AGENCY 2.

0 : IC 33 NEW COURSE POINTERS

This is a summary of Important Concept / terminologies collected from every chapter of the
new course . To be used/ handed over as Retention / emphasised pointers after completion
of chapters during IC 33 Refresher trainings . It can be used during Safaalya , for
understanding the reasoning of the correct answers given in the TEST Mode .
Chapter No 1 : INTRODUCTION TO INSURANCE
History of Insurance Babylon Traders had agreement to pay extra to the lenders to write of the loans ,
shipment has been lost . These were called BOTTOMRY LOAN . In India it was p
Surat &Baruch
Modern Days : world ORIGIN Can be traced to Llyod coffee House ( Marine insurance ); AMICABLE SO
PERPETUAL ASSURANCE in 1706 London. Considered as First Life Insurance
In India The Oriental Life Insurance CO Ltd ( First Life Insurance company )
Triton Insurance Co Ltd ( First Non Life Insurance Company )
Bombay Mutual Assurance Society ( First Indian Life Insurance Co , 1870)
National Insurance Co (Oldest running insurance company in India 1906)
Life Insurance Act Also provident fund act was passed to regulate the Insurance Business in India . L
1912 act made it mandatory that premium rate table and valuation is made a must to b
Actuary
Insurance Act 1938 First legislation enacted to regulate the conduct of Insurance companies in India
of Insurance was appointed by Government , under this Act .
Nationalization of Life 1 sept 1956 , LIC was formed . Before this 170 Life insurance company and 75 pro
Insurance societies were present.
Nationalization of Non General insurance business notification Act 1972 . GIC ( General Insurance corpor
Life Insurance and 4 subsidiaries were set up . Before this 106 Non life insurance companies wer
Mahlothra Committee Mahlothra Committee set up , 1993. INSURANCE REGULATORY AND DEVELOPME
&IRDA 1999 . Today 24 Insurance company
Risk Burden PRIMARY burden : losses actually suffered by households ( business units ) and
and can be settled easily
Secondary Burden : costs and strains that one has to bear mainly from the fact
exposed to loss situation . Uncertainty over the event and loss that could happen
to transfer the risk to Insurance companies .
Risk Management Risk Avoidance ( controlling risk by avoiding loss) , Risk retention ( one decid
Techniques risk and its effect) , Risk reduction and control ( measure to reduce chances of
called loss prevention , and measure to reduce degree of loss is loss reduction
Financing ( provision of funds to meet the loss )
Insurance Vs Insurance refers to protection against an event that MIGHT happen , Assurance re
Assurance Protection against an event that WILL happen .
Insurance provides covers against Risk , Assurance provides protection against EV
definite . Assurance policies are associated with Life Insurance

Social Security Employee state Insurance corporation 1948 ( covers expenses due
to sickness, maternity , death for industrial employees ) : Crop
Insurance Schemes ( RKBY) for farmers , Rural Insurance Schemes
; Insurance industries also offer for social security i.e Janta
Personal , Jan Arogya .
Role Insurance Economic development of the country
Industry
Why insurance Events are unpredictable and could cause economic loss or
damage .
Events that could cause Risk is called perils .
Chapter No 2 : What Life Insurance Involves
Human Life Value Prof HUBENER . It measures the Human life based on individuals
net future earning ( less the amount He would spend )
Thumb Rule Divide the annual Income a family would like to
 have, even if the bread winner is no longer alive
,with the rate of interest that can be earned .
Eg : Rajan earns 1.2 L /Year and spends 24K . NET
income family would lose is 96 K . Assume interst
rate @ 8% = 96000/0.08= 120000 (HLV)

In general ,10-12 times income should be approx SA

for insurance
Risk Living too Long , Dying too Early , Living with disability
General Insurance Vs With exception of Personal Life insurance are contracts of
Life Insurance accident insurance , are usually ASSURANCE .
contract of INDEMNITY
Indemnity : Events where in Insurer can asses the exact amount of
loss that has occurred &pays compensation to the amount of Loss ,
nothing more .
Life Funds and Reserve : Premium collected in early years of the contract are
Reserve held in trust by insurer for the benefit of the policyholder .
Life Fund : This excess amount ( Reserve) creates a Fund , this is
called life fund . Insurer invests this fund and gets Interest .
Level Premium Term or protection Cash value Component :
Component: this forms the saving
consists of portion of premium component for the policyholder
actually needed to pay the cost
of Risk
Principles of Risk Life insurance companies classified as contractual financial
Pooling institution
DIVERSIFICATION : MUTUALITY :
Funds are spread out amongst Funds of various individuals are
various assets . combined together .
Funds flow from one source to Funds flow from various sources
many destination . to One .

