Introduction

1. Three type of insurance

Life Insurance Non-Life Insurance Re insurance
Insurance Apart from Human Life eg ;
Insurance For Human Life Health,Motor,Marine,Fire Insurer for Insurance Companies.
2. Insurance works on the Principle of Risk Transfer,If a Income Earner Died after taking the Insurance policy the Family
will get the claim amount.
3.History Of Insurance
1818- 1st Life Insurance Company in 1972 – General Insurance Business
1938 -Insurance Act
India (Oriental Life Insurance) Nationalization Act
1870 - British Insurance Act 1950 - Nationalization of Insurance 1980 – National Insurance Academy
1874 -MWP act 1955 - Insurance Institute of India 1993 – Malhotra committee
1912 – Indian Life Assurance act & 1999 – IRDA ( Insurance regulatory
1956 - LIC Formed
Chartered Insurance Institute Development Authority)
Insurance Act 1938 created Tariff
1928 – Indian Insurance Companies act 1957 – General Insurance Council
Advisory committee
26% FDI (Foreign Direct Investment) Allowed in Insurance
Direct Marketing Indirect Marketing
4.Insurance Distribution is Internet / Online Sales / E- Agent,Broker,Corporate
Divided in to 2 Types sales,Newspaper Advertisement and Agent,Bancassurance and Comparison
Sales through sales Executives Websites.
5. Benefits of Professional Insurance Market
Higher Confidence among the policy
Disclosure Need Based Selling
Holder
Employment Generation & Social
Increase in Insurance Penetration Profit for the Company
Benefits
Agent
1. Agent is responsible for both Insurer and the Policy holder,Agent is a Primary underwriter,
Agent Should have
Urban Area : 12th std Rural area :
Age 18 Years Domicile status
10th std
Should not be disqualified by a law and
Should undergo 50 hrs training Should Clear Prescribed examination
should be sound mind
Other Information regarding
For Renewal of License Agent Should Designated authority will issue the
Agent License valid for 3 Years
undergo 25hrs Training Agent License
In case of frauds the agent license will Canceled Agent License can be re-
Duplicate Id card Rs.50.
be canceled by designated authority applied after 5 years
Agent can take agency in Both Life And The Responsibility of agent ends only
Rs.500 Penalty for doing business
Non-Life it is called as Composite after settling the claim (Maturity or
without license
License Death)
Agent have to follow code of conduct Agent job is to recommend products
issued by IRDA that suits customers need
 Ethics & Code of Conduct
1.Ethics can be Defined as those values we commonly hold to be GOOD and RIGHT,a study of what makes one's own action
RIGHT and WRONG.
2.Typical Ethical Behaviour
Recommend suitable Need based policy to the
Fully Explain the Product benefits Recommend adequate Sum Insured amount
client
Recommend an appropriate method of Explain the terms and conditions as per clients
payments based on clients need need.
3.Typical Unethical Behaviour
Selling regular premium policy as Single or Not giving complete disclosure about the
Projecting exorbitant benefits under the plan
limited premium policy. features and its Benefits.
Telling customer no need to pay premium for
Not obtaining complete information about the Offering a rebate or inducement in return for
the full term,but the feature of the product do
prospective client. purchasing a policy.
not substantiate the statement.
4.Dangers of Unethical Behaviour
Overselling of Insurance Policies underselling of insurance Policies Delay/ refusal to make Payment
Due to Mis-selling unnecessary delay in claim
Selling more insurance cover than they actually Selling low insurance cover to make the policy
settlement may lead negative publicity to the
required by the client. attractive.
company.
Churning : Recommending client to surrender existing policy and to take new policy for getting high
commission for first year.
5. If a Insurance company and the agent follows ethical practice
Positive image is a indicator of success for
Develops Goodwill of the company protection by both side
the company in long term
Agent to ensure all Personal Information of the
Lead Standards and model for others
client to be kept confidentiality
6. Ethical Codes : Every one from the Insurance company from the CEO to Director to employees should follow the ethical
codes.
7.Evaluation and Monitoring: By analyzing the data regarding no of complaints registered against company products and services
can be notified.
Lapse,cancellations & Free look-in period Complaint volumes Analysis of product being offered
Investment
1.Banks : Through Banks Customers can deposit their Money through three type of Deposit
Traditional Deposit Cumulative Deposit Recurring Deposit
Interest Payable as per choice of the Customer In this type of Deposit Bank pays Interest in
Customer can Accumulate Saving In Monthly
it may be Monthly,Quarterly,Half yearly & Quarterly Mode. Principal and Interest will Be Mode
Yearly. Paid at end of the Term.
2. Shares : Normally Shares give three type of returns
Capital Appreciation Dividend Bonus Shares

