Insurance compensates losses from specified events. Insurance compensates losses to the full extent of lost income. Assets may be damaged by external causes, hence insurance is necessary. Consequences of adverse situations are only reduced by insurance. They are not eliminated.
Insurance benefits in replacement of the monetary losses, but only to some extent. The possibility that it will rain during a cricket match can be an insurable risk. The possibility that ones marriage will work out successfully or that the son will get admission in the prestigious college he has applied for are not an insurable risk. Both peril and risk are important in deciding the amount of insurance. The amount of sum assured decided on is the amount payable under life insurance policy. Insurance does not mean that the person can compromise on the safety to be taken.
Principles of insurance works on Sharing Probabilities of large nos. Trust Randomness Mutual help Proportionate contributions. Both Life and Non-Life insurers can transact Micro insurance.
Risk refers to the loss that happens. Only uncertain risk can be insured. A human being is an asset, which has economic value, is income earning and I is perishable The income generated can be used to measure a human being’s value. A human being is an asset which perishes when he dies or become disabled to work
The insurance as a trustee is responsible to pay a genuine claim. The insurer as a trustee is also responsible to see that the life Fund is safe And earns maximum interest It is also responsible to give priority to the policyholders.
Risk is not common to all assets. The greater the number of trials, greater the probability of the actual experience coming closer to the estimate. The probability of an event is mentioned either as a percentage or as a ratio.
The probability of ‘one in a hundred’s valid. a. When it happens once in a hundred trails. b. Even when the event happens 50 times in a 1000 trails. c. when the event does not happen even once in a 100 trials (it might happen 2 in 200 still the probability holds). Insurance is legitimate when an adverse happening is likely. Insurance covers harmful consequences.
Life Insurance is arranged if someone may die or someone may live The principle of indemnity is not applicable to life insurance.
Insurance benefit individuals, society and in turn the country. Insurance not only reduces the burden on individuals’ families, but also the Society.
Life insurance is better than other avenues of savings in respect ofa. Marketability b. Liquidity c. Transferability And most important useful in emergency.
Insurance is related to probable loss In Insurance, Premium is based on Expectations of losses. In Insurance, all the policyholders do not share the losses equally, it does not prevent risk and it does not compensate the losses in full.
An insurer placing insurance with another insurer is called reinsurance Living too long is a risk and also dying too soon. Perils are not avoidable. Probabilities of death and of survival is mutually exclusive There is no substitute for life insurance.
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A life insurance policy is a contract enforceable by law. The principle of utmost good faith applies to life insurance as well as non life insurance The principle of utmost good faith applies to medical as well as non medical cases.
The principle of utmost good faith is meant to protect the interest of the community of policyholders The principle of utmost good faith is important to ensure That the premium charged is correct That no one gets an undue advantage That there is no adverse selection
The responsibility to comply with the principle of utmost good faith rests with both the parties proposer as well as insurer. The principle of utmost good faith does not apply to . Facts of common knowledge Facts of law Facts which are not material for underwriting
Capacity to contract applies to both parties Consent to the contract can be implicit Facts which happen after the policy has commenced need not to be reported Facts which happen before policy has commenced need to be reported.
A life insurance policy becomes invalid if, the statements in the proposal are found to be substantially wrong. The principle of utmost good faith will operate in an existing policy if the policy has lapsed and it has to be revived. The existence of insurable interest is decided by The interest which proposer has in the assets being insured . The relationship between the proposer and the object of insurance
In the case of Life insurance, insurable interest should exist at the inception of insurance policy. In the case of life insurance the principle of insurable interest operates differently than in other forms of insurances.
Under general insurance, because of principle of indemnity assessment of losses are made at the commencement of proposal as well as claim, which can lead to difference of opinion between insurer and claimant.
The Claim payable is proportionate in non life insurance & dependable on Sum assured in life insurance . The Claim payable doesn’t depend upon income of deceased person neither loss of income to the family nor as per determined by a surveyor.
To find Human life value accurately is difficult but it can be reasonably estimated.
The need of insurance doesn’t depend on the age of person , place where he stays as far as life insurance is needed.
Insurance can be for a purpose of collateral security and also to have comfortable retired life. People hesitate to buy life insurance because they are not aware of their risk as well as they prefer to enjoy the present.
Life insurance can support in the event of sudden death , to have comfortable retirement as well as to have one’s investment plans. Many People think that they do not need life insurance and there is no hurry to buy life insurance it may be due to less awareness.
Risk can be retained , there is insurable interest existing between partners.
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The premium is the price paid by the policyholder to secure insurance. The amount of premium varies according to the insurance plan. The premium under a life insurance policy may be paid monthly , quarterly, semi annually or annually.
The annual premium may be less than twelve times the monthly premium. The annual premium is not equal to the SA divided by the term of the policy and The annual premium does not increase as the term of the policy increases. (there is a fixed formula to derive A.P.) The annual premium for a long term policy is less than for a short term policy.