Mutuality / Pooling Principles Provides protection against

economic loss due to death .
Pooling and evening out of
financial risk
Life Insurance Insurance is vehicle of Financials Security .
Contract Involves Risk and saving Component.
Opportunity Cost Cost that one has to bear in terms of opportunities one foregoes by
not placing ones money elsewhere .
Traditional products Advantages : Safe &Secure Disadvantages :corroding effect
Loan , Tax benefits of inflation , High marketing and
initial cost , Low yield

Chapter No 3 : Legal principles of Life Insurance

Elements of Valid Offer Offer made by the proposer and acceptance by
Contract &Acceptance insurer . When proposal is accepted it becomes
a Promise .
The acceptance needs to be Communicated to
the proposer which results in formation of
contract .
If Any condition is put , it becomes Counter
Offer .
 The policy bond becomes the evidence of
Contract
Consideration Premium is the consideration by the Insured
&the promise to indemnify is consideration by
Insurer
Agreement Consensus ad -idem
Free Consent Said to be free if NOT caused by : coercion ,
Undue influence , fraud , misrepresentation
,mistake .
If caused then the contract becomes void
Capacities Both parties Should be Legally competent.
Minors cant enter contract .
Legality The object of insurance contract is a lawful
object
UTMOST Good Faith Also called UBERRIIMA FIDIS. : Both parties should disclose all
material facts relating to subject matter of Insurance , accurately ,
whether requested or Not .
All Commercial contracts form CAVEAT EMPTOR ( Buyer's
Beware )
Material Facts to be Life Insurance Own medical History , family history , illness ,
disclosed habits like smoking , drinking , occupation etc
Fire Insurance Construction and usage-of building , age of
building , goods in premises
Marine Insurance Prescription of Goods / methods of packing
Motor Insurance Description of vehicle , date of purchase ,
deatils of driver
Breach of UTMOST Non Disclosure of May arise if insured is silent in general as
good Faith material facts the insurer has not asked specific things .
If intentionally suppressed then is termed
as concealment , with an intention to
deceive
Misrepresentation of Innocent :relates to inaccurate
Material facts statements made without fraudulent
intention
Fraudulent :false statement made
deliberate with intention to deceive the
insurer
Insurable Interest Considered as legal pre requisite for insurance .
Gambling or wager Game of cards / betting on cricket match
agreement etc
Insurance Agreement Taken in order to prevent loss or damage
due to peril . Has pure risk attached
Subject matter of Subject matter of Relates to property being insured
Insurance insurance against . Has intrinsic value
Subject matter of Insured financial interest in that
Insurance contract property .
Time of Insurable Life Insurance : At inception ,
interest General insurance : at time of inception as well as claim except
MARINE Insurance
Proximity Clause Relates to the cause of Loss or damage . If lose caused by Insured
Peril , then Insurer is liable .
Defination : active and efficient cause that sets in motion a chain
of event which brings about a result .
Contract of Adhesion Drafted by those parties having greater bargaining advantage .
 Usually Insurance companies .
To neutralize this , FREE LOOK period of 15 days , from the date of
revenging the policy document by the insured , is given . The
insurance company has to be intimated in writing and premium is
refunded less any charges / expenses

Chapter No 4 : Financial Planning

Types of Goals Short Term Buying TV , going for vacation
Medium Term Buying House , Vacation Abroad
Long Term Child education / marriage ; Retirement
Life stages Leaner ( 20-25 Yrs) Funds needed to financing ones
&Priorities education
Earner ( >25 Years ) Has family responsibility , might
have loans to repay
Partner ( married 28-30) Has concerns on building family ,
has goals like house , buying vehicle
etc
Parents ( 30-35 Years ) Health , good education for children
Provider ( 35-55 Years ) Higher education of children .
Marriages of children
Empty Nestors ( 55-65 Health care protection
Years)
Retirement ( Twilight years Health care , uncertainty of income .
60 )
Saving Postponement of consumption Parting with liquidity
Saving may be considered as a composite decision of above
Types of Financial Enabling Future transaction Specific Transaction Need :
Products eg FD , PPF etc making povision for Higher education
, purchase of house , consumer
durables etc
General Transaction Need :
amount set aside for current
consumption , without assigning any
specific needs
Meeting Contingency To meet contingencies like death ,
disability, damage through Fire etc .
Eg Insurance
Wealth Accumulation Saving and investment for
accumulating wealth eg shares ,
bonds , real estate
Risk Profile and Aggressive Accumulation
Investment styles Progressive Consolidation
Secured Spending
Conservative Gifting
Elements of Financial Investing , Risk Management , Retirement Planning , tax and estate
Planning / advisory planning , financing one's needs
service
Key terminology in Risk Tolerance Willingness to take risk while investing
Investment Time Horizon Time available to attain the Investment Goal ,
Liquidity Need to convert the investment into cash due
to un certaininty or contingencies
Marketability Ease with which investment can be brought
or sold
 Tax consideration Tax benefits and Tax free returns
Diversification Spread the risk through different investment
in assets

