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
In a liability insurance policy, provision for the payment of the insured's expenses as stated in the policy in three areas above the policy limit of liability: legal fees resulting from ...
Latin phrase for "The facts speak for themselves." This is a rule of evidence under which an individual is deemed, under certain specific circumstances, to be negligent by the mere ...
Type of health insurance under which an insured's coverage extends to all family members if they are residents of the insured's household. Insures all medical expenses (except those ...
Transportation firm that carries only select customers' goods and is not obligated to carry any particular customer's goods even if that customer is willing to pay. Contrast with common ...
Clause found in a marine insurance policy that states that the policy will not pay any claims less than a given amount but will pay claims in excess of that amount. The purpose of this ...
Federal legislation that established the old age survivors, disability, and health insurance (OASDHI). ...
Coverage on real property written to have no time limit. A single deposit premium pays for insurance for the life of the risk. The insurer earns enough investment income on the deposit to ...
Rate not subsequently adjusted. The rate stays in effect regardless of an insured's subsequent loss record. ...
Health characteristic considered by an insurer underwriting an applicant for life or health insurance. Many insurance companies charge reduced premiums for nonsmokers. ...
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.