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
Marine insurance contract clause that limits an insurance company's liability. The company agrees to pay only losses that exceed a percentage or flat dollar amount; partial (below this ...
Insurance company whose premium rates are usually below that of other insurance companies and the rating bureau. ...
Automatic nonproportional reinsurance treaty or automatic proportional reinsurance treaty that provides coverage for losses upon which claims are made while the treaty is in force, without ...
Limited number of payments, the first of which is due immediately, and payments thereafter are contingent upon the designated beneficiary (the annuitant) continuing to live. After the limit ...
Policy that combines life insurance coverage on two lives and pays policy proceeds on the second person's death with the accumulation potential of an underlying variable investment ...
Time that has elapsed between when claims actually occurred and when claims are actually paid. ...
Legislation designed to provide the structural reform necessary to strengthen the thrift industry after the bailout of the insolvent Federal Savings and Loan Insurance Corporation (FSLIC) ...
Coverage on an all risks basis for physical damage loss. Coverage applies to property damage to the insured boat or damage caused by the insured boat to a third party boat. Excluded perils ...
Business income coverage form that covers an insured business in the event that a manufacturer's operations are interrupted or suspended, thereby resulting in a monetary loss because a ...
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.