Chapter No 5 : LIFE INSURANCE PRODUCT Part I

Insurance Products Are Intangible . Creates immediate estate . Traditional / Linked products are types
plans
Traditional Plans Term Insurance Plan : Income replacement plan . Low premium products . gives
Convertible Term Plan : allows the policyholder to convert the term plan into wh
without providing fresh evidence of insurability . premium then would be higher .
Types of Term Plans Decreasing Term Marketed as mortgage redemption &credit
life insurance .
Mortgage Redemption : corresponds to
the decreasing amount of outstanding in a
Loan .in case of death .
Credit Life Insurance : To pay the balance
due of the loan in case the borrower dies
before the loan is repaid .
Increasing Term Death benefit increases with the term pf the
policy . Sum may increase by specific amount
or percentage at stated intervals during the
term of the plan .
Return of Premium Premiums are returned to the policyholders
after the end of the term in case no event
has happened
Whole Life Premium can be paid through out the term or for specified period . Gives protection
Insurance policyholder is alive .
Premium are higher than Term Plans . Ideal for person who are lone income earner
wants long term protection . Also to leave behind a legacy .
Cash Value Money left behind from the premium paid by the policyholder to cover the risk , is
Insurer . This is called cash value . One can withdraw the Cash value in form of Loa
emergiencies during the term of the plan
Endowment Plans Combination of Term and Pure endowment Plan
gives both protection and saving element .
Promoted also as THRIFT SAVING . Allows to park surplus money .
Money Back Plans Endowment plan with provision for return a part of Sum assured at periodical inter
term of the plan and balance at the end of the term .
In case of death , the full SA plus the bonus is paid to the nominee , irrespective o
benefits already paid during the term .
PAR &NON PAR Policies Par: Means participating policies in profit .
Non Par : Not a part of profit .
Under traditional plans , the pooled life funds are inv
stringent regulatory requirement as per prescribed
policyholders are either guaranteed a part of growth
kept aside .
Profits are paid as Bonuses

Without Profit plans have a fixed benefit &guarante

contract stage itself and are paid at the end of term
More .
Dividend method of Profit participation Portfolio Method Investment returns held by compa
determined and shares are equal
policyholders .

IRDA New guidelines on Traditional Products
Uniform reversionary bonus
Current Money Depends on when the investmen
Method and the rate that was secured at t
investment .
Also called SEGMENTED or INVE
Block method . As different inve
different bonuses
Higher Death Cover : 125% on single premium <45
on age >45
Higher death cover : 10 times the annual premium f
&7 times for age >45

Minimum Death Benefit : At least SA plus benefit

Addition of Bonuses and other benefits if not paid ea
be paid at death of the policyholder
Terminology Revisionary Bonus : declared as a part of SA ( PER t
AND are payable as additional benefits ( either at m
) . usually non guaranteed
Terminology Terminal Bonus : paid usually towards the end of ter
guaranteed.

Chapter No 6 : Life Insurance Products Part II

Allocations of resources
Limitations of Traditional Plans
Non Traditional plans
or Linked plans
Non Traditional Universal Life
Products
INTER Means allocation across time ,e
TEMPORAL sufficient funds are available fo
various needs of life stages
EFFICIENT Faster rate of accumulation , m
Allocation future .
Cash value Not well defined . Depends on a
component reserve set up .
Rate of return Exact costs are not defined .diffi
compare with other instrument
Surrender value Depends on actuarial reserve
assessment . Very arb
Yield Low yield due to prudent norm
super vision
Direct linkage to Superior returns as compared to
Investment plans , thereby getting higher re
long run
Inflation Higher rate of return in Linked p
beat Inflation
Flexibility Policyholder get higher control o
plans as they can choose their p
the funds in which they want to
Surrender Value Allows to withdraw between the
give higher surrender value to t
policyholder as compared to Tra
Was popular in USA . Called Variable policy in
India .
USP : flexible premium after the first year.
Allowed the policy holder to skip premiums
also . ( Minimum requirement being to
maintain the cost of policy )
Partial withdrawal options from cash value
allowed
 Variable Life First introduced in 1977 in USA . Its a kind of
Insurance whole life plan . No guarantee with respect to
either interest rate or minimum cash value .
Policyholders have to bear the risk on
investment .
Market volatility have to be kept in mind
Unit Linked Plans introduced in UK .
Insurance Units are credited to the policyholders
account at the date on premium payment is
due .
They are Unbundled contracts .
Premium Break Up in Expenses Mortality Investment
Ulip Once the charges are deducted from the premium , the balance of account and inc
invested in units .
Value of Units are fixed with reference to pre determined index of performance .
NAV Net Asset Value .
The values of the unit is given by NAV . Which reflects the market value of the asse
funds are invested
Funds Equity Debt Balanced Money Market
Invested in Equity Invested in Govt Mix of Invested in
,\ Bonds , FD , Equity and Treasury Bills
equity related Corporate Bonds Debt ,etc
instruments
Terminology Growth Fund : Equity Balanced Fund Sectoral Funds

Chapter No 7 : Pension & Annuities

Differences Life Insurance Pension
Provides Protection against Provides protection against
financial consequences . living too long Risk , mainly risk
Basic contingency covered is of income stop .
mortality . Basic contingencies retirement
Creates Sum assured . income discontinuance .
Cash value paid to nominee in Corpus gets created which gets
case of death , else paid to the liquidated in part or whole
policy holder at maturity through its conversion into
stream of regular payouts ,
known as ANNUITIES
Types of Pension Public Pension PAYG Scheme ( Pay as you go ) .
first pillar of social security .
Deducted from current income of work force
. Fulfils the state responsibility , for
minimum level of retirement income
( safety net )
paid to people of low income .
Combination of flat rate , sufficient to
ensure minimum standard life .

