Life Insurance

INSURANCE & RISK MANAGEMENT (BBAA04A52)
Unit -3:
LIFE INSURANCE
Dr. J.Mexon ,
Department of Management,
Kristu Jayanti College, Bengaluru.

Contents
• Introduction to Life Insurance
• Principles of Life Insurance
• Life insurance products
• Life Insurance Pensions
• Life Insurance Annuities
• Life insurance underwriting
• Need for selection in Underwriting
• Mortality
• Sources of Mortality Data & Extra mortality
• Numerical methods of undertaking & Occupational hazards

Introduction to Life Insurance
• Life Insurance is a financial cover for a contingency linked with
human life, like death, disability, accident, retirement etc. Human
life is subject to risks of death and disability due to natural and
accidental causes. Life Insurance products provide a definite
amount of money in case the life insured dies during the term of
the policy or becomes disabled on account of an accident.
• Life Insurance is defined as a contract between the policy holder
and the insurance company, where the life insurance company pays
a specific sum to the insured individual's family upon his death. The
life insurance sum is paid in exchange for a specific amount of
premium.

Life-based contracts tend to fall into two major categories:
• Protection policies: Provide a benefit, typically a lump sum
payment, in the event of a specified occurrence. Gives
comprehensive insurance cover to protect your family’s
future to ensure that they lead their lives conformably
without any financial worries, even in your absence.
• Investment policies: the main objective of these policies is
to facilitate the growth of capital by regular or single
premiums. Mostly life insurance paid for with a single
lump-sum deposit at the outset, rather than monthly
premiums.

Feature of Life Insurance Policy:
1. The individual whose life is covered under the policy is called the life insured
or life assured
2. The individual who pays the premium for the policy is called the policyholder
3. The policyholder and the life insured can be same or different. When you buy
a life insurance policy on your life, you are the policyholder and life insured.
However, when you buy a policy on the life of your spouse or dependent child,
you would be the policyholder but the life insured would be the spouse of the
dependent child.
4. Every life insurance policy has a specified duration and coverage level which
you can choose
5. There are different types of life insurance plans and each plan has a different
benefit structure

Importance of Life Insurance Plan:
Life insurance policies provide financial security. They promise
to give your family financial assistance in case of your
premature death.
There are different types of life insurance plans and each plan
helps you in fulfilling your life’s financial goals
By investing in life insurance policies you can buy peace of mind
for yourself as far are financial stability is concerned
Life insurance policies also give you tax benefits and help in
lowering your tax

ASSESSMENT OF INSURANCE NEED:
Using comprehensive financial data and an individual’s goals and
objectives, an appropriate amount of insurance can be derived which may
allow an individual to achieve their planning goals. Because each person’s
situation is unique, each case must be approached with the individual’s
goals and objectives as the driving force behind assessing the insurance
need. There are three main ways to calculate an individual’s insurance
need.
i. Rule-of-Thumb Approach
ii. Income Replacement Approach
iii. Needs Approach

i. Rule-of-Thumb Approach:
This method of calculating an individual’s insurance need is the most basic
and it focuses on how much insurance coverage a family needs to replace a
breadwinner’s earnings and maintain their standard of living. The general
idea is that insuring for an amount equaling six-to-eight times an
individual’s annual salary will provide adequate coverage in most
situations.
While this approach can provide a basic estimate of the insurance need, it
does not take into account individual circumstances, such as the insured
person’s age, if the home is a one or two income household, and the age
of the dependents.

ii. Income Replacement Approach
This approach uses the human value life concept to measure an
individual’s insurance need. The method states that the economic value of
a life is the present value of the future earnings potential of that person.
Therefore, the amount of insurance needed will equal how much the
insured person will earn until retirement.
This amount is based on a number of factors including current after-tax
income, income growth rates, an after-tax discount rate (or expected
future investment returns), and the remaining number of years the insured
is expected to work. There are several potential adjustments to an
individual’s income level that should be considered in order to calculate an
accurate insurance need:

iii. Needs Approach
The Needs Approach is another simple formula that can be used to calculate an
individual’s life insurance needs based on several calculations.
• Sum all of the individual’s short-term needs which likely fall into three
categories; final expenses (funeral), outstanding debts (loans), and emergency
expenses (medical).
• Calculate all of the individual’s long-term debts and obligations(college tuition
expenses)
• Calculate the family maintenance expenses (i.e., living expenses)
• Calculate what resources an individual has to meet their needs.
Insurance need = (Short-term needs + Long-term needs + Maintenance
Expenses) – Resources
In general, this analysis should be done at least every three years, or when there
is a major life change (i.e., birth of a child, purchasing a home, etc.)

