ZEE Business
ZEE BUSINESS
हिंदी में पढ़ें  हिंदी में पढ़ें
Live TV
Live TV
  • Home
  • Personal Finance
  • Markets
    • Stocks
    • Global Markets
    • IPO
    • Companies
    • Currency
    • Commodities
  • My Money
  • Web Stories
  • Calculators
    • Income Tax Calculator
    • Home Loan/EMI Calculator
    • Mutual Fund Returns Calculator
    • Personal Loan Calculator
    • Car Loan Calculator
    • SIP calculator
    • Lumpsum Calculator
    • SWP Calculator
  • Videos
    • M Se Market
    • Jeb Zindagi Zaroorat
    • Light Camera Stocks
    • Tech Takes
    • Big Bulls Ka Nishana
    • Paisa Wasool
    • Commodity Ke MrityunjayMantra
    • The Right Property Show
  • Economy & Infra
    • Policy & Initiatives
    • Agriculture
    • Telecom
    • Aviation
    • Railways
    • Retail
    • Roadways
    • World Economy
  • Exclusive
    • Wealth Guide
    • Interviews
  • Auto
    • Cars
    • Bikes
    • Electric Vehicle
    • Commercial Vehicles
  • Tech
    • Mobiles
    • Gadgets
    • Reviews
    • Tips and Tricks
    • Apps
  • Real Estate
    • Home Buyers
    • Builders
  • Trending
    • Entertainment
    • Politics
    • Lifestyle
    • Travel
    • Sports
    • IPL 2023
    • Karnataka Elections 2023
    • Viral
    • Education
    • Jobs
Read in App
Business News » Personal Finance News

Explained: What is insurance underwriting and how it works?

Insurance underwriting: why does the insurance company bear this risk and how is it calculated?

  • Twitter
  • Facebook
  • Linkedin
  • whatapp
  • View in App
Explained: What is insurance underwriting and how it works?
Insurance underwriting: What is underwriting and how is the risk assessed? Pic- Pixabay

Insurance underwriting: Buying insurance is significant as it helps in tough times like medical emergencies, accidents, etc. Insurance is basically a contract between two parties wherein the insurance company agrees to pay compensation for the loss incurred to the individual based on the term and conditions of the insurance contract in exchange for premiums paid by the individual. 

These contracts usually involve risks of higher value where insurance companies have to pay a higher amount than the premiums paid by the person whose life is insured. A term life insurance policy for a 25-year-old could cost Rs 12,000 per year for a sum assured of Rs 10,00,000. The risk for insurance companies is high here because they will have to pay a large sum if the person whose life is assured dies during the policy term.

So why does the insurance company bear this risk and how is it calculated?

Also Read: Income Tax: What are the 3 deductions under the new tax regime? 

What is insurance underwriting?

The insurance company calculates the risk so that it can be minimised and this process is called underwriting. 

It is the process of categorising risks and charging a sufficient premium to insure those risks. Simply put, it refers to the process of assessing the risk associated with each insurance proposal before deciding whether or not to grant insurance and at what cost.

Does underwriting apply to all forms of insurance?

All types of insurance rely on insurance underwriting. Individuals or businesses, by definition, transfer their risks to an insurer, who charges a fee to provide financial assistance in the event of a loss.

However, before issuing an insurance policy, insurers must understand the nature and scope of the risk they are taking.

How does insurance underwriting work?

-Most insurance companies while insuring a person or an entity evaluate the risk with the following process: 

-Reviewing the application of the person who wants to be insured

-Determining whether the insurance company should cover the applicant

-Recommending the kind of policy and conditions the insurance company will agree to

-Finding solutions that could reduce the frequency of future claims 

-Assessing the coverage if one has made multiple claims, had trouble making payments, or is taking out a new policy  

Click here to get more stock market updates I Zee Business Live

 

 

Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.

TAGS:
Accident Insurancebest health insurance policyunderwritinglife insurancePersonal Finanace
Written By: Sirali Gupta
Edited By: Hemant Abhishek
Updated: Wed, Mar 15, 2023
09:42 am
Mumbai, ZeeBiz WebDesk

LATEST NEWS

Ganga Dussehra 2023: Know date, significance and rituals here

IRCTC shares extend gains to second straight day ahead of Q4 results; will there be a dividend announcement?

Amazon 5G Revolution Sale: From Samsung Galaxy S23 Ultra to Lava Blaze, list of 5G smartphones available at huge discounts

Atomberg raises $86 million from Temasek, Steadview Capital & others

GSLV-F12 carrying navigation satellite NVS-01 lifts-off from Sriharikota

Jaypee Infratech defers approval of financial statements for March 2023 quarter

SBI raises USD 750 million via bonds on India INX under its 10 billion MTN programme

BoB aims at 15% credit growth in FY23

From global cues to last leg of Q4 results, 10 things to know before Dalal Street opening bell

FINAL TRADE: Indices pare gains; Sensex ends 345 pts higher; Nifty just shy of 18,600

  • India News
  • World News
  • Companies News
  • Market News
  • Personal Finance News
  • Technology News
  • Automobile News
  • Small Business News
  • Income Tax Calculator
  • Live TV
  • Videos
  • Photos
  • Author
  • Rss Feed
  • Advertise with us
  • Privacy Policy
  • Legal Disclaimer

Latest Trending Updates

  • EPFO
  • Budget 2020
  • Income Tax Return
  • Auto Expo 2020
  • Home Loan
  • Business News

Trending Topics

  • Income Tax
  • income Tax Calculator
  • 7th Pay Commission
  • Reserve Bank of India
  • GST
  • Latest Business News

Follow us on

zeebiz
zeebiz

Partner Sites

  • Zee News
  • Hindi News
  • Marathi News
  • Bengali News
  • Tamil News
  • Malayalam News
  • Gujarati News
  • Telugu News
  • Kannada News
  • DNA
  • WION
© 2023. Indiadotcom Digital Private Limited. All Rights Reserved.
LIVE TV