Premium depends upon Age of the person, family history and the Medical history of the person to be insured. The premium actually paid by the policyholder depends upon the level of risk as assessed by the insurer.
The premium collected in the early years is more than what is required. The pure premium will be Less than the office premium. The net premium will be Less than the risk premium.
The premium is loaded because of Likely expenses. The premium rates printed in the promotional literature are Office premiums.
The reason for charging level premiums is that the risk increases as age increases and it is convenient to both policyholder and insurer. The practice of charging level premiums, makes it convenient to the policyholder reduces the likelihood of lapses and adds to the reserves of the insurer.
Adjustments are made to the tabular premiums because of The health of the person insured, The frequency of premium payment, The occupation of the person insured. Premium rates are determined by the actuaries of insurers. The age next birthday is either higher than the age nearest birthday or equal to nearest birthday.
The premium calculated on mortality alone is called risk premium. Insurers collect premium in advance. In life insurance, profit is determined by The actuary who makes a valuation
In the business of life insurance, valuation means an actuarial exercise to determine adequacy of funds. The addition to the life fund in a year represents the moneys set aside by the insurer for the policyholders. The addition to the life fund arises because of the practice of charging level premiums.
A life insurer does a valuation because it is a statutory requirement, it is necessary to be able to declare dividends to shareholders and it tells the insurer how well it is managing the business. The surplus in the life fund represents the profits of the business, the excess premium collected by the insurer and the dues to the shareholders.
The surplus disclosed in a valuation means that the interests of the policyholders are safe, the funds of the insurer are adequate to meet its liabilities and the business is being managed well. The life fund belongs to the policyholders. In a valuation, the actuary calculates the fund that the insurer must have and the liability of the insurer
Bonus is declared out of the surplus declared by the actuary. The minimum percentage of the surplus to be set-aside for policyholders is ninety. Interim bonus valid Till the next declaration of bonus.
A bonus becomes possible because actual experience is better than expectations, the assumptions made in constructing the premium were conservative and there is a loading for bonus in the premium. Surplus in the life fund does not signify, that the premium rates must be revised downwards, the premium rates are appropriate, or the company is too miserly in expenditure. It only signifies that insurer is solvent.
When a certain level of bonus is declared, it does not means that this level will be maintained in future years but it is the bonus for that particular year.
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A plan of insurance is said to be different from another if, the conditions when the sum assured becomes payable are different. Every plan of insurance is a combination of two basic plans Plans of insurance cannot be compared by comparing the premium rates A whole life plan is basically a term insurance plan with an indefinite term
The sum assured under some policies increases every year whereas under some policies reduces every year
The S.A payable on death can be more than the S.A payable on maturity or death. The SA is not always payable immediately on death or survival it may be paid long after the death of the insured The SA can be payable in a lump sum as well as in instalments.
In a limited payment policy, the premium is not paid as long as the policy is in force. premium stops before the end of the term.
For the same age and SA, the premium under an ordinary Whole Life policy Will be less than in a limited payment Whole Life policy For the same age, SA and term, the premium under an Endowment policy Will be less than in a limited payment Endowment policy
Limited payment plan policies may be preferred by persons Who are first class LIVES AND IN THE BEST OF THEIR LIVES. Limited payment plan policies may be preferred by persons Who do not expect to be in active employment for long The educational annuity policy is NOT an annuity policy, ALSO IT is NOT meant for ONLY persons having young children
IN AN INCREASING TERM POLICY, SA INCREASES EVERY YEAR Only participating policies are entitled to the benefit of bonus
IN A CONVERTIBLE PLAN THE CONVERSION IS DONE WITHOUT UNDERWRITER In a convertible plan, the conversion is done on the request of the policyholder
If the option of conversion is not exercised, the policy will continue as before If the option of conversion is not exercised, the policy will NOT come to an end Convertible plan policies do not participate in bonuses
A joint life policy MAY cover a married couple under one policy A joint life policy may cover partners in business under one policy The premium of a joint life policy DOES NOT depend on the age of the older person
The bonus on a joint life policy is calculated on THE SINGLE SA AND NOT THE DOUBLE SA IN A JOINT LIFE POLICY The premium CHARGED will be less than the cost for insuring the two persons separately IN A CHILDREN’S POLICY IT’S THE MINOR CHILD WHO IS INSURED
IN A CHILDREN’S POLICY The insured child becomes the owner of the policy on vesting date IN A CHILDREN’S POLICY The vesting date is a policy anniversary IN A CHILDREN’S POLICY The deferred date is a policy anniversary IN A CHILDREN’S POLICY The policy vests at age 18 last birthday IN A CHILDREN’S POLICY Risk will commence on deferred date automatically
