Risk Selection
Methods by which a home office underwriter chooses applicants that an insurer will accept. The underwriter's job is to spread the costs equitably among members of the group to be insured. Therefore, the underwriter must determine which are normal risks, or standard risks, to be charged the standard rate; which are substandard risks, to be charged a higher rate; and which are preferred risks, to receive a discount. This process is made more difficult by SELF-SELECTION and ADVERSE SELECTION. The underwriter must screen applicants who are looking for insurance, specifically because they have a greater-than-normal chance of loss, and set the correct PREMIUM rate for them.
Popular Insurance Terms
Dividend in a participating policy paid after the death of an insured, representing dividends earned between the last dividend date and the insured's death. ...
Insured plan under which the insurance company agrees to provide the insured with a series of benefits on a benefits-paid basis plus administrative services on a stipulated-fee basis. This ...
Same as term Deductible: amount of loss that insured pays in a claim; includes the following types: Absolute dollar amount. Amount the insured must pay before the company will pay, up to ...
Single policy under which individuals in a natural group (such as employees of a business firm) and their dependents are covered. ...
Transfer of the cash value of the policy from the policyowner to the policyowner's creditor as security for a loan. ...
Insurance written for a period of time greater than one year. ...
Means, in pension plans, by which a projection is made of benefits credited to each employee's account at retirement age. Costs are then allocated on a level basis over a specified future ...
Insurance that combines features of flexible premium life insurance and universal life insurance into one policy in the following manner: Premiums after the required minimum initial premium ...
Coverage under a homeowners insurance policy in the event that a credit card is fraudulently used or altered. Fraud includes theft and the unauthorized use of a credit card. ...
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