In India, the life insurance underwriting process evaluates an individual's risk to determine the appropriate premium. This process ensures the insurer offers fair coverage while managing potential risks. Read on to learn everything about the underwriting process, including the factors considered, how it works, and how to obtain the best policy for your needs.
Life Cover Starting @ just ₹18/day*
Choose India’s Only Personalised Term Plan
Modify coverage as per your life stages & commitments
Hassle-Free Claim Settlement
99.38% Claim settlement ratio*
Smart Income Tax Savings
Save up to ₹54,600* on your taxes
Underwriting in insurance is the process by which insurers assess the risk associated with insuring an individual or entity. It’s a critical function that determines whether an insurance application should be accepted, how much coverage to provide, and at what premium rate. This process helps insurance companies balance risk exposure and ensure profitability while providing applicants with appropriate coverage options.
An underwriter in insurance is a professional responsible for assessing and evaluating the risks associated with insuring a person, business, or asset. They determine whether an applicant qualifies for insurance, how much coverage should be offered, and at what premium rate. Underwriters analyse various risk factors and help insurance companies make informed decisions that balance risk and profitability.
If you're applying for life insurance, the underwriter will evaluate your risk profile through a "Life Insurance Underwriting" process. This procedure considers many factors that could influence your insurance premiums, and other factors. The underwriting phase for life insurance starts after you apply. It involves determining the appropriate coverage level and policy premium.
An underwriter is assigned to your application to determine your risk profile. This allows the insurance company to adjust the premium and coverage as necessary. Underwriting for life insurance involves a comprehensive evaluation of age, gender, medical history, lifestyle, interests, and financial stability. It is based on actuarial mortality rate calculations, a standard practice in the insurance industry.
The life insurance industry uses several distinct underwriting methods. Learn about the many forms of life insurance underwriting by reading the advice below.
The insurance underwriting procedure involves the following steps.
Mostly, two to eight weeks may pass during the underwriting procedure for life insurance. The underwriter checks the details you've provided in the proposal form to ensure you can afford the premium. If you are honest about the information you provide, the insurance company can authenticate your coverage and the premium smoothly. Consequently, be forthright while communicating with insurance providers.
When applying for life insurance, your application goes through an underwriting process where the insurance company assesses your risk level. There are four possible outcomes of this process: acceptance, postponement, rejection, or counteroffer.
Underwriting standards for life insurance vary from company to company, but there are some universal parameters that most insurers follow when looking for "red flags." Insurers may respond to these potential dangers by decreasing their coverage, charging more premiums, or rejecting an application for life insurance.
Among the most important reasons for rejecting a life insurance application are a smoking history and a diagnosis of potentially fatal diseases like diabetes, heart disease, cancer, HIV/AIDS, or a bloodborne illness. Other factors that can lead to rejection may include the following:
In most cases, an insurer would request further medical documentation if a policyholder has a body mass index (BMI) of 40 or above. A high body mass index (BMI) is a common reason for application denial.
Life insurance companies may deny coverage if you have high blood pressure unless it's controlled with medication. Adverse reactions might result from inappropriate or unmanaged stress.
Insurance companies may refuse a policy if the policyholder wants to visit a dangerous or unstable country.
Use of narcotics will result in a rejection. Each insurance company has its policy on marijuana use.
Applicants with high-risk employment, such as pilots and police bomb specialists, may need to seek coverage via speciality carriers or employer plans.
The more alcohol you consume than the usual person, the higher your premiums will be. The application could be rejected if the applicant has been drinking heavily.
If applicants engage in high-risk hobbies like skydiving or auto racing, they may be charged far more for insurance or denied coverage altogether.
Some insurance companies might turn down an applicant with a history of dangerous or drunken driving.
Having any of these conditions is not an automatic denial of insurance. Nonetheless, you could have fewer options and a higher insurance cost. But bear in mind that as medical science progresses, other choices may become available. In those days, a person with an HIV diagnosis couldn't acquire medically underwritten insurance.
People are accepted for coverage despite having a minor or easily managed health condition. You have two primary choices if your medical history or current health concerns make it likely that you will not "pass" a mandatory medical examination.
In India, various life insurance plans are available. Each has unique features and benefits, catering to the diverse needs of individuals and families. Common options include:
| Term Life Insurance | Life coverage for a specific duration. A perfect option for people who want a financial safety net for their loved ones. |
| Whole Life Insurance | Financial protection for a lifetime, along with saving components. Maturity benefits once completing 100 years of age. |
| Endowment Plans | Financial protection plus guaranteed returns. Maturity benefits when the policy term ends. A perfect option for those who want life cover insurance and guaranteed returns |
| Unit Linked Insurance Plans (ULIPs) | Financial protection plus investment options. Maturity benefits when the policy term ends. This is for those who want life coverage and investment opportunities to build wealth. |
ACKO Life Flexi Term Plan is a Pure, Non-Linked, highly flexible life insurance option offering pure protection. It's designed to provide coverage for you and your family, with unique features to adjust the coverage and terms as your needs change over time.
Based on your changing requirements, you can increase your policy term (once a year) and decrease it (after five years).
Depending on your needs, you can increase it (once a year) or decrease it after three years of policy tenure.
Customise your plan with ACKO Life Accidental Death Benefit Rider, ACKO Life Accidental Total Permanent Disability Benefit Rider, and ACKO Life Critical Illness Benefit Rider.
Add, modify, or even change your nominees whenever you want.
Decide how your nominee receives the benefit (monthly or one-time full payment).
Easily save up to ₹54,600* on your taxes under Section 80C.
The underwriting process in life insurance assesses an applicant's risk profile to determine coverage eligibility and premium rates. It involves collecting personal information like age, health history, lifestyle, and sometimes conducting a medical exam. For high-value policies, insurers may review medical records and financial data. This data helps classify applicants into risk categories, directly impacting premium rates and coverage terms. Increasingly, insurers use predictive analytics to streamline underwriting for faster, more precise decisions.
In conclusion, underwriting ensures fair premium pricing and financial stability for insurers, providing policyholders with coverage tailored to their unique risk factors while helping manage overall policy costs.
Here are some common questions about life insurance underwriting.
Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet, and is subject to changes.
1.5K Linkedin Followers 
Reviewed by Vaibhav Kumar Kaushik 
Acko Technology & Services Private Limited
#36/5, Hustlehub One East, Somasandrapalya, 27th Main Rd, Sector 2, HSR Layout, Bengaluru, Karnataka 560102
Products 
Company
Legal
Support
Car Insurance 
Bike Insurance
Health Insurance
Group Health Insurance
Travel Insurance
Life Insurance