If the Value of the share increases from Capital Company Will Declare Dividend according to For Every Share company will Declare Bonus
Invested is called Capital Appreciation. the Performance of the Company Shares.
3. Bonds are Similar to Bank Fixed Deposits it Provides regular Income, Interest will Be paid to the Investors. The different kind
of Bonds are Corporate Bond;G-secs Government Securities,Commercial Paper and Treasury Bills.
4. Gold & Silver can also be invested through gold ETF (exchange Trade Fund),* In Gold ETF: eg: (1 Unit = ½ gm to 1 gm) and
(100 Units = 50 gm to 100 gm),* Reason for Investing in Gold and Silver is to get Good return,Protection against Inflation.
5.Post Office offers different products to save money,Investor Earns fixed interest rate
National Saving Certificate (NSC) Kisan Vikas Patra (KVP) Public Provident Fund (PPF)
Post Office Savings Account Recurring deposit account Time Deposit account
Post office monthly income scheme Senior Citizens saving Scheme (SCSS)
6.Mutual Funds are managed by Asset Management Companies (AMC),Advantage of Investing in Mutual Fund is Risk
Diversification, Regular Income in Form of Dividend,Capital Appreciation in form of Rise in Price.
7.The decision of Increase or decrease in Interest Rate are decided by Central Bank of the Country ((RBI) Reserve Bank of
India).
Banks Bonds Shares
If RBI increases interest rate Bond rate
If Interest rate Increases Bank Deposits look increases. If Interest Rate Falls Bond Rate If Interest Rate decreases Share Looks
Attractive. Decreases Attractive
8.If Inflation is running at 5% and you earn 8% through Investment in Bank Deposit the actual return the Investor earned is
3%,It means the Future value of any goods will Increase. Value of Rupee Decrease.
 Taxation
As per Income Tax Act 1961 Find the following Sections allows Tax Deductions
80D :Premium Paid towards Health Insurance Plans for the self,spouse and Children,Higher Deduction is allowed for
Senior Citizens under this plan.
80DD : Tax exempted for Medical Treatment / Training / Rehabilitation for Handicapped / handicapped dependent
10 (10D): Tax Exempted for the returns
from insurance policy.
(Maturity,Death,Paid
80 E: Tax exempted for interest paid on Section 24(b): Tax Exempted for up,Surrender,Survival Benefit and Rider
education loan. interest paid on Home Loan. Benefits).
80C : Tax Exempted up to 1 lakh for the Following Products
Life Insurance Premium Paid for traditional
Policies Unit-linked insurance plans Pension Plans
Repayment of the Principal component of
home loan Employee Provident fund Equity Linked Savings Scheme
Tuition fee paid for Children Five year tax saving Bank deposit Public Provident Fund (PPFs).
National Saving Certificates Senior citizen saving schemes (SCS) Stamp duty and registration charges
Infrastructure bonds Pension funds Post office time deposit – 5 years
80CCF: One can invest in Infrastructure Bond over and above 80C
Life Insurance Premium Eligible for Tax exemption Through 80c only if the below conditions are Satisfied
Condition 1: Sum Assured should be always 5 times of Premium.e g: Premium 60,000 * 5 times = SA 3lakh.
Condition 2: Premium should not exceed 20% of Sum Assured, eg:SA 1 lakh * 20% = 20,000 Premium.
Commission
1.Agent is Paid Remuneration (Commission) for the Business sourced by him as New Business commission and
Renewal Commission
1st Year 2nd & 3rd Year Subsequent Year
35.00% 7.50% 5.00%

During the first 10 Years (From Company Start Date) of Insurance company business, * Agent Can be paid 40% of Commission .
On Demand Agent can Disclose For ULIP Plans Commission details are If Agent Dies Renewal Commission will
Commission details to Customer Printed in Benefit illustration Be paid to Legal Heirs
Conditions for Terminated Agency for receiving Renewal Commission
Agents Renewal commission Should
not Exceed 4% who's agency is Agent Should Have been working for Sum Assured should Not be Less than
Terminated the Insurer for at least 5 years Rs.50,000.
Low Commission for short term policy Lower Commission Products : Term
Agent Should Have Been Working 10 and High Commission for Long term Plan,Single premium Plan,Annuity Plan
Years for the Insurance Company. policy and Pension Plan.
 Complaint redressal
1.Consumer Protection Act ( COPA ) 1984:Objective to protect basic consumer rights,Policy holder have the right to seek
redress against unfair trade practices or unsatisfactory services from insurer or agents. The COPA has 3 levels according
to complaints volume,Complaints has to be registered within 2 yrs.
District level: 20 Lakhs State Level: 1 Crore National Level: Above 1 Crore
2. Initiatives by IRDA to Protect policy holders and the Grievance Redressal mechanism available to the policy Holder
a) Consumer Affairs Department Give special focus to and oversee the compliance by insurers of the IRDA regulations for protection of
( CAD ) policy holder interest.

b) Integrated grievance IGMS will create gateway to register complaint first in Insurance company,IGMS provide a standard
management System (IGMS) platform to all insurer to resolve policy holder grievance,IGMS is to measure TAT's for complaint.

