Underwriting Practices
It has been decided to revise the present underwriting guidelines as shown below:
1. Actual sum assured for calculation of sum under consideration (SUC)
Actual SA under the various plans will be calculated as under
Plans
Actual SA
Table Nos. 133 (T No. 105 for revival only)
3 times of basic SA
Table Nos. 88 (T No. 104 for revival only)
2 times of basic SA
Table Nos. 103, 160, 168
(T. Nos. 110 & 121for revival only)
1.5 times of basic SA
All the remaining plans including Table Nos.
106, 107, 108, 43, 52, 58, 137 (T 94 for revival only), Term rider SA, Critical Illness SA
Basic SA
Table No. 140
Risk SA
Original Premium paying term less than or equal to 5 including single premium mode
Basic SA less premiums paid
(1.5 times under Table 168 with single premium mode )
There is no change in the method of calculation of SUC, i.e, the sum of “Actual Sum Assured” including term rider and CI SA under all the current proposals and policies taken in last two full years on the basis of date of commencement. There is also no change in method of calculation of sum under consideration under children’s plan (Table Nos. 41, 50, 102, 159 (T Nos. 101, 113, 80, 81 & 92 for revival) both for child’s life as well as for premium waiver benefit on proposer’s life.
Sum Under Consideration calculated as above will be the basis for
i. FMR by DMR
ii. Calling for special report
iii. For deciding MHR limits
iv. For determining underwriting authority
For Financial underwriting Total Rated up SA (TRSA) will be equal to sum of actual SA under all previous policies including actual SA under current proposal but excluding SA under critical illness rider.
2. Introduction for full medical report and special reports
There is no change in the present practice of introduction on the basis of sum proposed for full medical report and special reports.
Corporate Club Member Agents are authorized to introduce proponents for full medical report and special reports up to sum proposed of Rs. 1 crore.
3. Full Medical Report (FMR) by Divisional Medical Referee (DMR) / Zonal
Medical Referee (ZMR)
At present FMR by DMR / ZMR is required if
a. SUC is equal to or greater than Rs. 25 lacs; or
b. The age last birthday as on date of proposal (not dated back age) is 60 years or more and SUC is greater than or equal to Rs. 5 lacs.
While calculating SUC for determining FMR by DMR/ZMR basic SA under the current proposal is taken into account.
It has been decided that for determining FMR by DMR/ZMR, SUC will be calculated by taking into account the actual SA as shown under Table of Item No. 1 above.
For FMR other than by DMR/ZMR, the existing rules will continue.
4. Validity of Full Medical Report (FMR)
FMR is valid for 6 months if the life to be assured is a standard life and three months in the case of sub-standard lives. Before completing a proposal it should be ensured that the FMR is valid on the basis of underwriting decision, i.e., 6 months for standard lives and 3 months for substandard lives.
5. Requirement for Fresh FMR in subsequent proposal
At present in respect of subsequent proposal a fresh FMR is required if the sum proposed under the subsequent proposal is more than Rs. 1 lac.
It has been decided that a fresh FMR in subsequent proposal will not be required if
i. actual sum assured in the fresh proposal is less than or equal to Rs. five lacs
ii. original FMR is valid as per our rules
iii. original FMR is by a doctor of sufficient limit including sum proposed under subsequent proposal.
A fresh FMR will be required if any one of the above three conditions is not satisfied.
6. Insurance taken from other insurance companies
Insurance taken from other insurance companies will not be taken into account while calculating Sum Under Consideration for the purpose of FMR (by DMR or otherwise), calling for special report, for deciding MHR limits and for determining underwriting authority. However, for financial underwriting, the maximum allowable SA eligibility will be reduced to the extent of full insurance cover taken from other insurers.
7. Ceiling on medical fees
Vide our letter dated 27th November 1992 addressed to all RMs (Actl) we had prescribed the following ceiling on the maximum amount of fees payable to medical examiners:
Class of city or town
Maximum amount of fees that can be paid in one financial year for FMRs
A
Rs. 37,500
B
Rs. 30,000
C
Rs. 25,000
Vide our circular ref. 1737/4 dated 23rd December 2000 the ceiling on number of medical examinations per medical examiner was reviewed and the maximum number of medical examinations that can be done by a medical examiner was fixed depending on the class of city or town.
The charges payable for medical examinations were revised upwards vide our circulars No. 1597/4 dated 17th December 1996 and 1874/4 dated 14th June 2003.
It is clarified that there is no upper limit on the maximum amount of fees that can be paid to a medical examiner in a financial year. However, there is no change in the maximum number of examinations laid down vide circular ref. 1737/4 dated 23rd December 2000.
8. Reimbursement for FMR and special reports
It is clarified that the total amount to be reimbursed for FMR and special reports should not exceed Rs. 4 per thousand basic sum assured excluding SA under Term Rider and critical illness.
9. Table No. 91 – New Jana Raksha
Presently under T 91 a proposal could be considered on the basis of self declaration without charging non-standard age proof extra up to a maximum SA of Rs. 50,000/-. A special proposal form 320 (JP) is used for this purpose.