Principles of Insurance
1. Principle of Utmost Good Faith,
2. Principle of Insurable Interest,
3. Principle of Indemnity,
4. Principle of Contribution,
5. Principle of Subrogation,
6. Principle of Causa Proxima (Nearest Cause)
7. Principle of Loss Minimization

1. Utmost Good faith: According to
this principle, the insurance contract
must be signed by both parties (i.e.
insurer and insured) in an absolute
good faith or belief or trust. The
person getting insured must willingly
disclose and surrender to the insurer
his complete true information
regarding the subject matter of
insurance.

2. Insurable Interest: The principle
of insurable interest states that the
person getting insured must have
insurable interest in the object of
insurance. A person has an
insurable interest when the physical
existence of the insured object
gives him some gain but its non-
existence will give him a loss
(financial).

3. Indemnity: Indemnity means
security, protection and
compensation given against
damage, loss or injury. The amount
of compensations is limited to the
amount assured or the actual
losses, whichever is less. However,
in case of life insurance, the
principle of indemnity does not
apply because the value of human
life cannot be measured in terms
of money.

4. Subrogation: According to the
principle of subrogation, when the
insured is compensated for the
losses due to damage to his
insured property, then the
ownership right of such property
shifts to the insurer.

5. Contribution: According to
this principle, the insured can
claim the compensation only to
the extent of actual loss either
from all insurers or from any
one insurer. If one insurer pays
full compensation then that
insurer can claim proportionate
claim from the other insurers.

6. Proximity Cause: When a
loss is caused by more than
one causes, the proximate or
the nearest or the closest
cause should be taken into
consideration to decide the
liability of the insurer.

7. Loss Minimization: According to
the Principle of Loss Minimization,
insured must always try his level
best to minimize the loss of his
insured property, in case of
uncertain events like a fire outbreak
or blast, etc. The insured must not
neglect and behave irresponsibly
during such events just because the
property is insured. Hence it is a
responsibility of the insured to
protect his insured property and
avoid further losses.

Essential Life Insurance Principles
1. Insurable Interest: In simple terms, insurable interest is that
relationship with the subject matter (a person, in the case of life
insurance) which is recognized at law and gives rise to a legal right
to insure that person. Some particular points to be noted with this
principle are:
(a) Insurable interest in oneself: we all have an insurable interest in
our own lives. From the law concept that husband and wife are one
person, it follows that there is also an insurable interest in one's
spouse.

(b) Insurable interest in others:
• debtors: if a person owes you money, you may insure him for the
amount of the loan, plus reasonable interest;
• business partners: especially where personal services are involved,
such as musicians, lawyers, medical practitioners etc;
• contract relationships: if another person's services have been
engaged under contract that person's death may cause the other
contract party to suffer financially. That potential loss is insurable.
(c) A parent or guardian of a minor (person aged under 18) Apart
from one’s spouse, only the relationships mentioned
(parent/guardian of a minor) constitute insurable interest arising
from blood or family connection.

(d) When is the interest needed? : The answer is that insurable
interest is only needed when the contract begins, and becomes
irrelevant thereafter. What could be the (quite legal) consequences
of this? Some examples are:
• Divorce: a spouse, who insures his/her spouse and then becomes
divorced, can keep the policy in force and be perfectly entitled to
collect the benefit in due time.
• Debts: it is legally possible to insure your debtor, have the debt
repaid, keep the policy in force, and be "paid again" in due time.