c) Internal grievance redressal cell of As per IRDA under regulation for protection of policy holders interest every insurance company will
the insurer have Grievance redressal system to address customer complaints.
d) Grievance registration Customer can register complaints with the insurance company either calling up its customer care
Mechanism department,writing an email to company's help desk
If the customer is dissatisfied with reply/solution by the customer care cell or failed to give solution in
Specified TAT (Turn around time) the customer can escalate the complaint to next level. Customer
e) Grievance redressal officer
can approach Grievance redressal officer/ Nodal Officer. Even after that if the client is not
satisfied he can escalate to appellate authority.
3) Grievance Redressal cell of IRDA : IRDA introduced IRDA Grievance Call Center (IGCC), *A complaint can be logged by
calling up IGCC on toll free number 155255 or we can send Email to IRDA at complaints@irda.gov.in .
Insurance Ombudsman created by we have 12 Ombudsman office across the
government of India. country.
Ombudsman handle two type of functions Ombudsman Power of Insurance Contract
conciliation and Making awards value not exceeding Rs.20 Lakhs
4.OMBUDSMAN Ombudsman duty is to promote a settlement
Ombudsman recommendation should be made not
agreement between the complainant and the
later than 1 month.
Insurance company.
Insurance company should honour the award
Ombudsman will grant award within 3 months
passed by the insurance ombudsman within 15
from the receipt of complaint.
Days
Premium & Bonus
Premium is the price paid by the policy holder to secure life cover
Premiums are Calculated by Actuary of the company
1.Premium
Premium is otherwise know as Consideration
Premium is based on age of the Life Insured
2.Types of premium : Customer Can pay premium in 3 types
Single Premium Policy Holder pays a single lump sum payment at the inception of policy.
Level Premium Policy holder pays the same amount of premium for the entire duration of the policy
Flexible Premium Policy holder to choose a flexible premium payment plan for their convenience,* Premium Amount can
generally increases by 5% annually.
1. RISK premium = Sum assured * Mortality rate
2. Based on risk premium company calculates LEVEL Premium
3. Steps for Calculating 3. Net Premium = Premium – Interest earnings
Premiums 4. Add Loadings ( Administrative expenses, Medical Expenses, Processing Fee, renewal and claim
settlement expenses, profit margin and bonus loadings).
5. Gross premium arrived according to type of the policy.
Bonus
Bonus determined by Actuary of the company.
Bonus is paid only for participating plan.
4.Bonus
Profits are distributed for the policy holder in the form of Bonus
Bonus not available for Term Plan,Health Plan and ULIP plan
5. Four type of Bonus

Simple Revisionary Bonus Insurance company declare bonus every year and add the bonus with sum insured and it will be paid
at the time of Claim (Maturity, Claim).
Compound Revisionary Bonus Bonus will be calculated on a compound interest basis.
*This Bonus will be Paid as the Incentive for the policy holder for continuing the policy for Long term.
Terminal Bonus (eg. 20,25 or 35 years).*This bonus is also known as Terminal Bonus / Final Addition Bonus / Loyalty
Bonus / Persistency bonus.
Interim Bonus In case of Claim to be paid in between the financial year the company will pay the interim bonus till the
next declaration of bonus for the financial year.
 Insurance Concept
Utmost good faith
1) Utmost good Faith: A positive duty to disclose accurate and full information (Material facts) whether it may be
requested or not,
Utmost good faith is needs to exist at
Utmost good faith applies to both
the time of taking out the insurance
customer and the insurance company.
policy and Revival of policy.
Breaches of duty of Utmost Good faith can be categorised as
Eg: Ajay , while applying for life insurance with Company ABC, does not disclose that he
had undergone surgery during his childhood. He feels it is immaterial to disclose this
Non-disclosure information to the insurance company as the surgery was done during his childhood, some
15 years ago, and he had completely recovered from the incident a long time ago.

For example, Ajay consumes alcohol regularly. However, before applying for life insurance he does
concealment of material fact not consume alcohol for a month, thinking that by doing so it will not be detected during the
medical test and he will get insurance at better terms.

