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
Life insurance policy provision stating that after the death of an insured, the proceeds from a policy are not immediately paid to the primary beneficiary; instead, they are delayed for a ...
Placement of verbal descriptive information into numerical form for the purposes of analysis. ...
Amount received by the policyholder if the policy is canceled, benefits are reduced, or the premium is reduced. ...
Same as term Claims Made Basis: method of determining whether or not coverage is available for a specific claim. If a claim is made during the time period when a liability policy is in ...
Same as term Expiration File: agents' records showing when clients' policies expire. ...
Same as term Extended Coverage Endorsement: added to an insurance policy or a clause found in an insurance policy that will provide additional coverage for risks to be insured other than ...
Assets from a will transfer into an established life insurance trust. Through this mechanism, assets that have been probated are transferred into a living trust. ...
Annual contributions to a pension plan that exceed or are smaller than the minimum required for future employee benefits currently being earned; and any supplemental liability for past ...
Health insurance that provides coverage for physicians' fees for all services, with the exception of surgeons' fees. ...
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