Detailed Notes for File 1: LIC NB Underwriting Guidelines.

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Introduction

The LIC NB Underwriting Guidelines provide a comprehensive framework for processing new insurance
applications. These guidelines ensure that all necessary documentation is collected, risk assessments are
conducted, and compliance with regulatory requirements is maintained. The document outlines specific
requirements for proposal forms, age proofs, medical underwriting, financial underwriting, and special
conditions for various types of insurance.

Proposal Forms

Proposal forms are essential tools for gathering relevant information from applicants. Different forms are
required based on the type of insurance being applied for. For instance, Form 300 is used for conventional
plans, while Form 340 is used for minor lives with medical conditions. These forms are periodically revised to
ensure they are up to date with current instructions and requirements.

Age Proofs

Age proofs are crucial for verifying the age of the applicant, which is a key factor in determining the premium
and coverage. Standard age proofs include municipal certificates, school or college certificates, passports,
and Aadhar cards. Non-standard age proofs, such as PAN cards and driving licenses, are also accepted under
specific conditions. The guidelines specify that if only the year of birth is stated, the date of birth (DOB) is
taken as July 1st, and if only the month of birth is stated, the 15th of that month is used.

Medical Underwriting

Medical underwriting is a critical part of the process, as it assesses the health risks associated with the
applicant. Medical requirements vary based on age, sum assured, and type of plan. For example, applicants
under the age of 18 to 35 years may be eligible for non-medical schemes, while those in higher age brackets
may require full medical reports (FMR) and special medical questionnaires. The guidelines also specify the
validity periods for medical reports, which range from 3 months for Declarations of Good Health to 12
months for Full Medical Reports.

Financial Underwriting

Financial underwriting ensures that the proposed insurance is within the financial means of the applicant.
Income proofs are required for higher premiums, such as salary certificates, income tax returns (ITR), and
audited accounts. The guidelines provide detailed instructions on the types of income proofs accepted and
the conditions under which they are required. For example, if the total annualized premium exceeds Rs.
100,000, standard income proofs like ITR, Form 16, and employer's certificates are mandatory.
Specific Conditions

The guidelines outline specific conditions for various types of insurance, including major students, pregnant
women, housewives, and non-resident Indians (NRIs). For instance, major students (both male and female)
must be under 30 years of age and provide proof of their academic status. Pregnant women must submit
proposals within 24 weeks of pregnancy and provide specific medical reports. Housewives must provide proof
of their husband's income to support the insurance application.

KYC Norms

Know Your Customer (KYC) norms are essential for compliance with anti-money laundering regulations. KYC
requirements include proof of identity, proof of residence, and recent photographs. When the annual
premium exceeds Rs. 10,000, proof of identity and residence is mandatory. For premiums of Rs. 100,000 and
above, additional income proofs are required.

High Sum Assured Cases

For high sum assured cases (above Rs. 50 lakhs), special medical and financial reports are required. The
guidelines specify that a special medical history report (MHR) in Form 3251 (A&B) must be submitted by
authorized officials. Previous policies, if lapsed within the last three years, must be sent with revival
requirements. Detailed income proofs and medical reports are mandatory for these cases.

Extra Premiums for Sub-Standard Lives

Extra premiums are charged for sub-standard lives based on extra mortality rate (EMR) classes. The
guidelines provide a detailed table of EMR classes and the corresponding factors to be applied. For example,
EMR Class I has a factor of 1, while EMR Class X has a factor of 20. The extra premiums are calculated by
multiplying the base premium by the respective EMR factor.

MHR Limits

MHR limits vary based on the authority. For example, authorized agents can underwrite up to Rs. 5 lakhs,
while branch managers can underwrite up to Rs. 40 lakhs. The guidelines provide a detailed table of MHR
limits for different authorities, including development officers, zonal managers, and chief managers.

TPA Matters

Third-party administrators (TPAs) are utilized for medical examinations. The guidelines provide detailed
instructions for TPA operations, including the collection and submission of proposal papers. TPAs must send
daily statements to the branch office, detailing the status of each proposal. The branches are required to
maintain a register for proposals referred to TPAs.
Insurance on NRIs and FNIOs

NRIs are Indian citizens temporarily residing abroad, while foreign nationals of Indian origin (FNIOs) are not
treated as NRIs for insurance purposes. The guidelines specify different residence groups and the
corresponding plans and sum assured limits. For example, NRIs residing in Group V countries can apply for all
plans, including term riders, while those in Group III and IV countries may face restrictions.

Conclusion

The LIC NB Underwriting Guidelines provide a thorough framework for processing new insurance applications.
They ensure compliance with regulatory requirements, assess risks accurately, and maintain the financial
integrity of the insurance process. By following these guidelines, LIC aims to provide fair and equitable
coverage to all applicants.

Detailed Notes for File 2: Life Underwriting - LOMA 290.pptx

Life underwriting is the process of evaluating and classifying risks to determine the premium and coverage for
life insurance policies. This process is crucial for ensuring that the premiums charged are adequate, equitable,
and not excessive. The LOMA 290 presentation provides an overview of the life underwriting process, its
objectives, and the various factors involved.

Role in New Business Processing

Underwriting is a key component of the New Business Processing Department. It involves three main tasks:
processing applications, underwriting cases, and issuing policy papers. The underwriting process begins with
the collection of relevant information through proposal forms, which vary based on the type of policy and
business class.