For example, Ajay declares his age to be five years less than he actually is. To support this he forges
Fraudulent misrepresentation the proof of age documents and submits them to the insurance company to get insurance at better
terms.
Innocent Misrepresentation inaccurate statements which are believed to be true.
Material Facts
1) Material Facts: Disclosing Material facts which considered as material regardless asked in the proposal form, If the
Insured breached the contract the Insurer can avoid the contract entirely ab initio (from the the beginning).
2) Indisputability clause ( section 45): if the insurance company comes to know the proposer not disclosed some
material facts in first two years of policy,Insurance company can disclose the policy is null and void.
This right can be enforced by the After 2 years,Fraud must be established
Insurance company can Keep all the
insurance company during the first 2 by the insurance company if it wishes to
premiums paid.
years of the policy. make the policy void.
Insurable Interest
1) Proposer has to have a Insurable interest on the life to be insured in order to insurance policy,
Insurable interest needs to exist in Life Insurable interest needs to exist in Insurable Interest need to exist in
Insurance at the time Inception of General Insurance at inception of Marine Insurance only at the time of
Policy Policy and also at the time claim making a claim.
If Company found that the Insurable interest does not exist In future( after inception of the policy) the insurance policy is
valid.
Insurable interest is exist in the following circumstance
own life Spouse / Children/ Parents Assets
Creditor Surety Employer – Employee
Employee – Employer Key man insurance Partners
Indemnity
1) General insurance policies and health insurance policies are contract of indemnity.
Insurance cannot be used to make Insured is compensated only the actual
Insured cannot profit from the Insurer.
Profit. loss .
Rajesh has taken out an individual health insurance policy with a sum insured of Rs. 1,00,000. Rajesh also has health cover of
Rs.1,00,000 from his employer. Rajesh falls ill and has to be hospitalised, resulting in a hospital bill of Rs. 25,000. So in this case Rajesh
cannot make a claim of Rs. 25,000 from both insurers. Rajesh will get a total claim of only Rs. 25,000. So the principle of indemnity
ensures that insurance cannot be used to make a profit.
 Contract
1) Insurance is a contract between insurance company (Insurer) and the policy holder (Insured). In
Return of consideration (Premium).
Non Life and general Insurance is a
Life insurance is a Value Contract
Contract of Indemnity
Features of valid contract
Insurance company offers policy and Customer accepting the policy
Offer and Acceptance
Unconditionally
Consideration Premium = Consideration
Person entering in to the contract should be competent.
Capacity to contract
Eg: 18 yrs age / Sound mind / Not disqualified by law.
consensus ad idem Both Insurer and insured agree upon the same thing,in same sense.
Legality of object and purpose Both parties to the contract should create legal relationship.
A person requesting for a very high amount should be capable for paying
Capability of performance
the premium.
Void contract has no binding effect on either party because a void contract is no contract at all
( Mistake,illegitimate,unlawful circumstance and lack of insurable interest).
Voidable is binding unless and until one of the parties choose to set it aside.(Breach of good faith or breach of
warranty)
Documents
Proposal Form: is a first document that the proposer needs to fill in and submit to the insurance company.
Insurance company collects information through proposal form,
if the Proposer is Illiterate or not If the information provided in the
Proposer should fill in the proposal
understanding the language, proposal form is not correct the
form themselves in their own
The third person can help the proposer insurance company can cancel the
handwriting.
to fill the information. contract.
First Premium Receipt : Proof of Commencement of risk, FPR is valid till the policy document reaches the
policy holder
Policy Document: It is the evidence of contract between insured and the insurance company.
Heading Logo,Name & Address of the company
Preamble Proposal signed by the proposer
Operative Clause Premium to be paid by Insured and Sum assured payable by insurer.
Proviso Provision available in the policy (eg: Surrender,Loan, Assignment etc.)
Schedule Details of Policy: Date of Commencement,Maturity Date,sum assured
Attesation Sign and seal of the authorised official
Terms & Condition Grace period,loan
Endorsment Any changes in the policy contract to be Attached
Exclusion exclusion in the policy like Suicide
Company will Issue subsequent premium receipt when it receives further
Renewal Premium Receipt
premium from the proposer.
Age Proof : is used to determine the risk profile of the proposer and the premium amount to be charged, The
Age Proof are classified in to 2 types that are accepted
* Certificate from school or College * Passport * Birth certificates * Service
Standard proof register of the employer *Baptism Certificate * Defence Id card * Pan card *
marriage certificate issued by roman catholic church
* Horoscope * Ration Card * Certificate from Village Panchayat *Affidavit by
Non-standard Age proof
way of self declaration or elder's declaration.
Benefit Illustration: it is the best document to show to the customer,as per IRDA Illustration explains the
Guaranteed and non-guaranteed benefits @ 6% and 10% and also the charges deducted on the policy.
KYC (Know your Customer): As per IRDA every Insurer should collect Customer Identification,residence and
income proof from the customer.
 Key Indian and International insurance Bodies
1) Insurance Regulatory
Development Authority ( IRDA ) * IRDA is an Insurance Regulator in India.* Autonomous body to regulate and develop insurance
industry,* IRDA Formed after the recommendations of Malhotra Committee Report.
It is a face of the Life Insurance Industry in India,The role of LI council to maintain high
2) Life Insurance Council standards and Ethics and Governance,Creating Positive Image,Promoting
awareness,Conducting Research and to be an active link between Indian life
insurance industry and Global Market.
3) General Insurance Council It Represents General (Non-life) insurance Companies
4) Insurance Brokers Association of
India (IBAI) The Insurance broker represent insurance Buyers
5) Institute of Actuaries of India The Actuary is a expert who is the expert for assessing the risk by mathematical and statistical
(IAI) data.
6) Tariff Advisory Committee Controls rate,Regulate advantages,Terms and condition offered by insurers in respect of general
(TAC) Insurance .
7) Insurance Institute of India (III) 1955
Promote insurance education and training in India.
8) National Insurance Academy
(NIA) 1980 design,Implement and operate an Insurance training and Research.
9) Chartered Insurance Institute Works with Local Regulators,educational Partner and industrial organizations to Improve
(CII) Professionalism,skill and Behavior
10) Institute of insurance and Risk Aims to serve learning and development and Promotion of International Post Graduate diploma
Management IIRM) courses in Insurance and risk management.
11) SEBI - (Securities and Exchange
Board of India) Regulator for Securities market in India
12) RBI – Reserve Bank Of India Regulator and Monetary Authority for Financial Systems in India
*Central government of India have the Power to Supersede the IRDA by issuing a
13 ) The Role of Central notification,*Issue Grant to the IRDA after appropriation made by parliament.* IRDA's annual
government Statement of accounts must be Audited by Comptroller and Auditor General of India,* Central
government can issue direction on question of policy,other than technical and administrative
matters.
Risk
1.Risk is the chance of damage or loss * Risk is something considered to be a potential hazard,* Primary job of insurance is
to transfer risk from individual to an insurance company.
2.Component of Risk are
Uncertainty Level Of Risk Peril and Hazard
Insurance covers only the Peril refers to natural disasters Lung Cancer,
Level of risk assessed in terms of
uncertain Events * eg. Death is storms, floods, earthquake.
Probability / Frequency and extent /
certain and Time of death is Hazard refers to condition influence peril to
Severity
uncertain. increase
Peril Perils are risk that policy holder die before a specified date.
Hazard Hazards are factors which could influence that risk.
Lung cancer is a peril and Smoking is a hazard
4. Hazard can be categorised in to two types : Physical and moral hazard
Refers to dimension and physical characteristics of the risk.
Physical Hazard
*eg. A family history,heart disease,high blood pressure
Refers to Habits and activities that increases the risk.
Moral Hazard
*eg. Consumption of alcohol and smoking.
5.Insurable risk:
Financial Risk Risk that can be measured in monetary terms
Pure Risk Where there is no possibility of making profit
particular Risk which are personal or local in their effect
Insurance company pools the premium collected from several individual to insure
them against similar risk
Premium collected from the individual is deposited in Pool Account
Insurance company has to ensure that the premium collected is enough to meet claim
6.Pooling of risk :
payments
Premium that is charged by the insurance company should also be sufficient to meet
the administrative expenses.
Company includes certain percentage of Profit in the premium collected
 Underwriting
Underwriter assess the risk and makes decision whether to accept or reject the policy.

