Numerical Rating Method: Debits and Credits
Start at 100, add debits, subtract credits: the total is expected mortality as a percentage of standard.
The numerical rating method turns an underwriter's view of a life into one number. Every applicant starts at 100, which stands for the expected mortality of standard lives of the same age and sex. Each unfavourable factor adds points (debits). Each favourable factor takes points away (credits). The total is the applicant's expected mortality as a percentage of standard: a total of 150 means the underwriter expects 50% more deaths than in the standard group.
The method was introduced by Arthur Hunter and Oscar Rogers of New York Life in the early twentieth century, built on mortality studies of insured lives. Before it, underwriters judged each case as a whole, and two underwriters could reach different decisions on the same file. Numerical rating made decisions consistent, quicker to teach and easier to check.
You save ₹250
- Full 100-question mocks
- Chapter-wise practice
- Section-wise sets
One payment, no subscription · Valid for 1 month
Key Terms
- Base (100)
- The mortality of standard lives of the applicant's age and sex, taken as 100%. Every rating starts here.
- Debit
- Points added for a factor that raises expected mortality, such as overweight, raised blood pressure, a hazardous occupation or an adverse family history.
- Credit
- Points subtracted for a factor that lowers expected mortality, such as a favourable build, normal readings on repeat tests or a good family history.
- Total rating
- Base plus debits minus credits. It reads as expected mortality as a percentage of standard.
- Extra mortality
- Total rating minus 100. A rating of 175 means 75% extra mortality.
- Substandard (rated) life
- A life whose total falls above the insurer's standard band but within the range it will accept on special terms.
How an Underwriter Scores a Proposal
- 1
Start at 100
Every proposal begins at the standard mortality of its age and sex group.
- 2
Score each factor separately
Build, blood pressure, medical history, family history, habits, occupation, avocation and residence are each read against the insurer's manual, which gives the debit or credit for each finding.
- 3
Add the points
Debits and credits are summed, not multiplied. The method assumes each factor acts on mortality independently of the others.
- 4
Check for overriding factors
Some findings are not scored at all: a condition the manual lists as a decline or a postponement (for example, a recent major operation awaiting results) settles the case whatever the other points say.
- 5
Map the total to a decision
The insurer's own bands turn the total into standard acceptance, acceptance at an extra premium or on other special terms, postponement, or decline.
Worked Example: A 40-Year-Old Applying for ₹50 Lakh Term Cover
All points and the mortality rate below are illustrations for practice, not values from any insurer's manual.
Base
Finding
Standard life, age 40, male
Points
100
Build
Finding
Overweight for height
Points
+25
Blood pressure
Finding
Mildly raised on the medical examination
Points
+25
Family history
Finding
A parent died of heart disease before 60
Points
+25
Lipid profile
Finding
Cholesterol and HDL in the favourable range
Points
−15
Total
Finding
100 + 25 + 25 + 25 − 15
Points
160
| Factor | Finding | Points |
|---|---|---|
| Base | Standard life, age 40, male | 100 |
| Build | Overweight for height | +25 |
| Blood pressure | Mildly raised on the medical examination | +25 |
| Family history | A parent died of heart disease before 60 | +25 |
| Lipid profile | Cholesterol and HDL in the favourable range | −15 |
| Total | 100 + 25 + 25 + 25 − 15 | 160 |
How a Total Usually Translates Into a Decision
The shape below is common to most manuals. The cut-off points are each insurer's own, so none is given here.
| Total rating | Typical outcome |
|---|---|
| Around 100, inside the standard band | Accepted at ordinary rates (some insurers also have preferred classes below 100) |
| Above the standard band, within the insurer's highest rated class | Accepted on special terms: extra premium, age rating, lien or a restricted plan |
| Above the insurer's highest class | Declined, because no premium the insurer offers covers the expected claims |
| Condition still under investigation or recent | Postponed until the outcome is known, then reconsidered |
Ways to Accept a Substandard Life
The rating says how much extra risk there is. The insurer then picks how to charge for it.
- Percentage (table) extra
- Premium raised in line with the extra mortality. Suits risks that grow with age, such as raised blood pressure or diabetes.
- Flat extra
- A fixed amount per ₹1,000 sum assured, for a set number of years or for the whole term. Suits risks that do not grow with age, such as a hazardous occupation or avocation, or a past cancer whose risk fades.
- Age rating (age addition)
- The life is charged the premium of an older age. Simple to apply and common in Indian practice.
- Lien
- The sum assured payable on death is reduced in the early policy years and rises to the full amount later. Suits risks that are highest at the start and decrease.
- Restricted plan or term
- Cover offered only on certain plans, or for a shorter term, so the insurer's exposure ends before the extra risk peaks.
- Exclusion
- A named cause or activity is excluded, used for some avocations and for riders more than for the basic life cover.
How IC-22 Tests This
Expect direct questions: what the base of 100 represents, whether a factor is a debit or a credit, who introduced the method, and which acceptance method suits a given risk (flat extra for constant risk, lien for decreasing risk, percentage extra for increasing risk). A short sum asking for the total rating from a list of debits and credits is also common. Debits raise the total; swapping debits and credits is the usual trap.
Limits of the Method
- check_circleAdding points assumes factors are independent. Some conditions make each other worse (diabetes with raised blood pressure, for example), so manuals often set combined ratings instead of adding the two.
- check_circlePoints come from past mortality studies of insured lives. New treatments can make old debits too harsh until the manual is updated.
- check_circleIt cannot score moral hazard or doubtful financial reasons for cover. Those are judged separately in financial underwriting.
- check_circleA total near a band edge still needs judgement, which is why manuals leave room for the underwriter's discretion and for referral to the reinsurer.
FAQs
What is the numerical rating method in life insurance underwriting?expand_more
A way of scoring a proposal by starting at 100 (standard mortality), adding debits for unfavourable factors and subtracting credits for favourable ones. The total is expected mortality as a percentage of standard and decides whether the life is accepted at ordinary rates, rated, postponed or declined.
What are debits and credits in underwriting?expand_more
Debits are points added for factors that raise expected mortality. Credits are points subtracted for factors that lower it. Both are read from the insurer's underwriting manual.
Who introduced the numerical rating system?expand_more
Arthur Hunter and Oscar Rogers of New York Life, who based it on statistical studies of the mortality of insured lives.
What does a rating of 175 mean?expand_more
Expected mortality 75% above that of standard lives of the same age. Whether that is accepted, and at what extra premium, depends on the insurer's own class bands.
Are debit points the same at every insurer?expand_more
No. Each insurer or its reinsurer publishes its own manual, so the same finding can carry different points and the same total can land in different classes. That is why this page uses illustrative numbers only.
Access exam-specific mock tests directly from your Android device.Next steps
- Financial Underwritingarrow_forward
- Diabetes Underwritingarrow_forward
- Formula Sheetarrow_forward
- IC-01: Underwriting processarrow_forward
Full-length IC-22 practice, timed to 2 hours and scored.