2. Duty of Disclosure (Utmost Good faith) : Simply expressed,
utmost good faith requires the disclosure of all material facts,
whether they are requested by the insurer or not. Some points to
note:
• What to disclose: clearly, the insurer wishes to know all important
facts, but you cannot be expected to disclose what you reasonably
cannot be expected to know.
• Non-medical application: if the insurance is arranged without a
physical examination of the applicant, the insurer will normally
have great difficulty in alleging that anything not covered by
questions on the application or personal physician's form is
material.

• Medical application: if the insurance is arranged with a
physical examination of the applicant, the insurer cannot
hold against the applicant any omissions or mis-
diagnosing by the medically qualified person concerned.
• Medical tests: the insurer is entitled to supplement
information supplied verbally with reasonable medical
examinations or tests.
• Breach of the duty: technically, this constitutes a breach
of utmost good faith, which normally renders the contract
voidable by the insurer.

Life Insurance Products
1. Term Insurance Policy
2. Whole Life Insurance Policy
3. Endowment Policies
4. Money Back Policy
5. Unit Linked Insurance Plans (ULIPs)

1. Term Insurance Policy: Simplest type of life insurance and these are
often called protection plans. This type of life insurance policy provides
monetary compensation to the nominee or beneficiary of the policy only if
the policyholder dies during the policy term.
The insurance payout will be made in most situations including death due to
sickness or accident.
Term Insurance Plans provide a significantly large insurance cover in
exchange for a relatively low premium payment. Key Factors that impact the
premiums payable include:
i. The cover amount ii. Age of the insured iii. Policy term iv.
Gender v. Smoking Habit vi. Payout Type (Lump sum, Fixed
Monthlyetc.)

2. Whole Life Insurance Policy: This policy extends Life Insurance
coverage until the demise of the policyholder. After the death of the
policyholder, the nominee is paid the benefits that are listed under the
Whole Life Insurance Policy. A whole life policy offers up to four
different types of benefits:
Death Benefit Maturity Benefit Survival Benefit and Bonus
• Pays the premium for a specific number of years to get a life cover till
the age of 100 years.
• If the insured individual survives beyond 100 years of age, he/she will
get maturity benefits along with applicable bonuses as specified by
the policy.
• If the insured individual dies before 100 years of age, the
Nominee/Beneficiary of the Whole Life plan will receive the Death
Benefit.

3. Endowment Policies: In the case of an Endowment Policy,
the insured person gets life cover along with the additional
benefit of saving regularly during the policy term. The money
that is saved as part of this policy is paid out to the
policyholder as a lump sum amount often the policy matures.
Endowment Plans are not an investment or wealth creation
tool and the savings they generate feature low returns. But
individuals with very low-risk tolerance often choose these
policies due to the guaranteed returns as well as the favorable
tax treatment of the insurance payout.

4. Money Back Policy: “Money Back” which gives prospective
policyholders an idea about how this type of Life Insurance Policy works.
For example, 20 year New Money Back Plan offered by the LIC of India.
As per the terms of this policy, the policyholder needs to pay premiums
for 15 years out of the 20-year term of the policy to avail the 4 possible
benefits of the plan:
• Death Benefit – Benefit is up to 125% of the basic sum assured by the
plan and is payable if the policyholder expires anytime during the 20-
year term of the policy

• Survival Benefit– This comes into force at the end of the 5th, 10th, and
15th policy year. Each time, the policyholder is paid 20% of the basic
sum assured under the plan
• Maturity Benefit –This benefit is applicable if the policyholder survives
the entire 20-year policy term. The payout is equal to 40% of the
policy’s basic sum assured
• Bonus Component –This is a share of the insurance company’s profits
that the policyholder can receive. The bonus payout is usually made as
per the discretion of the insurer and depends on how profitable the
insurer’s business.

5. Unit Linked Insurance Plans (ULIPs): Unit Linked Insurance Plans or
ULIPs are investment products provided by insurance companies that have a
Life Insurance cover built into it. Typically, ULIPs are marketed as investments
that offer 3 key benefits:
• Investment Benefit
• Life Insurance Benefit and
• Tax savings
However, there is a key limitation regarding the life insurance cover provided
by ULIPs. Currently, the maximum Life cover a ULIP can provide is capped at
10 times of the annual premium. ULIPs invest in Equity and Debt markets
and Endowment or Money Back Life Insurance Plans.