in case of accepting he decides whether to accept the risk with * ordinary rate * Charge a
higher premium * modified and special term * accept with a lien *postpone * accept with clause.
1.Underwriter
Underwriter determines (MPL) Maximum Possible Loss
The Underwriter can collect Information from several sources.*Proposal form *Medical
examination *Agent confidential report *Special report from senior officials * Report from tax
authorities.
2.Underwriter will assess risk by doing
Financial Underwriting Financial underwriting is done to determine the insurable interest exist
Medical Underwriting
If proposer age and amount of cover is high Medical underwriting is done to determine the risk.
Non-medical underwriting The Medical Assessment is so expensive and time consuming also in rural areas medical
services are not available so medical test are not required
3.Human Life Value helps to calculate the required insurance cover or Economic value of a individual. HLV can be
calculate in two types.
Income Replacement method This method equates human life value to the present value of future earnings.
Simple Method Simple method to calculate HLV using bank FD Rate
The Underwriter may accept the proposal
If underwriter feel the risk is high initial stage but it may reduce in future,Underwriter will impose
4.Lien
lien (Decreasing or Diminishing Lien)
5.Clause Excluding particular risk
Agent has to ensure proposal form is filled completely by proposer

If agent feel the intention is not genuine they should mention that in agent confidentiality report.

Agent can help the customer to calculate their Human life value.
6..Agent Role in Underwriting
Agent can speed up underwriting process by * by submitting all the required documents in timely
manner * Help customer to complete medical check * ensure the doctor report is submitted.

* Can ensure whether the policy document reached customer *also can explain customer about
the rejection if the policy is rejected.
Claim
1.Claim: Claim is a demand that insurer redeem the promise made in the contract. Insurer part is to settle the claim.
Action on maturity claims is normally initiated by the insurance company itself.
A. Maturity Claim
If Insured survives for the policy term insurer will settle specified amount it is called as maturity
claim (Sum assured plus accumulated bonus,minus out standing premium and Loan Interest.)
Survival Benefits If the partial sum assured paid at the end of maturity or paying some specific payments at
specific time *eg. Money Back Plan
Paid-up value (Reduced Customer can discontinue the policy, rather than surrendering the policy, He is having the option
Sum insured) to convert it as paid-up * At the time of maturity reduced sum insured is paid.
Discounted Claims This option is exercised by the policyholder within one year of the maturity.

Commutation of installments
In Annuity policies individual is having the option to withdraw 1/3rd of the accumulated fund.
Annuity payment at the time of
vesting On vesting insurance company will pay annuity to annuitant
B. Death Claim On Death of Insured during the term of the policy the insurance company pay's sum insured to
the nominee.
Whether *Insurance Policy in force, * insured event take place, *original policy
2. A valid Claim
document submitted, *claim demand come from right person
3. Invalid claim: Insurance company can reject the claim due to the below said reason
Policy Not in force Excluded Conditions The claim is fraudulent
If death claim occurs within three years from the date of risk or from its revival
In Early death cases insurance company will do detailed investigation
4.Early death Claim
Additional documents may be asked to ensure that material facts are not suppressed at the time
of proposal / revival.
If the insured has not heard (missing) for 7 years
If the Insured is presumed to be dead Nominee or heirs insurer insist on a decree from a
5.presumption of death
competent court.
Premium is to be paid until court decrees presumption of dead.