IN A CHILDREN’S POLICY On the deferred date, the insured child need not be a major IN A CHILDREN’S POLICY THE POLICY HOLDER CAN DO THE ASSIGMENT AT ANY POINT OF TIME IN A CHILDREN’S POLICY The ownership of the policy changes on the vesting date AS THE CHILD BECOMES A MAJOR AND HENCE THE OWNER OR THE POLICY HOLDER
On vesting UNDER A CHILDREN’S PLAN, the insured person CANNOT change the term of the policy On vesting UNDER A CHILDREN’S PLAN the insured person CANNOT increase the SA A variable insurance plan combines an insurance plan with an investment plan A variable insurance policy DOES NOT guarantee a return or yield A variable insurance plan is good when investment conditions are favourable AND THE stock market is booming
Industrial assurance is NOT meant only for industrial workers Industrial assurance is meant for people with low incomes A salary savings scheme policy is NOT an industrial assurance plan A salary savings scheme policy can be taken for a SA of Rs.10 lakh In industrial assurance the lapse rates tend to be high
salary savings scheme plans, the premium is deducted from the pay roll industrial assurance plans, the premium is PAID BY THE INDIVIDUAL. THE POLICY HOLDER , THE INSURER AND the AGENT ALL ARE benefited if a policy is under the salary savings schemE
The premium under a SSS policy is paid monthly The premium under a SSS policy is one twelfth the annual premium In a SSS policy, the policyholder has to ensure that premium is paid In a SSS policy, the responsibility to pay premium is with the employeE In life insurance, the word ‘rider’ refers to additional clauses
A rider DOES NOT modify THE existing condition in the policy A rider supplements or adds to an existing condition in the policy Riders provide supplementary benefits to the basic plan A premium waiver option is allowed as a rider The premium on riders cannot exceed specified limits of the basic premium
IN SOME OF THE riders, THE PREMIUM depends on the age of the insured person The premium on a rider varies according to the basic plan There is no death risk cover in an annuity IN AN ANNUITY POLICY the payments may be paid every month An annuity is NOT ONLY paid to the person who takes out the annuity policy, IT CAN BE PAID TO THE FAMILY MEMBERS ALSO
An annuity CAN BE paid AFTER the death of the person ALSO DEPENDING UPON THE PREFERENCE OF THE PERSON WHO HAS TAKEN the annuity policy An annuity policy guarantees a pension NO MEDICAL IS REQUIRED IN AN ANNUITY PLAN Under an annuity certain policy, the annuity DOES NOT stop after ANY certain period, IT JUST GETS CONVERTED INTO A LIFE ANNUITY
Under a deferred annuity policy, the annuity commences ONLY AFTER THE COMPLETION OF DEFERMENT PERIOD I,E AT THE VESTING An annuity can be taken on a JOINT life ALSO In a life annuity, the risk of death is NOT covered Annuities purchased during different years may all commence on the same date I,E ON VESTING
In a deferred annuity policy, the premium CAN be paid in a lump sum AS WELL AS IN INSTALLMENTS In group insurance, the proposal is made by the employer Group insurance covers a large numbers of persons in one policy
Group insurance is relatively cheaper than individual insurances Salary savings schemes policies SHOULD NOT BE CONFUSED AS group insurance policies In group insurance the premium changes every year
In group insurance the premium is NOT paid by the persons who are covered BUT BY THE EMPLOYER The members of a housing society can negotiate for a group insurance policy The members of a housing society can negotiate for a group insurance policy A bank can take out a group policy for its account holders A finance company can take out a group policy for those taking loans from
The amount of cover in a group policy is NOT DECIDED by individual members OF THAT GROUP The amount of cover for each member is fixed by the terms of the policy A master policy is issued in a group insurance policy NONE OF THE memberS in a group policy pays the premium directly to the insurer Copies of the master policy are NOT given to all members by the insurer BUT ONLY TO THE EMPLOYER
The group for THE insurance HAS TO BE PRE- EXISTING FOR SOME OTHER PURPOSE Entry into the scheme and exit out of it, is NOT at the option of the members Group business is socially very relevant A trade union can take out a group insurance policy for its members
A group insurance contract is NOT A CONTRACT between the insurer and the insured persons Premiums under some group policies are paid by governments group insurance differ from salary savings schemes IN FOLLOWING WAYS: IN TERMS OF THE PERSONS WHO PAY THE PREMIUM Responsibility to pay the premium THE PERSON Deciding to take the policy
Group insurance differs from salary savings schemes IN the FOLLOWING WAYS: NUMBER OF PERSONS INSURED UNDER A POLICY Responsibility of employer Issue of premium receipt A group of travelers on a package tour cannot take group insurance Members of a toddy tappers association can take group insurance In group policies, the chance of adverse selection is low
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Proposal form is both a request and an offer to enter an insurance contract. Selection and underwriting are same. (Underwriting can also be termed as selection.) Policy is issued after the assessment of risk by underwriter. In first class life or normal or standard life, the premium charged is equal to tabular premium and no extra bonus is given for the life being normal or standard and bonus is given only as per the normal terms and condition of the contract.
An underwriter acts in the interest of the policyholder as well as the insurance company. An underwriter charges extra premium for physical hazards. Body measurements may indicate physical hazards.
