The Rationale For Setting A Limit Outline: No Health Insurance And Income Protection Insurance

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Part 1 Question No 1 Explain the rationale for setting a limit below which no medical evidence is obtained for life, critical illness insurance and income protection insurance. Answer Medical evidence is only requested when there is any significant factors is disclosed in application or the sum assured is very high. Comprehensive application is designed to gather sufficient information to take the decision of accepting or rejecting the risk offered. Standard application is accepted on standard rates without asking any other evidence. To consider an application for life insurance the most important factor to rate the risk is mortality risk. And the basis to rate the application for critical illness and income protection is morbidity rate. Limits are fixed on the basis of following factors; Age Sum assured…show more content…
Life Insurance Application for life insurance usually assessed on the basis of information provided on application form. Any significant disclosure or exceeds sum assured amount required additional medical and non medical evidence. Basis of life insurance assessment is mortality, if no worse risk than the mortality rates used in premium calculation then applicant can be accepted at standard rate. If considered to be worse mortality risk they are offered substandard rates. Can be accepted at extra rate, can face exclusion, postponement or decline according to the risk presented. Factors that affect the assessment of mortality are as follows, • Medical History • Occupation • Life style • Overseas travel • Financial aspects • Activities Underwriter must consider the deterioration of the applicant’s risk in future. Heredity also another point to be considers. Life insurance the premium is fixed at the inception of the

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