IC38 Life Insurance Study Material

Insurance: Transfer of risk to insurer.

• 1st Life Insurance Company in India: Oriental Life Insurance Company
• 1st Non-Life Insurance Company: Triton Insurance Company Ltd
• 1st Indian Insurance Company: Bombay Mutual Assurance Society Ltd (1870)
• Oldest Insurance Company: National Insurance Company Ltd (1906)
• Insurance Act 1938: First legislation to regulate insurance companies

Nationalization

• Life Insurance nationalized on 1 September 1956
• LIC formed after merging 170 insurance companies and 75 provident societies
• General Insurance nationalized in 1972
• GIC and 4 subsidiaries formed

Malhotra Committee and IRDAI

• Malhotra Committee setup in 1993
• Report submitted in 1994
• IRDAI formed under IRDA Act 1999

Risk Management Techniques

• Risk Avoidance
• Risk Retention
• Insurance is a Risk Transfer Mechanism

Role of Insurance

• Infrastructure development
• Economic growth
• Protection against risks

Government Sponsored Schemes

• Employees State Insurance Corporation
• Crop Insurance Scheme
• Rural Insurance Schemes

Insurance is a service and an intangible good.

Insurance Agent Role

• Point of Sale
• Proposal Stage
• Acceptance Stage
• Premium Payment
• Claim Settlement

Effective Listening

• Paying attention
• Providing feedback
• Responding appropriately
• Empathetic listening
• Not being judgmental

Active Listening

• Pay attention
• Demonstrate listening
• Provide feedback
• Respond appropriately
• Empathetic listening

IGMS

Integrated Grievance Management System launched by IRDAI.

Consumer Protection Act 1986

Protection for consumer interests.

Insurance Ombudsman

• Total Offices: 12
• Power up to Rs.20 Lakhs
• Recommendation within 1 month
• Award within 90 days

Judicial Channels

• District Forum: Up to Rs.20 Lakhs
• State Commission: Rs.20 Lakhs to Rs.1 Crore
• National Commission: Above Rs.1 Crore

Important Days

• 10 days: Insurer communication
• 15 days: Free look period
• 15 days: Proposal acceptance/rejection
• 30 days: Claim settlement
• 90 days: Ombudsman award
• 180 days: Investigation completion

Application for insurance agent appointment should be submitted in Form I-A.

Insurance Contract

Agreement between insurer and insured under Indian Contract Act 1872.

Utmost Good Faith

All material facts must be disclosed.

Material Facts

• Medical history
• Family history
• Occupation
• Income
• Habits

Breach of Utmost Good Faith

• Non Disclosure
• Concealment
• Misrepresentation

Insurable Interest

Financial interest in subject matter insured.

Indemnity

Restore insured to same financial position.

Human Life Value (HLV)

Determines insurance requirement.

Principle of Risk Pooling

Premiums collected from many people used to pay claims.

• Transactional Products: Bank deposits
• Contingency Products: Insurance
• Wealth Accumulation Products: Shares and bonds

The right time to start financial planning is when one receives first salary.

Traditional Products

• Term Insurance
• Whole Life Insurance
• Endowment Plans
• Money Back Plans

Variants of Term Insurance

• Decreasing Term
• Increasing Term
• Return of Premium

Non Traditional Products

• Universal Life Insurance
• Variable Life Insurance
• ULIPs

ULIP Fund Options

• Equity Fund
• Debt Fund
• Balanced Fund
• Money Market Fund

MWP Act

Protects benefits for wife and children.

Keyman Insurance

Insurance taken by company on important employee.

Mortgage Redemption Insurance

Protects home loan repayment.

• Premium
• Net Premium
• Bonus
• Simple Reversionary Bonus
• Compound Bonus
• Terminal Bonus

• Prospectus
• Proposal Form
• Agent Report
• Medical Examiner Report
• Moral Hazard Report

KYC Documents

• Address Proof
• Identity Proof
• Income Proof

Grace Period

• 15 days for monthly mode
• 31 days for yearly/half yearly/quarterly

Lapse

Policy lapses if premium not paid.

Revival

Policy can be revived within 5 years.

Nomination

Appointment of nominee.

Assignment

Transfer of policy rights.

Purpose

• Prevent anti selection
• Classify risks
• Ensure equity

Risk Classification

• Standard Lives
• Preferred Lives
• Sub Standard Lives
• Declined Lives

Types of Claims

• Survival Claim
• Maturity Claim
• Death Claim

Presumption of Death

Person unheard for 7 years presumed dead.

Types of Healthcare

• Primary Healthcare
• Secondary Healthcare
• Tertiary Healthcare

Health Infrastructure

• PHC
• Community Health Centres
• Sub Centres

Mediclaim Features

• Hospitalization Expenses
• ICU Charges
• Medicine Costs
• Daycare Procedures
• Pre and Post Hospitalization

Common Exclusions

• Pre-existing Diseases
• Waiting Periods

Critical Illness Policy

Lump sum benefit on diagnosis of critical illness.

TPA

Third Party Administrators process health claims.