Flat rate &means tested pension :

financed by Tax &contribution all pay
regardless of benefit levels

Earning related supplementary

portion : Individuals own contribution,
which is supplemented , by state
 subsidiaries
Occupational Pension Second pillar . Contribution from employee
and employer .
Defined benefit .
Calculated with reference with last drawn
salary and number of years in pensionable
service an using an accrual method
eg Accrual Method : employee with 38
years service has earned 40k/ month as
last salary . if accrual rate is 1/60 for each
pensionable service , then 38 / 60 * 40k =
25,333 pension
Uninsure Employer can manage the fund
d pension setting up a trust . Trust can pay
scheme pension only through
purchasing annuity by life
insurance companies
Insured Insurance companies manage
Pension the fund and pay pension
scheme

Personal Pension Individual buys pension from Life insurance

Co
Commutation in 1/3rd of accumulated value can be withdrawn at the time of
Pension retirement , Tax Free .
Types of Annuity Immediate Annuitant receives payouts after making the
initial investment . Usually the next month
of paying the investment .( In monthly )
similarly post 3 months in qtrly , 6months in
half and next year in case of yearly annuity
mode
Deferred Invested for a period of time .
( accumulation phase ) . at the time he is
ready to receive ( distribution phase ) ,
annuity payouts are made as per the mode
choosen
Every pension is annuity But evry annuity is not Pension
Pension related Longevity Risk Living too long . pension provides life long
contingency income
Inflation Pension may have provisions for Indexing to
save the corrosion effect
Investment Risk Fixed guarantee pensions are the way to
protect from investment getting wiped out
due to bad performance .
Replacement Income Occupational pension , which calculates
risk through accrual method might be the
solution to maintain the Life style post
retiring
Types of Annuity Annuity for Annuity for Guaranteed Joint life Joint life
Life life with certain Annuity with annuity
return of 5/10/15/20/ return of without
Corpus 25/30 then corpus return of
for life corpus
Payment to Paid as long as they live . In case of joint annuity , the spouse gets
 annuitants 50% of the annuity till life . If the spouse predecease the annuitant
then the annuity ceases on death of the annuitant
Penion vs annuity Pension is an insurance product . Annuity is the payout made .

Chapter No 8:Health Insurance

Expenses covered under Health insurance Room cost , boarding expenses , Nurs
diagnostic tests ,operation theatre ch
surgical appliances .

Some plans cover pre an post hospita

day care procedure also
Terminology Day care centre : less than 24 hours
lithotripsy
Third party Administrator ( TPA ) Licensed under IRDA REGULATION 200
remuneration by insurance company
health service
Network Provider Cashless facility provided by listed ho
Portability Right for individual health policy holde
transfer credit gained from pre existin
exclusion, from one insurer to other
provided previous policy is maintained
policy from same company itself is ex
Waiting Period 48 Months for pre existing illness . One year to four years for
cataract and some procedure like hysterectomy
Domiciliary hospitalization Refers to medical treatment for a period extending three da
which otherwise can be done at home . Limited to certian pe
This is possible if :
# if the condition of patient is such that he/she cant be remo
# cant be removed due to lack of accommodation
Family Floater Covers family ( Husband , wife , up to two children ). commo
Premium would be less than if the policies are taken as indiv
Health Insurance boundary Varies from insurer . Usually 3 months age to 80 Years .
Maximum SA will vary from insurer depending on age group
Hospital Under clinical regulation act ( registration and regulation ) 20
# has qualified nursing staff around the clock
# minimum 10 in patient beds in a town having population 1
beds in all other places
# has medical practitioner in charge round the clock
# fully equipped operation theatre of its own where surgical
# maintains daily records of patient .
Claim Pre authorization : except in emergencies , cashless facility may require a pre autho
Reimbursement insurer or an appointed TPA .
IRDA has prescribed a standard format . Usully cashless is provded in net work hos
IRDA regulations All health insurance policies should have the following benefits given :
# The network to be provided
#free look period ( 15 days ) from the date of documents received by policyholder .
# 30 Days grace period after due date of premium payment
# life time coverage
# provision for nomination .
#one page summary containing benefits , terms and conditions .
Identity card and Carries details of the policyholder and logo of the insurer.
Smart card Validity period coincides with the Term of the plan

Chapter No 9: Application of Life Insurance

 Married Women Sec 6 , MWPA act , provides security of benefits under life insurance
Property act 1874 to wife and children and also allows creation of Trust .
Beneficiary : wife alone / wife &one or more children jointly / one
or more children
Life assured : Married / widower / divorcee MAN only
Features of MWPA #each policy will remain in separate trust . Either wife o children
( above 18 years ) can be trustee
# policy beyond control of court of law attachment, creditors or
even life assured .
# maney paid to the trustee .
#policy cannot be surrendered &neither nomination or assignment
can be done
# if no special trustee appointed , then sum secured under the
policy becomes payable to official state trustee in which the
insurance was effective situated
Key man Insurance Taken out by business to compensate that business for financial
losses that would arise due to death or extended incapacity of an
important member of the business .
# Business protection insurance
# Key man insurance is a TERM PLAN .
# Premium paid by company is treated as business expenses . so
tax benefit given under Sec 37 ( 1)
# death benefit is taxable income .
MRI Mortgage redemption insurance . Taken to protect home loan

