (Form No. 3261)
c. Self Declaration (Form No. 5220 Stamped) d. Self Declaration (Form No. 5096 – Unstamped) e. Certificate issued by village panchayat
are as under:
i. to vi – as listed above
vii. For Elder’s Declaration and Self Declaration (Stamped)
- maximum cover to be restricted to five times the assessed income
- if no assessed income – maximum cover to be restricted to three times the
stated annual income
viii. For Self Declaration (Unstamped)
- maximum sum assured including all previous policies will be restricted to
Rs. 50,000/-
ix. The date of birth may be taken as follows when self-declarations are
submitted
- If the date of birth is stated in the declaration, then the same may be taken
as it is.
- If the month alone of birth is stated in the declaration, then 15th
of the month
stated may be taken as the date of birth.
- If the year alone of birth is stated in the declaration, then First July of the
year stated may be taken as the date of birth.
2. RESTRICTIONS ON MATURITY / PREMIUM CEASING AGE A. Sub-standard Lives
i. It has been decided not to impose any restrictions on maturity age, premium ceasing age or term (except the restrictions imposed at the time of introduction of plan) when the extra premium charged is
a. on account of overweight only
b. up to EMR Class VI (health + build extra)
ii. It has been decided to reduce the maturity age / premium ceasing age by 5 years from the maximum allowable under the plan when the extra charged is
a. beyond EMR Class VI (excluding extra for overweight) b. for heart impairments
iii. It has also been decided to restrict the maturity age / premium ceasing age / term whenever opined by our medical referees.
B. Physically Handicapped Lives
The following maturity age restrictions will apply to Physically Handicapped Lives: i. Group A – loss of one limb - no restrictions
ii. Group A – loss of more than one limb
a. Maximum maturity age for Table 14 - 70 years b. Maximum maturity age for Table Nos.
75, 90, 93, 95, 154, 155, 156, 157 – 65 years
iii. Group B – Maximum maturity age – 65 years (only endowment type of assurances)
3. UNDERWRITING OF PROPOSALS WITH PREVIOUS POLICIES ACCEPTED WITH HEALTH EXTRA
In accordance with the existing underwriting practices, all fresh proposals, irrespective of the sum under consideration, where previous policies were accepted with health extra by CUS are required to be referred to CUS for underwriting decision.
It has now been decided that ZUS can underwrite all fresh proposals up to sum under consideration of Rs. 5 lacs where previous policies were accepted with extra by CUS. In such cases it should be ensured that the EMR class to be
charged by ZUS should not be less than the EMR class charged by CUS previously. However, they should take into account recent underwriting guidelines whereby certain extras have been withdrawn or reduced, e.g., single extra for caesarian section, extra for Group A Deformity with one limb, etc. Divisional Offices should therefore refer such proposals to ZUS.
4. PROPOSALS UNDER LIVES WITH GROUP B DEFORMITIES
As per circular Ref: Actl/1851/4 dated 23rd January 2003 all deformity cases
falling under Group B are to be referred to CUS.
It has been decided to decentralize underwriting of proposals under lives with group B deformities to Divisions / Zones within their underwriting powers as per the following guidelines:
Deformity Questionnaire duly filled in should be obtained. If deformity is progressive - Refer to ZUS
If deformity is stationery:
Loss of Extra to be charged Plans to be allowed Maximum Maturity
age Extra of Rs. 2.0 %0
without AB, PDB, EPDB Table Nos. 14, 48, 91 Extra of Rs. 2.50 %0
without AB, PDB, EPDB Table Nos. 75, 93, 154, 155, 156, 157 One
Limb
Extra of Rs. 1.50 %0
without AB, PDB, EPDB Table No. 90 Extra of Rs. 3.0 %0
without AB, PDB, EPDB Table Nos. 14, 48, 91 Two
Limbs
Extra of Rs. 2.25 %0
without AB, PDB, EPDB Table No. 90 Extra of Rs. 4.0 %0
without AB, PDB, EPDB Table No. 14 Three
Limbs
Extra of Rs. 3.0 %0
without AB, PDB, EPDB Table No. 90
65 years in all cases
In all cases, rate appropriately for the underlying cause of deformity also.
5. INSISTENCE ON PARENTS’S INSURANCE IN THE CASE OF MINOR / MAJOR CHILDREN UP TO SUM UNDER CONSIDERATION OF
Rs. 5 LAKHS
Vide Paragraph 6 of our Circular Ref: Actl./1854/4 dated 14th February 2003,
proposals from minor / major children where parents did not have adequate insurance on their own lives due to advanced age or adverse health conditions were required to be sent to CUS for consideration.
It has now been decided that ZUS can underwrite proposals on the lives of minor/major children on the basis of parents’ income up to sum under consideration of Rs. 5 lakhs without insisting on insurance on the lives of parents as per the following guidelines:
• Such proposals should be accompanied with special MHR from MM or SDM • There should be genuine reasons duly supported by evidence as to why
the parents cannot take insurance on their own lives (such as – advanced age, adverse health)
• The parents should have adequate income and fairly good social standing • If there is more than one child, lives of all the children should be covered
for equal amount
• The children to be insured should be school / college going
If proposals on the lives of minor / major children up to sum under consideration of Rs. 5 lakhs do not satisfy the above guidelines, they should be dropped at ZUS level itself and should not be referred to CUS for further consideration.
6. KEYMAN INSURANCE TO COMPANIES
PARTNERSHIP AND KEYMAN INSURANCE TO PARTNERSHIP FIRMS Proposals on the lives of different key men / partners from the same company / partnership firms should not be clubbed together for the purpose of deciding the underwriting authority. If the sum under consideration on each keyman / partner is within the powers of the Division / Zone, then such cases should be
underwritten only at the respective offices, regardless of the total sum proposed on all the lives of all key men / partners put together.
Under partnership insurance / key man insurance to partnership firms, the maximum permissible sum assured is calculated independently for each partner, i.e., his closing capital balance plus proportionate share in good will. Hence even if one of the proposals is sent to CUS on medical ground the other simultaneous proposals can be underwritten by the respective underwriting authority without any difficulty.
In the case of key man insurance to companies, the maximum allowable key man insurance depends on the net profits of the company. When there are more than one key man proposals, the divisional office should calculate the maximum permissible keyman insurance as per financial underwriting rules.
If the maximum allowable cover is adequate for all simultaneous keyman proposals put together, then even if one of the proposals is referred to CUS on medical grounds, the other simultaneous proposals should be underwritten by the respective underwriting authority.
However, if the maximum allowable cover is not adequate for all simultaneous proposals, then the other proposals should be kept pending till the decision from CUS is received. The fact that other proposals are kept pending should be clearly mentioned in the proposal referred to CUS so that the maximum amount that can be allowed under different proposals can be decided by CUS.
The above instructions come into force with immediate effect.
This article has been prepared by Datacomp Training Academy for private circulation and quick reference. For complete details please refer to circular Actl./1874/ 4 dated 23rd May 2003 issued by the LIC of India.