1.Childhood
2.Young Unmarried
3. Young Married
4.Young Married with children
5.Married with older children
6.Pre – retirement
7.Retirement
Basic Elements of Insurance is Death cover and Maturity cover
1. Term insurance Plan
2. Return of premium plan
(ROP)
3. Pure Endowment plan
4. Endowment Insurance Plan
5. Whole Life insurance plan
6. Convertible plan
7. Joint life insurance plan
8.Group Insurance Plan
9.Unit Linked Insurance plan
10.Child plan
11.Money Back Policy
12. Salary savings
Life Stages
Financial security for children in the event of Future financial responsibilities such as
death of parents Marriage,Education
* Self Protection Need * Health protection for Dependent parents * Short term savings.
* Self Protection Need * Family floater health insurance * Short term savings.
* Protection need * Children future (education & Marriage) * Family floater health insurance
plan * Small contribution towards retirement plan
* Protection need * Children future (education & Marriage) * Step up investment towards
Retirement * Enhance health cover.
* Investment for retirement *income protection need * leave inheritance for children *
Review health cover
* Need to invest funds wisely ensure an adequate regular income * Review health cover
* Estate Planning /Inheritance Planning
Life Insurance Products
* This Plans offer only death cover, * There is no maturity benefit * Cheapest plan * Plan
for Financial security and protection * Protection against liabilities
On death of insured company pay death benefit, * on maturity company return part
premium paid by the customer.
This plan is opposite to Term plan, Only maturity benefit will be paid only if the insured
survive for the policy term.
It is a combination of term plan and pure endowment plan,* it offers death cover and
maturity cover with bonus
A Term insurance plan with unspecified term with saving element.
Plan can be converted from one plan to another plan
Insurance plan offers insurance cover for two person under one policy.* Nominee not
need for this plan.
Insurance protection for a group of people,* Insurance company issues master policy.
* Plan for Investment and protection, * On death Company pays Fund value or Sum
assured * On maturity company pays Fund value.
Plan for children,*Risk start for child only on deferred date, * If child attains 18 Years old
the title changes automatically this date is called VESTING Date.
* during the policy term Partial survival benefits paid under this plan, * Policy holder
receives survival benefit in fixed or variable proposition from the percentage of sum
assured *
*It is not a specific plan, *Premium will be deducted from the salary of the employee
directly.
 Special Plans
Insurance plan for low income group,(Ricksha pullers,farmers,self help group)
1. Micro Insurance Plans Sum assured Minimum: Rs.5,000 and Maximum Rs.50,000
Weekly premium as low as Rs.15 per week
Annuity is paid as a regular payment for the individual
Annuity can be either Immediate or deferred annuity,
2. Annuity Plans * Immediate annuity: Annuity payment starts immediately after purchasing lump sum.*
Deferred Annuity : Annuity payment starts from vesting date though annuity is purchased
in lump sum or alternatively by paying installments.
Types of annuity plan
I) Life Annuity * Company will pay annuity to annuitant till he dies.
* As per the choice of annuitant (5,10,15 yrs) company will pay annuity for the fixed period or
II) Guaranteed period Annuity guaranteed period.* If annuitant dies in between the guaranteed period annuity will be paid to
legal heirs.* If annuitant survives for guaranteed period, company will extend paying annuity till
he dies.
III) Life Annuity with return of * Annuity will be paid to annuitant till he dies, * After the death of annuitant the Purchase
purchase price price will be paid back to the nominee / Beneficiary.
IV) Joint life,or last survivor
annuity * Annuity will be paid to Husband and wife at the same level.
V) Increasing annuity * Annuity payment will Increase every year by certain percentage.
3.Pension plan provide pension for a individuals, No life cover for this plan.
Accumulation phase Individual pays regular contribution or lump sum during his earning period.
With the help of accumulated fund Insurance company invest Lump sum amount on behalf of
Regular annuity phase
the individual and start making regular/periodic annuity.
Commutation At the time of commutation the customer can withdraw 1/3rd of accumulated fund.
Open Market option At the time of commutation Annuity can be purchased from any company
Tax exempted for withdrawal of 1/3rd of accumulated fund at the commutation period *Regular
Tax implication
annuity or Pension are taxable.
4.Health Plans
Individual Health insurance plan Health Plan covers single individual
Family floater health insurance
plan All Family members can be covered under one policy.(i.e Self,spouse,children and parent).*
Insurance cover shared among the family members *There is no fixed proportion.
Group health insurance Health plan take by a group (i.e Employer taking health insurance for the employee).
Daily hospitalisation cash benefit Insurance company pays the insured a fixed amount on a daily basis in the event of
plan hospitalisation, * Daily amount paid is fixed and may be more or less than the cost of of actual
treatment.