Chapter No 10 : Pricing and valuation in Life Insurance

Premium Printed rate table called Office premium . They are le
( same through out the term of the plan )
Single Premium Paid only once at the start of the p
Limited Paid for a limited period of the term
Premium
Regular Paid every year till end of term
Premium
Rebates For SA Given to policyholders for taking h
assured .
For mode of For yearly mode / half yearly mode
Premium pay Monthly mode insurer charge extra
administration cost of more to serv
every month
Premium Components Mortality Mortality table depends on the age
&Interest RISK premium .
Interest is discount rate assumed f
present value of future claims .
Net premium = Risk Premium Interest
Guiding principles determining Loading Adequacy To cover operating expenses of ins
provide margin of safety and contri
surplus or profit for companies
Equity Each policy should pay its own cost
class of policy doesnt subsidise th
Competitiveness Higher loading can make the policy
hence companies should load keep
competition in mind
Expenses New Business High expenses at start of policy .
Insurer needs to hold certain marg
 Causes New business strain .
Commissions to agents /incentives
agents / medical fees etc
Lapses Loading provided to counter th
&contingencies policies

Gross premium = net premium + loading of expense

contingencies +bonus loading
Valuing ASSETS Book Value Value at which insurer has prurchased its
asset
Market Value Worth of life insurer in the market
Discounted present Estimating the future income stream from
value various assets and discounting them from
Present
Surplus Arises as a result of actuarial experience being better . Should be passed on to the p
participating plans .
Some part to be retained for soundness of the company . ( solvency )
Bonus Paid as per thousand of SA
Most common is revisionary bonus .
Bonus may be payable at surrender with minimum 5 years of term completion .
Distribution of # may be paid in form of CASH dividend
Bonus # in form of adjustment to reduction in premium .
# non forfeiture paid up additions to policy can be allowed
# dividends may be allowed to accumulate with interest and can be taken in betwe
end of the term .
PAC Policy allocation charges : comprised of agents commission ,policy set up cost , adm
&statutory levies

Chapter No 11: DOCUMENTATION : Proposal Stage

Prospectus Consists of :
# terms &conditions # scope of benefi
guaranteed )
# entitlements # exceptions # whethe
Proposal Form # Insurance is a legal contract betwee
# application form is called propoasal
# IRDA regulation 2013 prescribes the
forms .
Agent Report #Agent is primary underwriter .
# ACR ( agent confidentiality report ) i
in which the agent mentions the mate
occupation , hobbies etc )
Medical examiners report # Medical examination to be done by t
insurer Only .
# details pertaining to height , weight
mentioned .
Moral Hazard Report Is likelihood that clients behaviour might change , resulting in
Eg : smoking , drinking , paragliding etc
Age proof Standard School certificate / PAN card / Pass port / servi
register / Baptism certificate / marriage certifi
issued by Catholic Roman church
Non Standard Horoscope / ration card /village panchayat cer
.
Anti Money Prevention of money laundering act ( PMLA ) 2002.
Laundering ( AML) all insurer should have AML policy and file copy with IRDA .
 AML program should include : Internal process and procedure / appointment of princ
recruitment and training of agents on AML / Internal audit /control
KYC Photo / Age Proof / address Proof / Identity proof /Income p

Chapter No 12 :DOCUMENTTION : Policy Stage

FPR ( First Premium Insurance contact commences as soon as FPR is issued
Receipt ) contains : Name &address of policyholder / Policy Number/ Premium
amount paid / method and frequency of premium payment / Next
due date of premium / Date of commencement of risk / final maturity
date / SA/
RPR Renewal Premium Receipt : given the next premium, post the first, is
paid
Policy Document Its the evidence of contract . Should be signed by competent
authority and stamped accordingly Indian stamp act .
Policy schedule Name of Insurance company .
Specific details in policy documents :Policy
owners Name , date of birth , plan and term of
the policy ,SA, PREMIUM amount , Nominee
name ,DOC , Date of maturity , Policy Number ,
Mode of premium payment

# This becomes the heart of the contract

# signature of the authorised person &stamped
# address of the local ombudsman
Standard Defines the rights &privileges of the
Provision policyholders.
Carries days of grace , forfeiture options etc
Specific policy Printed either on the face of the document or
provision inserted separately in form of attachment .
Carries exclusion etc pertaining to the contract
between the individual and the company
Misc RPR acts as a proof for premiums paid as renewal
Policy document Insurer will send duplicate policy without making any changes in the
Lost contract

Chapter No 13 : DOCUMENTATION : Policy Condition

Grace Period This clause grants the policyholder an additional period to pay the
pemium post the due date is over .
Standard days of grace is one month or 31 days .
In case of death in the grace period , the insurer will cut the unpaid
premium and pay the death benefit to the nominee.
Lapse Post grace period , if premium not paid then policy gets lapsed
all the benefits of the policy gets lost in case of lapse
Reinstatement The policy that has been lapsed/ terminated, will be put back in
/Revival force .
This cannot be unconditional .
# No increase of risk to be seen while reviving
# premium + interest to be paid
# should be revived within specific time frame from the date of lapse
. Like 5 years maximum .
# specific evidence of instability interest . ( proof of good health )