Physical hazard affects the probability of death. Financial underwriting is done to evaluate the possibility of moral hazard. The underwriting assessment includes the intention of proposer for taking insurance and the genuineness for the need of insurance.
Moral hazard may be suspected in cases where life to be insured is old or insurance is for a very large amount. It is not possible to quantify the extent of moral hazard. An underwriter uses financial and medical data . Medical referee is a doctor in the panel and not the underwriter.
The medical referee only sees the reports received by the insurer and does not examine the life to be insured.
In some cases, the underwriter consults the reinsurers before deciding. If the underwriter feels that the risk is more, he may impose a lien. A ‘lien’ may be imposed by the underwriter if the additional risk is expected to wear off in course of time . A ‘lien’ operates for a specific period. A ‘clause’ restricts the benefits under the policy.
A ‘clause’ excludes specific risks. Medical examination may not be required in all the policies. The system of non - medical underwriting is introduced because Medical examiners are not available in all areas The system of non - medical underwriting is introduced because most of the cases are found to be standard lives (acceptable at Ordinary Rate OR)
Under the system of non-medical underwriting, there is restriction on both the SA and age. Working and educated women are treated on par with men. The agent is expected to make his report commenting on the risk factors and the agent’s report is important for the underwriter.
By writing a truthful report, the agent is helping the insurer and the life to be insured. Smoking and drinking are hazards inviting additional premium. Underwriting is the process of verifying the level of risk of each new entrant.
In the case of a lien, the amount payable on death will vary from year to year
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The proposal is the basis of the insurance contract. The proposal can be signed in any language and not necessary to be signed in the language in which it is printed. The proposal should be written by the proposer himself / herself.
The declaration in the proposal must be signed by the proposer. The information in the proposal form is used for underwriting,if found incorrect can nullify the insurance contract If the proposal form is filled up in a language not known to the proposer, The person who filled up the form has to sign a declaration.
Personal statements are required in all the cases and need not be witnessed by the agents. A copy of the proposal has to be given to the proposer. A copy of medical report is never given to the proposer .
The medical report, The agents’ confidential report to the insurer, The medical referee’s advice are confidential and will not be given to the proposer. The proposal form and personal statement contain information relevant to determine the level of risk, Moral hazard and Insurable interest.
FPR is the evidence of the insurance contract begun. Policy document is the evidence of the insurance contract. The medical examiner depends upon the statements in the personal statement.
The FPR is issued when The first premium is adjusted in the office. The date of commencement of the policy Cannot be later than the date of issue of the FPR. Policies can be back dated to any date within the financial year .
The second quarterly (monthly,half-yearly) premium after commencement is called renewal premium. If a policyholder has doubts about the policy he has applied for, he can Ask for cancellation within fifteen days (free-look period) of issue of the policy.
In the case of SSS policies, the employer does not get the renewal premium receipts. In the event of a dispute, the policy document will be referred to. A policy is specific and relevant only to a particular contract.
The nomination may be made later by an endorsement. The change in terms will be made by endorsements. When a policy is converted, an endorsement is made on the policy.
Changes in the terms of the policy are made through endorsements. When a policy is converted, an endorsement is made on the policy. IRDA has not prescribed proposal forms for all insurers
Endorsements on a policy form part of the insurance contract , and it must be typed on or attached to policy. The family history appears in the personal statement. Clauses and Endorsements modify the conditions in the policy.
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If the age proof submitted along with proposal form later found to be false, The insurer can declare the policy null & void (ab initio) Insurer can revise the premium on the basis of the actual age from the commencement , Insurer can revise the premium & other terms of the contract. Age is material information which can affect the terms of underwriting.
Age is not only important for the underwriting but to consider the need for medical tests also. Days of grace depends on the frequency (mode) of premium payment. The number of days of grace can be 30/31or 15.
If premium is not paid within the days of grace , the policy lapses. In the case of SSS , if the premiums are deducted by the employer.
If the premium was due on 15th July & 16th August is a Sunday , the grace period will end on 17th August (Monday) If the monthly premium was due on 24th February in a leap year (Tuesday), the grace period will end on 10th March (Wednesday) If death occurs in grace period , the premium due will not be waived.
The premium is deemed to be paid when the cash, cheque or D.D is received. When a policy lapses the contract comes to an end. When a policy lapses some benefits are protected
If the insured dies during the days of grace , the claim will be admitted. The non-forfeiture clause is relevant only when the premium is not paid. Non-forfeiture provisions exist because It is not fair to the policyholder to deny everything to the policyholder The insurance Act requires it There is an accumulated reserve under the policy
Following are non-forfeiture options. Policy becomes paid up Payment of surrender value Automatic advance of premium
Surrender value factor increases with the duration elapsed; therefore in case of paid up policies surrender value increases. When policy lapses vested bonus will not be forfeited.
The reserve accumulates under a policy because of level premiums. Paid up option is effective from date of first unpaid premium. Any paid up policy does not participate in future bonuses; it will also not be entitled to any interim bonus.