Rider * Additional life cover option with base policy at Nominal cost
1.Conditions for Rider
2. Accidental Death benefit
(ADB) Rider
3.Term Life Rider
4.Critical Illness Rider
5.Waiver of premium
6.Other Rider offered by insurance companies
a. Surgical care rider
b. Hospital care rider
c. Guaranteed insurability rider
1.Presistency
2.Low presistency ratio :
means large number of policies have
been lapsed or have been surrendered. For Agents: Loss of renewal commission
3.High presistency ratio:
Means Client,Agent & insurance
company all benefit by retaining policies
and avoiding early surrenders
4.Factors affect Presistency
5. How to maintain high
Presistency
Rider
* Premium on all Rider should not exceed 30% of base premium.
* Rider premium should not exceed 100% if Critical Illness rider is taken with Term plan.
* The Sum assured arising under each rider should not exceed the Sum insured under
the base policy.
* ADB rider Claim is paid on the event of death due to accident.
* Enhance the death cover amount in a policy at a nominal cost.
* CI rider provides Sum assured in event of diagnosis of critical illness.
* The Illness should be covered in the list specified by insurance company.
* CI Benefit will cease once the CI Rider claim is paid but the base policy will continue.
* This rider waives future premiums in event of the disability of the policy holder due to
illness or accident.
* In case of eventuality Insurance company pays the premium on behalf of the policy
holder.
* This Rider pays treatment for the cost of surgery.
* This rider pays the treatment cost in the event of hospitalisation of the policy holder.
* This rider gives the insured the right to increase their cover in response to different life
events.
Presistency
* Amount of business that the insurance companies retaining.
Formula to Calculate presistency *Presistency =
The number of policy remaining in force at the end of the year
The total number of policies in force at the beginning of the year
* Agent Play an important role in maintaining a high presistency ratio
It For Insurance company:Loss of Profit and Reduction in accumulation reserve.
For Clients: Loss of Insurance Cover
For Insurance company: Increased Revenues and maintain profitability.
For Clients: High client satisfaction,helps for achieving goals
For Agents: Renewal commission
*Product Design * Change in Client financial circumstance *Policy servicing *Role of
agents.
* Flexibility in premium payment *Constant reminder of due premium dates * Continuous
contact with clients *Policy servicing.
 Need analysis,Fact Finding and Skills
1. Fact finding: Agent job is to identify the Client need in the following process
1. Identifying Needs 2. Quantifying Needs 3. Prioritising Needs
2. Client need can be
Real Need Actual need which should be given priority
Perceived need
Client will think it may be important when he is not having adequate income to buy
3.Using Fact finding we can gather client information through structured interviews,Fact finding form contains
Personal details Family details Personal details
Employment details Financial Needs Existing insurance and investment
Monthly income and expenditure objectives and consideration Future changes
4.Making recommendation: When making recommendation agent need to ensure product shortlisted for each need,
Presentation should be in two way communication. with presentation structure
5. Skills: Agent is the contact point for a client,Agent must want to have

Communication Skill * Friendly approach,* Answering the question honestly , encourage client to speak ,
*Ask question in order to understand the need of the client *Open ended question and
Questioning skill closed ended question to be asked
listening skill * Concentrate on clients answer
6. Handling objections from clients
1.Product does not meet my *Understand the need *Offer new product after reviewing his need * Ask client open
needs ended questions
2. Competitors product offering * present comparative analysis * Relate Products * Explain why the particular product
additional benefits advise to him
* Revisit the importance of proper financial planning * tell him the importance of
3.i don't have fund for investment insurance
DAYS
Insurance company has to respond within 10 days after receiving any communication or
10 Days
Complaint or request from its policyholder
Insurance company (underwriter) should
Free Look in or Cooling off period if customer inform Policy holder on the decision,
disagree with policy terms and condition whether Proposal form is accepted or
Rejected
15 Days
within 15 days Company should ask for Within 15 days Insurance company
additional documents if required for the date of should honour the award passed by the
receipt of claim ombudsman
15 Days Grace period for Monthly premium mode
30 days grace period for Quarterly,Half Yearly Within 30 days ombudsman has to pass
and annual premium mode recommendation
30 Days If a valid claim is delayed insurance
If all documents are submitted claim has to be
company has to pay bank interest + 2%
settled by insurance company within 30 days
.
90 Days Ombudsman has to pass Award within 90 days
6 months/180 days Investigation on claim has to be completed within 6months or 180 days
Indisputably clause can be enforced by Within 2 years complaint can be made
2 Year
insurance company during the first 2 years through Consumer protection act.
3 Year Agent License is valid up to 3 years
If Agent license is canceled / Terminated by the Designated authority he can apply for
5 Year
Agent license only after 5 years.
 Important Words