Application Process

Proposal forms are essential tools for gathering information from applicants. These forms can range from
simple questionnaires to detailed medical reports, depending on the type of policy and the level of risk
involved. Data collection methods include manual forms, tele-underwriting, and e-channels. The goal is to
gather accurate and comprehensive information to make informed underwriting decisions.

Process Flow

The underwriting process involves several steps, including gathering data, confirming good order, conducting
suitability tests, underwriting the application, and issuing the policy papers. The New Business Processing
 Administration System (NB PAS) is used to manage and streamline these processes. Suitability tests are
conducted to prevent mis-selling and ensure that the policy is appropriate for the applicant's needs.

Automation in NB/UW Process

Automation plays a significant role in simplifying the underwriting process and reducing turnaround time.
Instant decision underwriting and straight-through processing are used for straightforward cases, while
exception-based underwriting is used for cases with deviations. These automated systems help improve
efficiency and accuracy in the underwriting process.

Organization Structure

The underwriting team consists of various roles, including underwriting assistants, junior underwriters, senior
underwriters, chief underwriters, COO, and CEO. Actuaries and medical officers provide staff support. The
organizational structure can vary from centralized to fully decentralized, depending on the company's size
and operational model.

Underwriting Philosophy

The underwriting philosophy is driven by the company's risk appetite, which varies from one company to
another. The board of directors makes decisions on what and how much risk to accept. Formal manuals and
guidelines are issued to ensure consistency and compliance in the underwriting process.

Guiding Principles

Two key guiding principles in underwriting are:

1. Avoiding Adverse Selection: Ensuring that riskier individuals do not disproportionately seek insurance.
2. Persistency: Ensuring that the insurance coverage is adequate and within the financial means of the client to
promote long-term business continuity.
Risk Classification

Risks are classified into different categories, including preferred risk, standard risk, sub-standard risk, and
decline. The classification is based on numeric rating methods, which help in determining the appropriate
premium and coverage.

Sources of Information

Underwriting relies on various sources of information, including proposal forms, KYC documents,
photographs, age proofs, agent’s confidential reports, income proofs, and bank details. Digital sources, such
as CRISIL credit scores, digital health scores, and IIB databases, are also increasingly used to gather relevant
information.
 Conclusion

Life underwriting is a critical process that ensures the premiums charged are fair and equitable while
managing the risks associated with life insurance policies. By following established guidelines and utilizing
both traditional and digital tools, underwriters can make informed decisions that benefit both the insurer and
the insured.

Detailed Notes for File 3: Life UW Factors.pptx

Life insurance underwriting involves assessing various factors that affect insurability. These factors include
personal, health-related, and financial factors. The Life UW Factors presentation provides an overview of
these factors and the sources of information used in the underwriting process.

Factors Affecting Insurability

Personal Factors

 Age: Age is a key factor in determining mortality rates. Chronological age is used as a proxy for biological age.
Mortality tables, such as the Indian Assured Mortality Table (2006-2008), provide detailed mortality rates for
different ages.
 Gender: Females generally have lower mortality rates than males. In advanced countries, females are
charged lower life insurance premiums and higher annuity rates.
 Occupation: Certain occupations increase risk due to environmental hazards, physical conditions, and
accident risks. Companies maintain lists of occupations that attract extra premiums.
 Habits: Regular activities, such as tobacco use, smoking, and liquor consumption, increase risk and can affect
future mortality.
 Residence: Mortality rates vary by country due to differences in living conditions. Developing countries
typically have higher mortality rates than developed countries.
 Hobbies: Risky hobbies, such as scuba-diving, racing, and skydiving, may impose exclusions or additional
premiums.
Health Factors

 Current Health: The applicant's current health status, including build, weight, and health conditions, is crucial
in underwriting. Overweight individuals face higher mortality rates due to increased risk of cardiovascular
diseases.
 Family Health History: Family health history is important because certain diseases can be hereditary. A family
history of major diseases can indicate the applicant's susceptibility to these conditions.
 Medical Reports: Detailed medical questionnaires, medical reports, and special reports for specific diseases
are used to assess health risks. For example, applicants with polio may need to provide a filled Deformity
Questionnaire and medical reports.
Financial Factors

 Financial Status: The applicant's financial status, including income, business activity, and financial obligations,
is assessed to ensure the proposed insurance is affordable.
 Motive for Insurance: The purpose of the insurance and the sum assured are considered to ensure the
coverage is adequate and within the applicant's financial means.
 Sum Assured Calculation: Various methods, such as Human Life Value (HLV), need analysis, income multiples,
and income replacement, are used to calculate the sum assured.
Sources of Information

Personal Factors

 Age Proofs: Standard age proofs include municipal certificates, school or college certificates, and passports.
Non-standard age proofs include PAN cards and driving licenses.
 Occupation Questionnaires: Specific occupation questionnaires are used for different professions, such as
army personnel, aviation, and merchants marine.
Health Factors

 Medical Questionnaires: Medical questionnaires, medical reports, and special reports for specific diseases
are used to assess health risks. For example, applicants with specific conditions may need to provide a
Deformity Questionnaire and medical reports.
Financial Factors

 Income Proofs: Income tax returns, bank statements, and loan repayment records are used to verify the
applicant's financial status. Evidence of income and details of other policies financed by the proposer are also
required.
Conclusion

Life insurance underwriting is a systematic process that assesses various factors to ensure premiums are
adequate, equitable, and not excessive. By considering personal, health-related, and financial factors,
underwriters can make informed decisions that benefit both the insurer and the insured. The use of both
traditional and digital sources of information helps improve the accuracy and efficiency of the underwriting
process.