Insurer may require a medical examination or evidence of insecurity

 # if the lapse period is over an year
# if the insurer suspects then he can trigger fresh medical

Revival is some time preferred as buying a new plan might have

higher premium rates .
Revival Measures Ordinary Revival By paying the premium and interest , with proof
of good health . Usually applicable to policy
which has acquired surrender value
Special Revival For policy that have lapsed under three years.
Its like new policy is written , whose date of
commencement is within two years of lapses,
but the maturity date will not change from
previous.
Loan cum Revival This stimulates the loan for consideration
amount for revival .
Instalment revival Depending on mode of payment ,the life insured
may require to pay one half yearly or two qtrly
premium , and balance arrears would be
spread , to be paid along with future premiums
on the due date , during the period of two years
or more .
Non Forfeiture Insurance act 113 . If 3 years premium paid then guaranteed
option Surrender value in the policy . Hence policy holder has a claim to
cash value accumulated under the policy .
Surrender Value Chart shows the surrender rate . Increases with each passing year of
the term if premium are paid . Surrender value arrived as a
percentage of premium paid is called guarantee surrender value .

Th feature allows the policyholder to withdraw the cash value in

between the term , and will end the contract .
Policy Loan By using cash value s security , in a plan , policyholder can take a
loan from the insurance company.
Usually limited to 90% of the cash value .

Difference
Policy Loan No legal obligation to repay the loan taken . Can
repay all or in part to the insurer.
No Credit check is required .
Commercial Loan Legally obligated to repay the loan
credit check will be done before , to see if the
borrower has previous history of any default .
Policy will be assigned to the insurer , when loan taken .
Nomination # In event of death , the money would be paid to the person
nominated by the policyholder .
# One more persons can be nominated
#. entitled for valid discharge .
#. Nomination can be done at either inception of the plan or later
date .
#. Nomination can be changed by Endorsement in the policy
document .
#. Gives only the right to receive the money &he has no RIGHT to
whole or part of the claim .
I#.n case of minor , appointee has to be given . Appointee loses his
status when the nominee attains major .
 #.If no nomination , then claim will be paid to LEGAL heirs .
#.No specific shares given , when multiple nominations are made .
#.Assignments will cancel nomination
#.MWPA cannot have nomination.

Assignment # refers to transfer of propert

transfer by delivery .
# in life insurance policy assig
rights , title of interest.
#Person who transfer is ASSIN
called ASIGNEE .
# is governed by Sec 38 of In
Conditional States that
assignor eit
of the assig
Absolute All rights , t
without rev
More comm
Conditions for valid assignment # all persons executing it ( ass
or assignable interest to the p
# should be supported by valu
love and affection .
# Not opposed to any law in fo
# assignee cannot do nomin
# assignment should be in wr
person. .
# has to be endorsed in the po
Difference Nomination As
# Process of appointment of a Process of tra
person to receive the death claim of the insura
# can be done at inception or person.
latter date . # can be don
# can be made only by the life commencem
insured of the policy of his own # can be don
life . the policy .
# witness not required # witness req
# Nominee has no right over the # assignee g
policy the policy .

Duplicate policy Satisfactory proof to be made before duplicate policy is issued

If payment is shortly due and amount is High , Insurance company
issued if no objection from others .
Alteration Normally alteration is allowed in the first year of the policy . Eg change in name / ag
change in the mode of payment / removal of extra premium or restrictive clauses .
usually done with endorsement on the policy document .
Alteration usually doesnt increase the risk .

Chapter No 14 : UNDERWRITING
Underwriting # to prevent anti selection or selection against insurer
Purpose # classify risk &ensure equity among risk . ( similar risk profiles would
be laced in similar premium bracket )
Anti selection Tendency of people who suspect or know their chances of high loss ,
try to seek insurance .

Risk Classification Standard Life Good health .anticip

to standard lives rep
Preferred Risk Anticipated mortalit
are charged lower p
Sub standard Anticipated mortalit
Lives considered as insura
higher premum than
Declined Lives Very high risk . Cann
Selection process On Field level or Known as primary u
primary or company represe
Underwriting Moral Hazard report
company representa
Department Level Done at company o
Methods of Underwriting Judgement Subjective judgeme
Method etc
might look at medic
Numerical Method Positive or negative
decision .
Total number of poin
( EXTRA MORTALITY
indicates Sub stand
Underwriting decision Acceptance at OR Common decision
( ordinary RATE ) same rate of premiu
rate
Acceptance with Applicable for sub s
Extra more than normal r
Lien on SA Kind of hold ( clause
company can exerc
benefit it has to pay
e.g : if the policyhol
certain disease like
the policy holder die
decreased SA Is pa
Restrictive Clause Means there will be
benefits under certa
Eg pregnancy claus
benefit in case deat
delivery
Decline / postpone Underwriter cab dec
High
Non medical Proposals selected without undergoing
Caries just 1/10th of risk . Other informa
form .
Conditions for non medical :
Female Only certain catego
SA upper limit Insurer might have
Age Younger age say 45
Plans Certain plans like t
Class of life Some times reputed
be excluded

Female Have longer life , b

 Insurance : leading to early age
careful .

Minors Minors have no contracting power , hence the insurance is usu

guardians:
Underwriters will notice the following before accepting any min
Whether physical development is is proper . Poor growth can
as malnutrition
Proper family history and personal history
Whether family has adequate Insurance on their own life .