A policy is made paid up only if the paid up value is of a minimum amount. If the paid up value is not up to a level the cash value will be paid. When premium is advanced from surrender value , the policy does not lapse. The premium advanced under the non-forfeitures option, remains a debt. In case of automatic advance of premium , policies are entitled to bonus.
In amount of SA payable on death; automatic premium advance is same as extended term assurance. In the duration for which the policy will remain in force; automatic advance of premium differ from extended term assurance. In automatic premium advance option ,the full installment premium is advanced. Non-forfeiture options seeks to protect the policyholder’s interest
When policy lapses it is neither beneficial to the policy holder nor to the Insurer. A lapse is effectively a case of adverse selection. Lapse may happen because of temporary financial difficulties. A revival is the opposite of a lapse. A revival is as important as a new proposal for insurance. Revivals are in the interest both, policyholder as well as insurer
In case of revival Requirement of medical examination is depends on the S.A & varies according to the duration of lapse. On revival ,the relevant S.A for revival will be the original S.A less paid up value. A revived policy effectively is, a new contract. Non-disclosure at the time of revival can nullify the policy.
On revival, the original terms of the policy may be changed. Duty to disclose all material facts, revives on revival.
Assignment changes the title to the policy Nomination doesn’t change the title to the policy. Assignee immediately become the policyholder. An assignee is the absolute owner of the policy . In conditional assignment, till the condition satisfy the assignee is absolute owner of the policy
An assignor cannot cancel the assignment. Nomination can be cancelled by insured. Absolute assignment holds good even after maturity. Nomination holds good only till maturity. In assignment the property is transferred to assignee. Nomination doesn’t transfer the property.
The assignment can be made on separate paper . Assignment becomes effective immediately once it is made . Nomination becomes effective after it is notified to the insurer.
Assignor receives rights as per the conditions mentioned in conditional assignment. A policy which is absolutely assigned , the rights can be again retransferred to the assignor when the assignee reassigns the policy.
A NOMINATION CAN BE MADE UNDER A CHILDREN’S DEFERRED POLICY AFTER VESTING DATE . THE NOMINATION IS INTENDED TO MAKE CLAIM SETTLEMENTS EASIER
THE NOMINATION CAN BE IN FAVOUR OF MORE THAN ONE PERSON IN THE CASE OF MANY NOMINEES, THE CLAIM WILL BE PAID TO THEM JOINTLY, ITS NOT DIVIDED AMONG THEM. NOMINATIONS CAN BE MADE BEFORE POLICY COMMENCES .
THE NOMINATIONS CAN BE MADE ONLY BY THE INSURED HIMSELF. ASSIGNEE IS FREE FROM THE ASSIGNOR’S OBLIGATIONS UNDER THE POLICY. NOMINATIONS CAN BE DONE TO A MINOR . A NOMINEE DOESN’T BECOME THE OWNER OF POLICY.
A PERSON TO WHOM ONE OWNS MONEYS CAN BE MADE A NOMINEE A NOMINATION CAN BE MADE IN FAVOUR OF AN INSTITUTION IF THE NOMINEE IS A MINOR, THE CLAIM CANNOT BE PAID TO THE GUARDIAN , ITS PAID TO APPOINTEE. IF THE NOMINEE DIES, THE CLAIM CANNOT BE PAID TO THE HEIRS OF THE NOMINEE ,AS THERE IS NO TRANSFER . ( THE INSURED NEED TO CHANGE THE NOMINATION
IF THE ASSIGNEE IS DEAD, THE CLAIM CAN BE PAID TO THE ASSIGNEE’S HEIRS . AN ASSIGNEE CAN ASSIGN THE POLICY FURTHER TO ANOTHER PERSON THE ASSIGNEE CAN TAKE A LOAN UNDER THE POLICY. THE NOMINEE CANNOT MAKE A FURTHER NOMINATION UNDER THE POLICY
THE CLAIM AMOUNT BELONGS TO THE HEIRS OF THE DECEASED AN ASSIGNEE BECOMES THE POLICYHOLDER A NOMINATION CAN BE MADE IN JOINT LIFE POLICIES THE POLICY HAS TO BE GIVEN TO THE INSURER AT THE TIME OF SURRENDER OR LOAN
LOANS CAN BE GIVEN TO A POLICY WHICH MAY BE IN FULL FORCE OR WHICH MAY BE LAPSED PROVIDED POLICY HAS A SURENDER VALUE. LOANS ARE AVAILABLE ON PAID UP POLICIES
A POLICY IS FORECLOSED WHEN THE PRINCIPLE LOAN AND ACCUMULATED INTERESTCOULD BECOME MORE THAN THE SURRENDER VALUE. A POLICY IS NOT FORECLOSED WHEN THE LOAN IS NOT REPAID A POLICY IS NOT FORECLOSED AT THE TIME OF CLAIM
OUTSTANDING AMOUNTS OF LOANS ARE DEDUCTED FROM THE CLAIM AMOUNT FORECLOSURE ACTION CANNOT BE TAKEN TILL A NOTICE IS SERVED ON THE POLICYHOLDER A POLICY WHICH IS FORECLOSED CAN BE REINSTATED FORECLOSURE CAN BE DONE ONLY AFTER INFORMING THE POLICYHOLDER
MWPA UNDER A MWP ACT POLICY, THE BENEFICIARIES MUST BE SPECIFIED AT THE COMMENCEMENT OF THE POLICY IF A POLICY IS UNDER THE MWP ACT, IT CANNOT BE SURRENDERED BY THE BENEFICIARIES A LOAN CANNOT BE TAKEN BY THE TRUSTEES IF A POLICY IS UNDER THE MWP ACT, THE POLICYHOLDER IS NOT THE LIFE INSURED NOT THE BENEFICIARIES THE TRUSTEE THE BENEFICIARIES UNDER THE MWP ACT CANNOT BE ANY MEMBER OF THE FAMILY. IT SHOULD BE EITHER WIFE OF CHILDREN. THE BENEFICIARIES PERMITTED UNDER THE MWP ACT DEPEND ALSO ON RELIGION MWP ACT POLICY CANNOT BE SURRENDERED
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A claim is a demand by the policy holder to fulfill the insurer’s obligations. A claim arises when the insured event happens. A request for a loan or surrender is not considered a claim.