Life Insurance Pensions
Pension: A monthly (or other periodic) income benefit payable to a person in
retirement, until that person's death.
However, with the establishment of Pension Funds Development Regulatory
and Development Authority, the need and awareness of creating Pension fund
for Private sector employees and self-occupied persons also has assumed
importance. With the increase in longevity, two important responsibilities are
cast on the Government:
• An inflation adjusted income which helps an old person to survive
• Provisions for health expenses of the old age
With only LIC and few other life insurance companies active currently in the
pension segment there is a huge potential for life insurance companies to
expand in this segment. Pension funds, being long term in nature, support
infrastructure investments in a big way

Types of Pension Plans
1. Participating Pension Plans: Investments in these plans are
regulated by IRDA in order to minimise the risks (protect investor’s
interest). A minimum of 20% of investment in Government of India
(GOI) securities, another 20% in GOI backed securities and the
remaining 60% in approved bonds and equities.
2. Unit-Linked Pension plans: Investment is mix of debt and equity
options of the plan, returns are determined by appreciation in the
unit’ NAV. The investor bear the investment risk.
3. Pure Pension plans: Insurer offer two pension plans one is with life
cover and the other without life cover. Its good go for Pure pension
cover, because it comes at a cost and will eat into the pension.

Selecting a Pension Plan
1. Safety: There should be a sense of balance between safety and
returns. The most important aspect in retirement planning is safety.
2. Performance: Before making any investment decision, the past
record on performance of these pension plans.
3. Exit Option: When pension fund’s performance is not up to the
expected level, there should be exit option. The policyholder buy
scheme from other insurance company.
4. Other Critical Issues: Other issues in connection with the policy and
insurer. (e.g.) Increasing insurance premium over a period of time.
5. Tax benefits: Enjoy income tax deductions under section 80.

Challenges for Pension Schemes in India:
i. Low awareness
ii. Aversion to Long term
iii. Lured by high return products
iv. Undisciplined approach towards investments
v. Absence of separate incentives

Life Insurance Annuities
• Annuity is a contract that provides an income for a specific
period of time.
• Annuity scheme are those wherein policyholders regular
contribution over a period of time (or a one-time
contribution) accumulate to form a corpus with the insurer.
The corpus is used to yield a regular income that is paid to
policyholders until death starting from the desired
retirement age. Some annuity schemes have the option to
pay the survivors a lump sum amount upon the death of
insured in addition to the regular income while the insured is
alive.

TYPES OF ANNUITY
• Immediate Annuity: An immediate annuity provides income for a
guaranteed period of time. Payments begin within one year of
purchase. Income payments can either be for life, for a specified
number of years or a combination of both.
• Deferred Annuity: In the case of deferred annuity, the payments to
the annuitant start after a certain deferment period. A deferred
annuity is made with either single purchase payment or several
purchase payments over time. A deferred annuity can be converted
into a stream of income at any time after 12 months.

• Fixed rate Annuity: A fixed rate annuity is an annuity in which the
insurance company agrees to pay a guaranteed amount of annuity
based on the investment for life.
• Variable Annuity: A Variable Annuity means that the monthly income
provided by the Policy may vary according to the actual investment
experience of the insurer. A variable annuity offers a variety of
investment funds account portfolios, including growth oriented
portfolios that can help you keep up with inflation. The customer can
decide how the investment will be allocated among the various
choices.

OPTIONS IN ANNUITY:
• Single Life Annuity: This is the most popular form of Annuity and under this option, the
Annuitant receives a specified amount of income for his or her life, whether the period of
the annuitant’s life is 1 year or many years. Once the annuitant dies, there are no more
payments to the state or family
• Annuity Certain: Annuity Certain provides a specified amount of monthly income for a
specified period of years, without consideration of any life contingency. If an individual
buys an annuity certain for 10 years, he is sure to get the annuity payments for 10 years
if he is alive or if he dies during the period of 10 years, his beneficiary will receive the
annuity for the residual period.
• Joint Life Annuity: Joint Life Annuity is issued on 2 individuals under which payments
continue in whole or in part until both individuals die. Upon death of annuitant,
payments would continue to the joint annuitant at a percentage of the original level as
selected by the annuitant at the time of income option was chosen. It is also called Joint
Life Last Survivor Annuity.