Occupation Hazard
Life style and habits
Medical Underwriting
Blood pressure
Accident Jobs like circus artist , demolition expert caus
Hazard to life
Health Hazard Person working In Mine , deep sea diver, ricks
puller , can have health related risk due to the
occupation
Moral Hazard People working in bar , or body guard of crimi
etc have high risk
Generally ACR or moral hazard report would cover this .
Eg smoking and drinking liquor habits , substance abuse
they all increase the risk on life .
Usually called medical examiner report .
Medical Factors that influence underwriting :
Family History #Certain disease are heredity
#Average longevity of family . Eg if parents d
due to heart problem etc , means offspring m
not live long
# Family living environment . Some times livi
conditions cause risk of infection etc
Personal Refers to past impairments of various system
History human body which life assured has suffred fro
Cardiovascular , cancer , TB , Nervous system
Personal Build : height , weight , chest &girth of abdo
characteristic indicate the health . For given age , there are
certain height weight ration indicating good h
Chest should expand 4 cm in normal person a
abdominal girth should not be more than exp
chest
Thumb rule :
Systolic : 115 (+- 2/5) of age
Diastolic : 75 ( +- 1/5 ) of age
Pulse rate can vary between 50-90 beats / minute with avg of 7

Specific gravity of Urine can indicate the balance among salts i

malfunction of the system
AGE Degenerative diseases increase with age . Underwriters carefuly consider the risk bas

Chapter No 15 : Payment under Life Insurance Policy

Claim Its a demand that insurer shou
the contract .
Types of Claim Survival Benefit Periodic paym
 policy , by t
policy bond is
endorsement
Surrender Premature clo
contract by t
Rider Benefits On occurrenc
the policy do
hospital care
Maturity Benefit Insurer pays
the life assur
Under maturity Participating
claim

Return o
premium P
(ROP)

ULIP
Money Ba

Death Claim Paid to the nominee/ legal hier

Documentation in death claim
Repudiation of death claim
Sec 45 , Insurance act 1938
event of death of the Policyhold
Claim may be early death ( les
or Non early ( after 3 years per
#Claim form by nominee
#certificate of burial or cremat
# Treating physician report
# hospital certificate
# employers certificate
# death certification issued by
# FIR / Post mortem report / In
In case of wrong information or
be repudiated .
Indisputable clause :no policy can be called ba
of asking for more information from the insured ,
was of inaccurate or suppressed facts .

Insurer has to prove . Only after obtaining the pro

after two years period .
Presumption of Death Missing person case , waiting period is 7 years fo
FIR and court decree . Premiums need to be paid
Claim Procedure Regulation 8 of IRDA , 2002
# Policy should state the primary documents which are normally re
# 15 days period for insurer to ask for any other information from
basis asking of documents .
# claim to be paid or disputed within 30 days from the date of rec
&clarification .
# In case of any investigation required , then insurance company to
of receipt of claim .
# subject to provision in sec 47 , where claim is ready to be paid , b
proper identification of payee , the insurer will have to pay interest
bank ,( effective from 30 days from the date of receipt of claim docu
# In case of delay from insurer in settling the claim , insurer has to
 rate prevalent at beginning of the financial year .
Riders A provision added through endorsement . Provides supplementary benefits or to incre
provided by the policy .
Critical Illness Covers critical illness . In case of diagnosis during the
riders tem of the plan , Rider benefits are paid to the life
assured and the rider benefit comes to an end .
Accident In case of death happening due to accident , the n
death benefit rider amount is paid to the nominee along with the
base plan benefits
Waiver of In case of disability during the trem of the plan ,
premium future premium is waived off and the policy will
continue with all benefits as per the initial contract
Disability In case of permanent disability, the insurer will either
rider pay rider amount in full or in part to the life assured

Chapter No 16 : REGULATORY ASPECTS

Insurance act 1938 Created to protect the interest of insured
# registration of insurance companies an
( sec 3&70)
# requirement to have sufficient solve
# requirements to maintain audit &su
# obligation of insurer towards social &
# limitation on expenses management
# licensing of agents and remuneration
# prohibition on rebates
IRDA 1999 Authority to protect the interest of the h
to regulate , promote &ensure orderly g
connected therewith .

IRDA regulation prescribe insurer obligat

# at the time of sale
# towards policy servicing
#claim servicing
#control of expenses and expenditure
#financial strength to maintain future ob
Regulations for agents # Licensed under Sec 42 of Insurance ac
# corporate agent is other than an indiv
policies
Health Stand alone health insurance agent to u
Rules governing Agents Urban ( 5 lac and above population ) : should be minimum 12th
Rural : minimum 10th pass

# Should be of sound Mind

# No criminal records
# should be major
#Undergone 50 hours of training , for composite agent : 75 hou
# for person possessing associate / fellowship / MBA /CA ETC 25
# PRE Recruitment examination conducted by III should be pas
Fees 250 Rs for agent / composite agent for issue or renewal of licen
# Insurer will sponsor the agent
# designated person in the insurer office will issue license valid
# 25 Hours training during renewal of license
 # APPLICATION to designated person should be IRDA FORM -VA
# for firm/ company :IRDA FORM - VC

# Rs 50 to be paid for duplicate license in case of lost

Code of Conduct for agent # should identify himself and the insurance company whom he
# disclose his license on demand
# carefully explain the requisite product as per the need of th
recommendation
# disclose the commission when asked by the prospect
# indicate the charge and premium .
# bring to the notice of the insurer any adverse habits / hobbie
#advise prospect / client on procedure of nomination / assignm
Rebate Sec 41 OF INSURANCE ACT , prohibits agents to allow either directly or indirectly to pa
prospect .

