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
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Document used to sign up employees for plans such as salary savings, life insurance, or other employee benefits. ...
Period of time during which notice of claim and proof of loss must be submitted by the insured or his or her legal representatives. ...
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Change in years of service credited to employee in calculating pension benefits and other employee benefits. ...
Termination of premium payments by an employer on behalf of an employee to an employee benefit plan. ...
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