Life Insurance Underwriting
Life Insurance Underwriting is the process of accepting the proposal of
the customer based on the guidelines formulated by the insurance
company. The insurance companies codify a set of procedures which
must be followed before accepting any new business.
When a new proposal comes to the insurance company its
underwriting department scrutinizes the proposal whether or not it
fulfills the criteria laid down by the company. It is not that one can get
whatever cover one wants. Underwriting can be defined as the decision
making process during which the company decides whether to insure
or not and if yes at what rate.

Underwriters place the potential insureds in the appropriate
risk class generally classified as follows:
• Preferred Class: Where the happening of an adverse event
or the possibility of claims is the least, i.e., the inherent risk
is lesser than average risk.
• Standard class: Where the risk exposed is at par with
average risk. Most of the insured belongs to this class.
• Sub-standard Class: Where the anticipated risk is higher than
the average risk.

Types of Life Insurance Underwriting:
• Increasing extra risks: These types of risks may or may not be major risks
at the time of commencement of the policy, but as time goes by its effect is
likely to become more significant, for example, high blood pressure or
obesity.
• Decreasing extra risk: This is exactly the reverse of an increasing risk
mentioned above. The risk of recurrence of risk is maximum at the time the
individual applies for insurance cover and decreases over a period of time,
with proper supervision and medication.
• Constant extra risk: This is kind of an extra risk, wherein the mortality risk
remains constant throughout the term of the Policy. E.g. an occupational
risk such as pilot in an airline. So long as the Person’s occupation continues
to be in the Air force, there is no decrease in the risk.

LIFE INSURANCE UNDERWRITTING PROCESS:
• Step 1: Application Quality Check
• Step2: Medical Examination
• Step 3: Final Application Rating

Step 1: Application Quality Check: Your application is first gone
through to make sure the information provided is complete and
correct. Therefore, it is important you fill your proposal form carefully
and completely. Unless the missing information is related to your
medical history, a minor change required in an application does not
typically slow down the underwriting process.
After this, your application goes into the official underwriting process.
Each of the following checks can increase the turnaround time, but it is
worth it to get you the right premium price you will need to pay over
the policy term.

Step2: Medical Examination: This step involves looking thoroughly at the
results of your paramedical exam, conducted only if required for health
proof. This medical test is a simple checkup with the doctor recommended
by the insurance company. After the medical examination, the results are
sent to the underwriter for evaluation. The information used by the
underwriter is mainly of three types – basic measurements, your blood test
and drug test.
Basic measurements include regular metrics like height, weight, blood
pressure.
Blood test can get a lot of information on potential health risks such as
heart disease, stroke, diabetes, and blood-borne illnesses, among others.
Finally, a urine test for a full drug panel will alert the underwriter to the
use of drugs, smoking and alcohol consumption.

Step 3: Final Application Rating: Once the underwriting process is complete
and all your medical and financial background have been checked, you are
either made a counter offer suggesting the changes basis you policy
evaluation, or you are proudly offered the life insurance policy. Depending
upon your acceptance or rejection of the new policy term, your policy is then
issued. After this, all that’s left to be done is to confirm the premium rate,
sign the policy to put it in force to keep your family protected.
The premium that you have to pay for your life insurance policy depends
majorly on this evaluation done basis factors like your age, your medical
history, gender, lifestyle, and job.

Factors considered in Underwriting (Needs for Selection)
1. Personal health history
2. Family history
3. Occupation history
4. Personal habits and life style
5. Financial status and capacity to pay
6. Country or Place risk

• Personal health history –This section in the Proposal form comprises
of whole list of questions concerning the various Systems in the
human body and whether the Life assured has undergone any
treatment or taking medicines or underwent diagnostic test or is
aware of any abnormality etc.
• Family history – Medically, it has been proved that genes play an
important role in certain lifestyle related ailments and Family history
assumes significance in assessing mortality. Details include the age at
death of the parents and siblings and whether there has been any
medical history for these close relatives.