A claim is paid after the completion of the claims settlement process not immediately on death THE INSURERS DO NOT MAKE ENQUIRIES IN THE CASE OF MATURITY CLAIMS .
THE INSURER MAKES ENQUIRIES ONLY IN THE CASE OF EARLY CLAIMS A DEATH CLAIM WITHIN TWO YEARS OF COMMENCEMENT OR REVIVAL IS TREATED AS AN EARLY CLAIM A DEATH CLAIM WITHIN TWO YEARS OF AN ALTERATION IS NOT TREATED AS AN EARLY CLAIM.
MATURITY CLAIM CHEQUES ARE PAID TO THE TRUSTEES IN A MWP ACT CASE. AND NOT TO BENEFICIARIES OR POLICY HOLDERS
MATURITY PROCEEDS ARE PAID TO THE HEIRS, IF THE POLICYHOLDER DIES EARLIER TO TAKING THE CLAIM. MATURITY PROCEEDS ARE NOT PAID TO THE NOMINEE, IF THE POLICYHOLDER DIES EARLIER TO TAKING THE CLAIM.
CLAIMS MAY BE PAID ON THE BASIS OF INDEMNITY, IF TITLE IS NOT ESTABLISHED
IF A PERSON IS MISSING FOR SEVEN YEARS, THE CLAIM IS CALLED A DEATH CLAIM. IN THE CASE OF A MISSING PERSON, PREMIUMS HAVE TO BE PAID TILL COURT JUDGMENT . IN THE CASE OF A MISSING PERSON, THE CLAIM ARISES FROM THE DATE THE COURT DECREES HIS DEATH AND NOT THE DATE FROM WHICH HE IS MISSING .
SURVIVAL BENEFITS CANNOT BE SETTLED ON INDEMNITY BASIS, IF ORIGINAL POLICY IS LOST. A DUPLICATE POLICY HAS TO BE MADE . IF ORIGINAL POLICY IS LOST, DUPLICATE POLICY IS NOT NECESSARY FOR MATURITY PAYMENTS.
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ULIPS PROVIDE FOR FLEXIBILITY IN ULIPS, NAVS ARE NOT DECIDED BY THE INSURERS THEMSELVES IN ULIPS THE DEATH BENEFIT MAY NOT BE A GUARANTEED FIGURE IN ULIPS THE ENTIRE PREMIUM PAID IS INVESTED IN THE CHOSEN FUND THE PREMIUMS, IN EXCESS OF RISK COVER, IS INVESTED AS DESIRED BY THE POLICYHOLDER
IN ULIPS THE INSURANCE COVER MUST BE A MINIMUM MULTIPLE OF THE PREMIUM ULIPS CAN BE SURRENDERED ONLY AFTER THREE YEARS LOANS ARE NOT GIVEN UNDER ULIPS ULIPS CANNOT BE ISSUED AS PARTICIPATING POLICIES
THE NAVS OF ALL THE FUNDS OF ALL THE INSURERS WILL VARY THE OFFER PRICE CAN BE HIGHER THAN THE BID PRICE THE OFFER BID SPREAD, WILL IN SOME CASES BE ZERO THE OFFER BID SPREAD IS THE DIFFERENCE BETWEEN THE TWO PRICES
A POLICYHOLDER CAN SWITCH BETWEEN FUNDS AT ANY TIME THE PREMIUM TO BE INVESTED IN THE FUND CAN BE INCREASED IN ANY YEAR THERE IS ALWAYS A CHARGE FOR SWITCHING BETWEEN FUNDS
DEATH CLAIMS ARE PAID DURING THE LOCK-IN PERIOD OF THREE YEARS THE NAV OF A FUND CAN BE LESS THAN PURCHASE PRICE THE SA MUST NOT BE LESS THAN 5 TIMES INSTALMENT PREMIUM THE SA MUST NOT BE LESS THAN 1.25 TIMES SINGLE PREMIUM
ONLY THE ALLOCATED PREMIUM IS INVESTED IN THE FUNDS THE POLICYHOLDER IS RESPONSIBLE FOR THE BENEFITS UNDER THE POLICY THE INSURER IS NOT RESPONSIBLE FOR THE BENEFITS UNDER THE POLICY THE NAVS ARE PUBLISHED REGULARLY
ONE CAN PAY ADDITIONAL PREMIUM IN ANY YEAR FOR INVESTMENT IF ONE INCREASES THE PREMIUM, THE SA WILL NOT BE INCREASED. THE LOCK IN PERIOD WILL APPLY, IF ADDITIONAL PREMIUM IS PAID ANY YEAR IF THE POLICY IS TERMINATED EARLIER THAN THE SPECIFIED TIME, A CHARGE HAS TO BE PAID
AN ADMINISTRATIVE CHARGE HAS TO BE PAID EVERY YEAR RIDERS CAN BE AVAILED OF THE DEATH BENEFIT MAY BE ‘INTEGRATED’ THE DEATH BENEFIT WILL BE THE BASIC SA ONLY PARTIAL WITHDRAWALS ARE PERMITTED PERIODICALLY THE SA AND THE VALUE OF UNITS WILL BE PAID TO THE LIFE ASSURED