Chapter No 17 : Life Insurance Agncy as Career

Insurance Channels Corporate Corporate en
agency manpower c
Brokers Represents t
any contract
company.
Bancassurance Bank is the c
insurance fro
Direct Marketing Insurance co
clients

Approach co
telemarketin
marketing ,
Individual agent An individua
company .
Unethical behaviour in insurance Misrepresentatio Advertisement unfair if it fails
n product . Regulations mentions
insurance benefits should e cl
the prospectus .
Illustration Should show optimistic and co
Should be signed by the policy
Replacement Surrender etc more than 25%
existing plan to source new pla
MDRT Million dollar round table internationally recognised forum for insura
Persistency Portion of policies remaining in force at the end of the period out of the total policies in
Policy retained without surrender or lapse .
Persistency score could be computed premium or cases wise .
This represents the health of company . Higher persistency is good

Chapter No 18 : Life Insurance Selling Process

Prospecting
Markets for Prospecting
Process of gathering names of people whom one can app
secure sales interview .
Immediate group Family and friends . They at-least wil
immediate sale interview .
Natural Market Members of same caste / community
members of church congregation , sa
PTA / Trade union etc
Centre of (COI) people who are in influential po
 Influence whose words are valued . These will
prospects .
Eg social / community leaders , Top C
Others References : taking new names from
customers or other prospects .
Newsletter, emails , web , testimonie
ways of gathering names
Qualified Prospects # The ones who can pay premiums
# who can pass any underwriting
# who has one or more needs of insurance
# who can be approached on favourable basis
Need analysis Method # present and future needs of the family are analized
# monitory vales are calculated
# the difference between the funds so needed to meet t
Needs of family # Clean up Funds : money for medical expenses , outstanding loans , inheritance exp
# Readjustment Income : Money required to help in changing life styles
# Income for family : till children are self supporting
# Life income for spouse : after children are self supporting
# special Need :mortgage redemption , emergency medical needs , higher education
Closing # Implied consent : start filling the form asking simple question like how to spell the
Technique # Offering alternative : giving alternative on minor decision . Eg by asking which mo
payment they would like between yearly or half yearly

Chapter No 19 : CUSTOMER Service

SERVQUAL Known as SERVICE QUALITY
Reliability : ability to perform promised services dependably and
accurately . To build trust .
Responsiveness : ability &willingness of service to customers ,
accurately and fast .
Assurance :refers to knowledge , competence , &courtesy of service
providers the ability to convey trust and confidence .
Empathy :Caring attitude and personalized touch
Tangibles : Physical ambience .
Customer Historical Value Premiums and other revenues that have been
Lifetime Value received in past from the customer
Present Value of Premium that may be expected to be received if
future business is retained
Potential Value The value of premiums that could be derived by
persuading the customer to buy new plans
Grievance Complaint is a crucial moment of truth .maximum ownership of clients
Redress al service lies with agents .good service gets rewarded by 5 people
getting informed and bad service passes on to people .
Trust Attraction , communication and being there builds trust

Chapter No 20 : GRIEVANCE REDESSAL MECHANISM

IGMS Integrated grievance manageme
insurance grievance data and as
insurance industry.
Policyholders can lodge their com
concerned insurer .
Grievance redressal mechanism //policyholder.gov.in/Interga
COPA 1986 Consumer protection Act
 District Forum Upto 20 Lac .
Empowered to s
appropriate civi
Sate Has original, ap
Commission Entertains appe
claims exceedin
National Final Authority .
Commission Has original, ap
Claims above 1
has supervisory
Procedure for filing complaint # No fees to file the complaint
# can be filed by self or authorised agents
# No advocate required to file complaint
Consumer The forum can recommend the following :
forum orders # to return to the complainant the premiums , the charges paid by him
# to award compensation to consumes in case of any loss or damage
# to remove defects or deficiency in service
Nature of complaints # delay in settlement of claims
# non settlement of claims
#repudiation of claim
# quantum of loss
# policy terms and conditions
Insurance Ombudsman Can act as a mediator or councillor within the term
Redressal of public grievance rules 1998.
# The decision of ombudsman, whether to accept o
#complaint should be in writing , signed by insured
Ombudsman within their jurisdiction insurer has .
# Complaints to the ombudsman can be made if co
insurer , and the insurance company has
@ rejected the complaint @@ No reply has no repli
the complaint .
@@@not satisfied with the reply by the insurance c

# The complaint with the ombudsman should be gi

rejection by the insurance company

# The complaint should not be pending in front of a

Recommendation and award by Ombudsman
# should be made within 1 month by the ombudsm
# copies of recommendation to be sent to both , in
# recommendation has to be accepted by the com
#copy of acceptance to be sent to the insurer and
within 15 days .

# maximum award would be upto 20 Lac

#award should be made within 3 months period fro
complaint .
# insurer shall comply within 15 days of receipt of
# if insured does not give written accpeatnce , the
implement the award .