It has been decided to discontinue the use of proposal form No. 320 (JP). Proposal Form No. 300 will only be used. Wherever non-standard age proof (NSAP – I or II or III) is submitted a declaration from the client, agent and Dev. Officer / ABM(S) is to be obtained in Form No. 3260 to the effect that he is not able to submit any other standard age proof. No age proof extra will be charged for NSAP-II and NSAP-III under Table No. 91 if the above declaration is satisfactory.
Vide Circular No. 1973/4 dated 6th October 2004 the maximum allowable sum assured under Table No. 91 under Non-medical (General) has been increased to Rs. 1 lac. It is clarified that under non-medical (General) to Other category for proponents with ages 46 to 50 and producing non-standard age proof the maximum allowable SA under Table No. 91 will be Rs. 50,000.
10. Table No. 103 – Jeevan Chhaya
Under this plan there is a special provision to allow a proposal under non-medical both in respect of male and female lives upto Rs. 1 lac where the child is up to one year old.
It has been decided to withdraw the above special concession. Table No. 103 will be allowed under non-medical – special and general - as per the revised guidelines for Non-medical Schemes.
11. Age Proof – Clarifications to Circular Nos. 1925/4 and 1930/4
a. Ration Card
Vide circular ref. 1925/4 dated 31st December 2003, Ration Card was included as one of the age proofs under Non-Standard Age Proof – I (NSAP-I).
It has now been decided to exclude Ration Card from NSAP-I and include the same as one of the age proofs under Non-Standard Age Proof – III with the following additional guidelines:
· Ration Cards issued originally clearly mentioning the date of issue will only be accepted as age proof under NSAP - III.
· Ration cards where date of issue is not available or non-legible or altered or Duplicate ration card / renewed ration card will not be accepted as age proof.
b. Other clarifications
Under NSAP-I the condition regarding plans involving term insurance element is revised as under:
Plans involving term insurance elements (Table Nos. 43, 52, 58, 88, 89, 103, 106, 107, 108, 121, 133, 143, 150, 160, 164 and 168) will be allowed for total aggregate rated up SA of Rs. 5 lacs.
Under NSAP-III, the special condition ‘c’ is to be deleted. Table No. 152 cannot be allowed with NSAP-III as the minimum SA under the plan is Rs. 2 lacs and maximum allowable with NSAP-III is Rs. one lac.
12. Underwriting procedure under Jeevan Anurag – Table No. 168:
The following clarifications may be noted:
Jeevan Anurag Plan will be allowed with:
i. Standard age proof – without restriction on SA
ii. Non-standard age proof - I (NSAP-I) – maximum aggregate rated up SA of Rs. 5 lakhs under Table Nos. 43, 52, 58, 88, 89, 103, 106, 107, 108, 121, 133, 143, 150, 160, 164, 168 taken together.
iii. When occupational extra is charged. The occupation extra to be charged will be one and half times (1.5 times) the extra shown in Annexure I to circular No. 1721/4 dated 19th December 2003. Clause 86 can be imposed if desired. DAB can be allowed with Clause 85.
13. Insurance to Sub-standard Minors
Vide our Circular ref. 1749//4 dated 7th April 2001 it was decided to allow Table Nos. 11 & 14 to minor lives who are considered to be 50 % overweight having EMR Class III or less.
It has now been decided to allow Table Nos. 48, 75, 93, 152, 154, 155, 156 and 157 to sub-standard minor lives attracting EMR Class III or less on account of overweight only in addition to Table No. 14.
At present the maximum policy term in respect of minor lives is restricted to 40 years. It has now been decided to delete the restriction of maximum term.
14. Revival under Table No. 102, 113 and 159
The above Plans are allowed only to standard lives. As a result revival under these plans is regretted if the life assured happens to sub-standard minor at the time of revival.
It is decided to allow revival under the above three plans to sub-standard minor lives attracting EMR on account of overweight only.
15. Table No. 52 – Mortgage Redemption – Cost of medical examination
It is clarified that under Table No. 52 the cost of medical examination will be borne by the Corporation as per rules as stated in Circular No. 1855/4 dated 17th February 2003.
Necessary correction may be carried out on page 48 of the latest Underwriting Manual under Table No. 52.
16. Passport:
In respect of illiterate proponents it is clarified that passport is accepted as standard age proof without any restrictions on maturity age / premium ceasing age.
17. Occupation Extra
The rules for charging occupation extra under the various plans are given in Circular No. 1921/4 dated 17th December 2003.
The following revisions may be noted:
Plans
Multiple to be applied to Occupation Extra given in Annexure I to Circular No. 1921/4
Table No. 133 (T 105 for revival)
3 times
Table No. 88 (T 104 for revival)
2 times
Table No. 103 & 168
(T 110 & 121 for revival)
1.5 times
All the remaining plans including term rider, CI rider and PWB
Extra shown in Annexure I
Occupation extra shown in annexure I to Circular No. 1921/4 dated 17 Dec. 2003 are in respect of policies where the premiums are payable throughout the term of the policy. The factors to be used for the purpose of calculating equivalent extra premiums where mode of payment is single premium or limited payment (Table Nos. 48, 162, 167 & 168) are given in Annexure.
It may be noted that the above factors are also to be used for calculating equivalent extra premium in respect of Standard Extras.
The above instructions come into force with effect from 1st March 2005.
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