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The laws of ‘The Insurance Act’ The Contract Act, The Income Tax Act, affect working of insurance agent. A person is an insurance agent because of the nature of his duties. An agent must look after the interests of the insurer and the proposer.
The functions of an agent differ according to the insurer he is working for. A person is eligible to get the insurance agency license only if he is above 18 yrs Of age, has undergone training and has passed IRDA Examination. A License for insurance agency is given only if insurer recommends the person.
Individuals, Companies & Co-operative societies can get the insurance agency license. A person with a criminal record will not be given the insurance agency license. Broker is an intermediary, A specified person work for the corporate agent, A cooperate insurance executive can work for only one life insurance company. A Life insurance Agent is not an employee of an insurer, He can work accordingly to his schedule, can also represent a Mutual Fund, Small Savings Schemes, can also be a share broker.
Commissions may continue to be paid to the heirs, after the death of the agent. A Life insurance agent should try to be aware of all the financial instruments, Know the benefits of all life insurance plans, understand income tax laws and Should also advise the best financial plans to the prospect. It’s good for life insurance agents to be expert in other financial institutions. A life insurance agent should always carry his license and literature with him and should not appear shabby. Life insurance always does not meet all the needs of all people, is not always better than other investments and tax advantage is not only the reason for buying Life insurance.
A person cannot get commission on the premium bought by him under policies if he does not have license. A life insurance job is not over as long as the policyholder or any member of his family is alive. When a policy lapses it means that the agent has failed in his duties and has not explained the benefits of insurance to the policyholder.
In Insurance it’s good to have knowledge of all the benefits about the plan, similar plans from the competitors and relevant tax laws. Some people have no need for life insurance and some buy it only for tax benefits. In market there are plenty of savings and investment instruments available. An agent may not necessarily know everything that the proposer wants to know.
Ethical behavior leads to improved business and earnings and it automatically comes when policyholder’s interest is kept in mind and is prescribed in IRDA’s code of conduct. There is no need for an insurance agent to run down other insurance companies. An agent has to reveal all the material facts to the customer and should not worry about extra charge. (Utmost Good Faith). Unethical behavior can affect the settlement of the early claim.
When the claim is repudiated, the agent trustworthiness is affected. The agent must give complete and correct information about the life assured. It is wrong if an agent suggests the customer to terminate the existing policy and go for the new one keeping his first years commission in mind.