MWP ACT 1874 * Married Women Property Act * Married men only can be the life insured,* Only Wife and
children can be a beneficiary * Maturity or death Claim will be paid only to TRUSTEE.
Transferring the title * Assignment can be defined in two types * Conditional Assignment and
Absolute Assignment
Assignment
Conditional assignment : Once the condition is Absolute assignment:Transferring the policy
fulfilled the title will transfer automatically. to the person or institution.
Policy Lost *It should be advertised in News Paper * policy may be pledged
There are three stages in Money laundering
Anti Money Laundering 1. Placement, 2.layering, 3.Integration
Payment of Premium by cash cannot exceed Rs.50,000.
If the Premium is paid within the grace period the policy will be treated as in force *Claim will
Grace Period be paid if death happens within the grace period * 15 days for monthly mode and 30 days for
Yearly,Half Yearly and quarterly premium paying mode.
If Premium is not paid within the grace period the policy will lapse,Policy will loose all the
Lapse
benefits.
*Option to continue the lapsed policy * At the time of Revival company may change terms
Revival
and condition,Can ask for Declaration of good health(DCH) and penalty for the delayed days.

Formula for Paid up value :

No of premium paid / No of premium payable * SA + Bonus.
Paid up value If the premium is paid for 3 years and there after if premiums are not paid then the policy is
treated as paid up * If claim happens,Paid up vale (Discounted value) is paid to the policy
holder
If the Policy holder decides to surrender the Policy, Insurance company will pay the
Surrender Value surrender value * Surrender value will increase if the term of policy increases
Surrender value formula =Date of surrender of policy – Date of commencement of policy.
* Loan can be taken from the policy * Loan amount is certain percentage from the surrender
Loan value * Policy will be assigned at the time of taking the loan* Loan cannot be taken under
Term plan,Money back plan,health plan,Annuity plan and ULIP pan.
*Policy surrender by the insurer or surrender by the policy holder * If the loan Interest and
principal increases more than surrender value the policy will be foreclosed * The Foreclosed
Foreclosure
policy can be reinstated before submitting the discharge voucher * Policy holder will be
informed before foreclosure action is taken place.
1. Contingency/Emergency fund : *Used in
emergency period, *Easy liquidity,*Investment 2.Insurance : financial security for family on
preferred in Bank deposits and debt mutual unexpected death
Prioritisng saving needs fund.
3.Assets : to purchase in the life time 4. Retirement :Securing fund for future
5.Tax Planning: Individual investment portfolio should be as tax efficient as possible.
 One word Answers
S. No Answer Hints
1 8320 Frequency loading 4%
2 32000 Housing loan monthly EMI
3 273333
Fixed Answer
4 213333 & 273333
5 30%of premium on base policy Rider Premium should not exceed 30% of base policy premium
6 5.00% Yearly 5% Premium will increase in Flexible increasing premium
7 75000 5% bonus for SA 1lakh and term 15 years
8 Discount in Next year No Claim Bonus
9 20 lakh ombudsman power
10 50000 Cash payment limit
11 20 lakh District level COPA
12 1 Cr State Level COPA
13 > 1 cr National Level COPA
14 Under No Circumstance Pooling of Risk
15 Domicile Status Agent qualification
16 Profiting from Insurance Indemnity and Pure risk
17 Open Market option Buying annuity / Pension from one company to another company
18 1/3rd of accumulated fund Annuitant can withdraw 1/3rd on commutation period
19 Retirement Stage Estate Planning
if the life insured died 8 months after taking 30 year policy insurance company
20 Suicide rejected the claim due to
21 Deny,his Wife,his Children and his parents Family Floater
22 Value contract Life insurance
23 Kisan Vikas Patra Post office
24 Time deposit Post office
25 ½ gm to 1 gm 1 unit of gold is equal
26 50 gm to 100 gm 100 unit of gold is equal
Has power to supersede the IRDA by issuing
27 notification Power of central government
28 Guaranteed and non guaranteed part Benefit Illustration, (6% & 10%)
29 Toll Free number / Email Grievance registration
30 155255 and complaints@irda.gov.in Grievance registration
Insurance broker represent the client and the
31 insurer remunerate the broker Relationship between insurer and broker
32 Marine insurance Insurable interest exist only at the time of claim
33 Liquidity Debt mutual fund
34 Past data / Claim experience
35 IRDA Regulator for insurance
36 RBI Regulator for Bank
37 SEBI Regulator for securities
38 Discount Value G-sec bond / Paid up value / HLV
39 Trustee MWP ACT
40 Economic Value Human Life
41 Agent Who Cannot be the managing director of the company
42 AMC – Asset Management companies Who will manage Mutual funds

43 Lung Cancer is a Peril and Smoking is a hazard Peril and hazard

44 5000 Minimum sum assured in Micro Insurance
45 50000 Maximum sum assured in Micro Insurance
* Ration Card * Horoscope * Certificate from village panchayat *Certificate and
46 Non Standard Age Proof *Affidavit from senior officers
In which part of the policy document details of sum assured paid by insurer and
47 operative clause premium to be paid by proposer will be mentioned
48 Policy Information statement Information about location of insurance ombudsman
49 Primary Underwriter Agent is a Primary underwriter