Selection of Risks for Life Insurance

The method of selecting risks has undergone radical changes during the span of one man’s lifetime. In the early days of my experience all proposals for life insurance were submitted to a Board of Directors which consisted mainly of landed proprietors, lawyers and accountants. They were assumed to have sufficient knowledge to determine which lives should be accepted, which should be rejected and which should be charged an extra premium, with the aid of the medical adviser and of the actuary. The former was usually a prominent physician who based his judgment on impressions and observations, and the latter on the meagre statistics then in existence. Contrast that with the method in use in the principal American companies at the present time. The majority of the proposals are not submitted to a medical director, actuary or underwriter, but are passed upon by lay reviewers with or without the use of a numerical rating system. Experience has shown that such a practice is safe, as in one-half or more of the proposals there is nothing of moment against the risk, and, unless the amount of insurance is large, the time of experts can be given with greater advantage to the more difficult types of cases.