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EVERY INSURER IN INDIA HAS TO COMPLY WITH THE INSURANCE ACT THE INSURANCE ACT DEALS WITH REGISTRATION OF INSURERS, INVESTMENTS OF INSURANCE FUNDS, LICENSING OF AGENTS THE INSURANCE ASSOCIATION IS CONSTITUTED BY THE INSURANCE ACT
IT IS AN OFFENCE IF AN AGENT GIVES A REBATE IT IS AN OFFENCE IF AN INSURER GIVES A REBATE A POLICYHOLDER HAVING A DISPUTE WITH AN INSURER, HAS A RIGHT TO APPROACH EITHER IRDA, OR OMBUDSMAN OR CONSUMERS REDRESSAL FORUM THE OMBUDSMAN IS NOT THE FINAL AUTHORITY INVOLVING INSURERS
THE INSURER HAS NO LIBERTY TO REJECT THE DECISIONS OF THE OMBUDSMAN THE OMBUDSMAN’S AUTHORITY IS NOT LIMITED TO CLAIMS MATTERS ONLY THE OMBUDSMAN IS NOT A JUDICIAL AUTHORITY THE OMBUDSMAN WILL NOT HEAR MATTERS ALREADY BEFORE OTHER COURTS
THE OMBUDSMAN’S RECOMMENDATIONS ARE NOT BINDING ON THE COMPLAINANT INSURERS HAVE TO COMPLY, IF THE COMPLAINANT ACCEPTS WHAT THE OMBUDSMAN SAYS MATTERS REFERRED TO THE OMBUDSMAN HAVE TO BE DECIDED IN ONE MONTH THE OMBUDSMAN CANNOT MODIFY THE TERMS OF ACCEPTANCE OF THE PROPOSAL
DISPUTE OVER THE AMOUNT OFFERED BY THE INSURER TO SETTLE A CLAIM, WHETHER A PREMIUM HAD BEEN PAID IN TIME OR NOT , WHETHER THE POLICY SHOULD BE TREATED LAPSED OR NOT CAN BE REFERRED TO THE OMBUDSMAN
COMPLAINT THAT THE ENQUIRIES BEING MADE ARE UNJUSTIFIED AND DELAYING THE CLAIM, SUCH COMPLAINS CAN BE REFERRED TO THE OMBUDSMAN COMPLAINTS THAT THE INSURER IS DELAYING THE CLAIM ON THE GROUNDS OF INVESTIGATION WOULD BE HEARD BY THE OMBUDSMAN COMPLAINTS THAT THE PREMIUM WAS PAID ON TIME BUT ACCOUNTED BY THE INSURER LATE WOULD BE HEARD BY THE OMBUDSMAN
COMPLAINTS THAT THE POLICY SHOULD NOT BE TREATED AS LAPSED WOULD BE HEARD BY THE OMBUDSMAN LIFE INSURANCE POLICIES PROVIDE SAVINGS IN TAXES THE INCOME TAX RELIEF WILL NOT BE THE SAME THROUGHOUT THE POLICY TERM THE SURRENDER VALUE IS NOT TREATED AS INCOME THE CLAIM AMOUNT IS NOT TREATED AS INCOME
TAX BENEFITS ARE NOT PART OF POLICY CONDITIONS. THE TAX BENEFITS MAY BE CHANGED AT ANY TIME THROUGH LEGISLATION A CONSUMERS FORUM IS NOT A SET UP EXCLUSIVELY FOR INSURANCE MATTERS THERE CAN BE AN APPEAL MADE AGAINST THE DECISION OF THE CONSUMER FORUM THE CONSUMER FORUM CAN SUMMON WITNESSES THE OMBUDSMAN CANNOT SUMMON WITNESSES
THE INCOME TAX PRIVILEGES FOR INSURANCE ARE NOT GUARANTEED IT IS NOT NECESSARY FOR EVERY AGENT TO DO SOME BUSINESS IN THE RURAL AREAS IT IS NOT NECESSARY THAT T HE BUSINESS IN THE RURAL AREAS HAS TO BE DONE ONLY BY THE RURAL AGENTS
A RURAL AREA IS DEFINED IN THE IRDA REGULATIONS NO AGENTS ARE APPOINTED SEPARATELY TO WORK IN THE RURAL SECTOR ANY AGENT CAN DO BUSINESS FROM THE RURAL AREAS THE IRDA HAS SPEICIFIED HOW MUCH MINIMUM BUSINESS THE INSURERS CAN DO IN THE RURAL AREAS
THE INSURANCE ACT HAS STIPULATED THAT INSURERS MUST DO MINIMUM BUSINESS IN THE RURAL AREAS THE REQUIREMENT OF BUSINESS FROM THE RURAL AREAS INCREASES EVERY YEAR THE MINIMUM REQUIREMENT IS IN TERMS OF NUMBER OF POLICIES
THE SOCIAL SECTOR IS NOT THE SAME AS THE RURAL SECTOR THE SOCIAL SECTOR INCLUDES BACKWARD CLASSES, UNORGANIZED SECTOR THE SOCIAL SECTOR CAN BE IN THE RURAL AREAS AS WELL AS URBAN AREAS MICRO INSURANCE IS NOT MEANT FOR THE RURAL SECTOR ONLY
NO SPECIALLY APPOINTED AGENTS ARE REQIURED TO SELL MICRO INSURANCE LIFE INSURANCE AGENTS CAN SELL NON- LIFE MICRO INSURANCE PRODUCTS LIFE MICRO INSURANCE POLICY CANNOT EXCEED RS. 50000 SA HEALTH INSURANCE COVERS CAN BE PROVIDED UNDER MICRO INSURANCE
COMMISSION FOR SELLING MICRO INSURANCE IS LESS THAN ORDINARY INSURANCE THE TERM FOR LIFE MICRO INSURANCE POLICIES IS LIMITED A PERSON AGED 45 CAN BE GIVEN A LIFE MICRO INSURANCE POLICY
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