Insurance Companies' Use of Education as a Risk Factor for Policy Refusals Examined

Insurance Companies in India Weigh Education in Term Policy Decisions

A recent social media post sparked a debate about whether education plays a role in obtaining insurance in India. The user claimed that several insurance companies refused to offer them a term insurance policy because they did not have a degree or higher education certificate.

While education is not the primary criterion for buying insurance, some insurers consider it as part of their broader risk-assessment process, particularly for term insurance policies. Varun Agarwal, head of term insurance at Policybazaar.com, explained that insurers have internal underwriting benchmarks when evaluating applications. These benchmarks often include specific educational criteria, with some insurers requiring applicants to have completed at least the 10th standard, while many mandate a 12th pass.

Term insurance policies typically run for decades and involve regular premium payments. Industry experts say that insurers consider a combination of factors such as income stability, occupation, education, and financial awareness before approving large cover amounts. This long-term commitment requires insurers to be cautious in their underwriting decisions.

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Not Everyone Agrees

Not everyone in the industry agrees that education should influence the decision on life insurance cover. Hitesh Soni, a qualified personal finance professional, said that the issue is more nuanced and sometimes varies across insurers. For male applicants, there is no issue with regard to qualification, but for female applicants, the mortality experience is not favorable, and the insurance company does not issue life insurance policies to females with education below the matriculation level.

Class 10 Certificate Confusion

Some experts point out that confusion often arises because people assume that a Class 10 certificate is mandatory for insurance. In reality, the document is frequently used for age verification or other purposes. Arun Ramamurthy, co-founder of Staywell.health, explained that insurers follow the documentation and verification norms set by the Insurance Regulatory and Development Authority of India (IRDAI), which allow several types of identity and age proof.

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Underwriting Criteria

Underwriting is the process by which insurers evaluate the risk of insuring a person. During this process, companies typically look at the applicant's age, income, health condition, lifestyle habits such as smoking, occupation, and financial stability. Experts say that education alone does not determine whether someone will get a policy.

Conclusion

Experts say that the discussion around education mainly relates to term insurance, which provides financial protection to the family in case of the policyholder's death. These policies often involve large sums assured, so insurers tend to be cautious while approving them. Rejection of a term insurance application can happen for many reasons, including unstable income, risky occupation, health conditions, incorrect disclosures, or mismatches in documentation.