• Occupation history – Occupational hazards play an important role in
mortality assessments. Since a Person majority of his time during his
life in his workplace, the hazards related to occupation have an
important bearing on mortality. For example, persons who are
engaged in professional sports like Motor car racing, are exposed to
higher risks.
• Personal habits and life style – Habits like Smoking and Drinking have
an impact. Therefore, information on these habits are also solicited in
the Proposal form.

• Financial status and capacity to pay – also called Financial
underwriting, this aspect reviews the capacity of the Customer to
repay the Premiums over the Premium paying period. Though not as
stricter as assessment of repaying capacity for a Loan, it is a factor
considered based on a simple formula – under which Sum Assured is
calculated as a multiple to Annual income of the Proposer – to check
over insurance.
• Country or Place risk – Persons residing in high risk locations face
higher mortality risks. Therefore countries which are prone to
frequent wars, civil commotions, riots etc. could attract higher
premium. In addition, the location of the Life insured in a high-risk
location also becomes important.

Mortality
A mortality rate is a measure of the frequency of occurrence of death
in a defined population during a specified interval. Mortality data from
death certificates and from census and population registers are
routinely collected; from these the death rate in a population can be
calculated. To calculate a death rate the number of deaths recorded is
divided by the number of people in the population, and then multiplied
by 100, 1,000 or another convenient figure.

• The crude death rate shows the number of deaths in the total
population and, for the sake of manageability, is usually calculated
per 1,000. It is calculated as follows: It is calculated as follows:

• Crude death rates do not show the burden of deaths in particular
groups in the population. For example, one might assume a town as
an unhealthy place/dangerous place because it has a high crude
death rate, but on closer examination this is found to be due to the
fact that it is a popular place to retire to and so has a high proportion
of older people. To counter this problem, age-specific rates can be
calculated as follows:

Factors affecting Mortality:
• Mortality or death is affected by a variety of factors. They may be
biological, physiological, environmental, etc. From the demographic view
point, mortality is related to the age and sex of an individual. There is
infant mortality, mortality of woman at the time of delivery, mortality of
man due to cancer of the prostate, etc.
• In its Manual on the International Statistical Classification of Causes of
Death, the World Health Organisation (WHO) places them under the
following five categories:
1. Infectious (caused by organism), parasitic and respiratory diseases (caused
by infection)
2. Cancer (body’s cells grow uncontrollably and spread to other parts)
3. Diseases of the circulatory system (Blood pressure, heart attack etc.. )
4. Violence and accidents
5. All other causes such as diseases of the digestive system.

Causes of Decline in Mortality Rates in Developing Countries:
(1) Disease Control Medicines:
(2) Public Health Programmes:
(3) Medical Facilities:
(4) Spread of Education:
(5) Status of Women:
(6) Food Supply:
(7) Life Expectancy:

Mortality Data Sources
For construction of mortality table, number of living at the beginning of
each age and the number of deaths during the age are required. The
mortality table should be constructed to represent the past experience
as accurately as possible. So the figures of mortality construction
should be as accurate as possible and based on large number of
persons. The sources of mortality construction can be obtained from
the following sources.
• Population Statistics
• Records of Life Insurers
• Miscellaneous Sources

• Population Statistics: The insurer gets number of living at
each age from the census records and the number of deaths
from municipal and other death records. The population
statistics will reveal how many persons have died at what
age. So, with the radix of total number of persons at the
beginning, it can be calculated how many died at particular
age. The calculation of mortality table on this basis is not
very easy and correct.

• Records of Insurers: The records of insurers give a correct
figures because the death rates can be correctly recorded.
No death will go unrecorded, correct number of persons
living and dead for each age can be known. Separate
mortality tables may be prepared for standard lives, sub-
standard lives, female and male lives.
• Sub-classification according to sex, marital status,
occupation, geographical area, class may be made and tables
are constructed separately. The counting of persons is done
very cautiously, withdrawal and lapsation are excluded.

• Miscellaneous Sources: Other sources are also used for
construction of mortality tables, such as patients’ register
maintained by the hospitals, statistics relating to health and
deaths etc. which are more reliable and trustable. The
mortality table constructed on the basis of these statistics
shall be more reliable.

