Numerical Rating System
Definition of "Numerical rating system"
Underwriting method used in classifying applicants for life insurance according to certain demographic factors and assigning weights to these factors. Factors include physical condition, build, family history, personal history, habits, and morals. For example, if an applicant is 5 feet 8 inches and weighs 250 pounds, his mortality expectation based on this height-weight ratio may be 160% of a standard risk who weighs 150 pounds at that height. In this instance a debit of 60 percentage points would be listed next to the weight factor on the applicant's underwriting sheet. If the applicant has an excellent family history (no hereditary diseases such as diabetes), his mortality expectation based on this factor is 90% of the standard risk. Here a credit of 10 percentage points would be listed next to the family history factor. Upon completion of the debiting/crediting process, debits and credits would be totaled for a final rate, which would classify the applicant as standard, substandard, or an uninsurable risk.
Popular Insurance Terms
Period of time of insurance coverage. If a loss occurs during this time, insurance benefits are paid. If a loss occurs after this time period has expired, no insurance benefits are paid. ...
Detailed descriptive list made available to the survivor (s) of the insured showing: attorney, accountant, insurance agent, and location of important documents such as wills, power of ...
Pooling of assets of two or more pension funds under common portfolio management. ...
Legislation that changed the tax treatment concerning child-care expenses so that an employee who has incurred child-care expenses greater than $4800 and who is participating in a ...
Addition to the pure cost of insurance that reflects agent commissions, premium taxes, administrative costs associated with putting business on an insurance company's books, and ...
Right of a policyholder in life insurance with cash value to elect a smaller, fully paid-up policy, without any further premiums to pay. The amount of the paid-up policy is determined by ...
Pension plan under which both the contribution (employer and employee if a contributory plan) and the benefit structure are fixed. In order to properly maintain the actuarial equivalent, ...
Coverage for the contents of a renter's home or apartment and for liability. Tenant policies are similar to homeowners insurance, except that they do not cover the structure. They do, ...
Requirement of state approval of property insurance rates and policy forms before they can be used. Individual states regulate insurers and approve their rates. There are three methods of ...
Comments for Numerical Rating System
what are the underwriting conditions
Aug 21, 2021 05:29:40Hey Alex! Thank you for reaching out to us. The interesting thing about your question is that you can only find your answer with each individual insurance company. Each company has its own system of calculating the underwriting conditions for calculating the risk of death because, in this case, we refer to life insurances. The method of calculation is highly complicated, and it is its own field of study. It is called Actuarial Mathematics, and there are countless formulas used and percentages applied. You should contact your insurance broker or agent for more detailed information as they have more expertise with this than us.
Aug 23, 2021 10:17:31Have a question or comment?
We're here to help.