Financial Underwriting

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What is Financial Underwriting in Insurance?

Financial underwriting is the process of evaluating whether the sum assured you're applying for matches your financial profile, like your income, assets, liabilities, and occupation. It helps ensure that the insurance cover is reasonable, justified, and not excessive for your current lifestyle and earning capacity.

Why is Financial Underwriting Important?

1. Protects Your Interests:
It prevents over-insurance, which could otherwise lead to misuse or fraudulent claims.

2. Ensures Fairness:
It ensures that the cover you’re applying for is in line with what someone in your financial situation would typically need—whether it’s to cover loans, replace lost income, or provide for dependents.

3. Risk Assessment:
Just like medical underwriting assesses your health risks, financial underwriting checks your economic risk profile.

When Does Financial Underwriting Happen?

• High Sum Assured: If you apply for a large cover, the insurer will evaluate your finances to ensure the amount is justified.

• Business Owners or Self-Employed Individuals: Since income may not be fixed, a deeper financial evaluation may be needed.

• Non-Working Applicants: For homemakers or dependents, the insurer will assess the earning member’s profile to determine the cover.

What Documents May Be Needed?

• Income proof (like salary slips or income tax returns)
• Bank statements
• Business financials (if self-employed)
• Existing insurance policies and liabilities

In a Nutshell

Financial underwriting is all about making sure your insurance cover reflects your financial reality. It helps maintain a healthy balance between protection and affordability, for you and for the insurance system as a whole.

1. Financial Underwriting Sum At Risk
Sum assured of current policy + sum assured of simultaneous applied policy, if any + Sum assured of any pending policy + sum assured of all policies taken with ABSLI in the past with current status premium paying, lapsed-to be revived/discontinued, pay out pending +Existing life insurance policies with other insurers in India & abroad

2. Medical Underwriting Sum At Risk
Sum assured of current policy + sum assured of simultaneous applied policy, if any + sum assured of policies with BSLI in the preceding 12 months + Total cover in policies with status “ lapsed - to be revived/ discontinued – pay out pending “ (irrespective of date of lapsation) + SA of Riders applied (as per formula)

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