Extra Mortality
• Extra mortality is a term used in epidemiology and public health that
refers to the number of deaths from all causes during a crisis above
and beyond what we would have expected to see under ‘normal’
conditions. In this case, we’re interested in how the number of deaths
during the COVID-19 pandemic compares to the deaths we would
have expected had the pandemic not occurred — a crucial quantity
that cannot be known but can be estimated in several ways.
• An unusual mortality increase during a specific period, in a given
population, is often referred to as an excess mortality.

• The reasons for an excess mortality may vary according to different
phenomena, the current being linked to the COVID-19 pandemic.
Excess mortality is a more comprehensive measure of the total
impact of the pandemic on deaths than the confirmed COVID-19
death count alone.
• In addition to confirmed deaths, excess mortality captures COVID-19
deaths that were not correctly diagnosed and reported, as well as
deaths from other causes that can be attributed to the overall crisis
condition. It also accounts for the partial absence of deaths from
other causes like accidents that did not occur due, e.g., to the
limitations in commuting or travel during the lockdown periods.

Important points about excess mortality figures to keep in mind
• First, not all countries have the infrastructure and capacity to register and
report all deaths. In richer countries with high-quality mortality reporting
systems, nearly 100% of deaths are registered; but in many low- and
middle-income countries, undercounting of mortality is a serious issue.
The UN estimates that only two-thirds of countries register at least 90% of
all deaths that occur, and some countries register less than 50% — or even
under 10% — of deaths.
• Second, there are delays in death reporting that make mortality data
provisional and incomplete in the weeks, months, and even years after a
death occurs — even in richer countries with high-quality mortality
reporting systems. The extent of the delay varies by country.

Occupational Hazards
• Occupational hazards are risks of illnesses or accidents in the
workplace. In other words, hazards that workers experience in their
place of work. A hazardous occupation calls for special treatment by
the insurer either by charging an extra premium or excluding the risk
of death due to such hazard..
• There is a social angle to this problem of occupational hazard. People
working in mines, on electricity poles, or insanitary condition like
stone crushers or road cleaning are normally the socially
disadvantaged people doing a great service to society.
• An occupational hazard is something unpleasant that a person
experiences or suffers as a result of doing their job. There are many
types of occupational hazards, such as biohazards, chemical
hazards, physical hazards, and psychosocial hazards.

1. Biological hazards: Biological hazards or biohazards refer to
biological substances that threaten the health of human beings
and other living organisms. This type of hazard may include
samples of a toxin of a biological source, a virus, or a
microorganism. Specifically, samples that harm human health.
2. Chemical hazards: Chemical hazards are occupational hazards
that exposure to chemicals in the workplace may cause. Victims
can suffer acute or long-term negative health effects. There are
hundreds of hazardous chemicals, including immune agents,
dermatologic agents and carcinogens etc. Asthmagens,
sensitizers, and systemic toxins are also hazardous chemicals.

3. Physical hazards: Physical hazards may be factors, agents, or
circumstances that can cause harm without or with contact. We
classify them as either environmental or occupational hazards.
Radiation, heat and cold stress, vibrations, and noise, for example,
are types of physical hazards. Physical hazards cause injuries and
illnesses in several industries.
4. Psychosocial hazards: Psychosocial hazards are occupational
hazards that affect employees’ psychological health. These hazards
affect their ability to take part in a work environment with other
colleagues. Psychosocial hazards are associated with how the work
was designed, organized, and managed. They are also related to the
social and economic contexts of the work. Patients suffer
psychological or psychiatric injury or illness.

Numerical Ratings
• The Numerical Rating Method is a systematic procedure for assessing the
value of risk, which is based on two practical rules, described earlier viz.,
the “hypothesis of unchanging extra mortality” and “addition of specific
rates of extra mortality for various impairments/ factors.” For this
purpose a sub-standard life may be described as on, which presents a
special hazard in respect of one or more of the following factors of
insurability.
1. Family medical history
2. Personal medical history
3. Present condition of health and habits including build
4. Occupation

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