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Life Insurance- A Case Study


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Life Insurance- A Case Study

  2. 2. 2 CONTENTS  What Is LIFE INSURANCE ?  History of Life Insurance  Reasons to have a Life Insurance  Types of Life Insurance  Policy Claim DEPARTMENT OF COMMERCE, MAR IVANIOS COLLEGE
  3. 3. 3 WHAT IS LIFE INSURANCE?  Life Insurance can be termed as an agreement between the policy owner and the insurer, where the insurer for a consideration of a sum of money agrees to reimburse upon the occurrence of the insured individuals' death or any other event, such as terminal illness, critical illness or maturity of the policy. DEPARTMENT OF COMMERCE, MAR IVANIOS COLLEGE
  4. 4. HISTORY OF LIFE INSURANCE 4  Life insurance in its modern form came to India from England in the year 1818.  Oriental Life Insurance Company, started by Europeans in Calcutta was the first life Insurance company on Indian soil.  Bombay Mutual Assurance Society, the first Indian life assurance society, was formed in 1870.  It was during the early 20th century that insurance witnessed a big boom in India with several more companies being set up. DEPARTMENT OF COMMERCE, MAR IVANIOS COLLEGE
  5. 5. 5 CONT.  By the mid-1950s, there were around 170 insurance companies and 80 provident fund societies in the country's life insurance scene. However, in the absence of regulatory systems, scams and irregularities were prevalent in most of these companies.  It was much later on the 19th Jan 1956, the Indian Parliament passed the LIC Act.  With a decision to nationalize the life assurance business in India, the Government set up The Life Insurance Corporation of India on 1st Sept. 1956 to take over around 245 life insurance companies & provident societies which were then in the scene. DEPARTMENT OF COMMERCE, MAR IVANIOS COLLEGE
  6. 6. 6 REASONS TO HAVE A LIFE INSURANCE  Protection (for present & future).  Liquidity  Tax Benefits  Money When in Need (to meet expenses on outstanding debts) DEPARTMENT OF COMMERCE, MAR IVANIOS
  7. 7. TYPES OF LIFE INSURANCE 7  Term Life Insurance  Endowment Insurance  Permanent (Whole) Life Insurance  Money Back Policy  Unit Liked Plans DEPARTMENT OF COMMERCE, MAR IVANIOS COLLEGE
  8. 8. 8 A CASE STUDY "yogakshemam vahamyaham"
  9. 9. 9 INTRODUCTION  Created on 1st Sept. 1956 by LIC Act (19th Jan. 1956).  Merger of 245 companies( 154 life insurance companies, 16 foreign companies & 75 provident companies).  Assets estimated- US $240 billion.  Headquarter- Mumbai  8 zonal offices, 118 divisional offices, 3500 servicing offices, 2048 Branch offices, 54 Customer Offices, 25 Metro Area Service Hubs and a number of Satellite Offices located in different parts of India. DEPARTMENT OF COMMERCE, MAR IVANIOS COLLEGE
  10. 10. 10 MISSION & VISION Mission “Explore and enhance the quality of life of people through financial security by providing products and services of aspired attributes with competitive returns, and by rendering resources for economic development.” Vision “A trans-nationally competitive financial conglomerate of significance to societies and Pride of India.” DEPARTMENT OF COMMERCE, MAR IVANIOS COLLEGE
  11. 11. OBJECTIVES 11  Spread Life Insurance widely and in particular to the rural areas and to the socially and economically backward classes with a view to reaching all insurable persons in the country and providing them adequate financial cover against death at a reasonable cost.  Maximize mobilization of people's savings by making insurance-linked savings adequately attractive.  Conduct business with utmost economy and with the full realization that the money belongs to the policyholders.  Act as trustees of the insured public in their individual and collective capacities. DEPARTMENT OF COMMERCE, MAR IVANIOS COLLEGE
  12. 12. OBJECTIVES (CONT.) 12  Meet the various life insurance needs of the community that would arise in the changing social and economic environment.  Involve all people working in the Corporation to the best of their capability in furthering the interests of the insured public by providing efficient service with courtesy.  Promote amongst all agents and employees of the Corporation a sense of participation, pride and job satisfaction through discharge of their duties with dedication towards achievement of Corporate Objective. DEPARTMENT OF COMMERCE, MAR IVANIOS COLLEGE
  13. 13. Types of Life Insurance 13 1.TERM LIFE INSURANCE  Sum assured is payable only in the event of death.  Term Life Insurance can be for period as long as 40 years and as short as 1 year.  No refund of premium.  Low premium as only death risk is covered.  It is pure death protection. DEPARTMENT OF COMMERCE, MAR IVANIOS COLLEGE
  14. 14. TYPES OF TERM LIFE INSURANCE 14 1. Annual / Level Term Insurance   The face or death benefit amount remains constant throughout the policy period. Premiums may increase when contract is renewed, but the face amount remains the same. 2. Renewable Term Insurance  The insurance company gives an option to renew the coverage after the term of the policy is over.  Premiums are considerably higher at each renewal. DEPARTMENT OF COMMERCE, MAR IVANIOS
  15. 15. 15 3. Increasing Term Insurance  Cover under this plan goes on increasing periodically over the term in a predetermined rate.  Premium amount remains the same.  It takes into account the inflation or any other changing circumstances. 4. Decreasing Term Insurance  Premiums remains constant throughout the term period.   Coverage amount decreases. Normally taken for mortgaged protection, under which outstanding loan amount decreases as time passes. DEPARTMENT OF COMMERCE, MAR IVANIOS COLLEGE
  16. 16. 16 5. Convertible Term Insurance  A policy that can be exchanged for a cash-value policy within a specific number of years (except the last 2 years).  Usually converted into endowment insurance or a whole life policy. DEPARTMENT OF COMMERCE, MAR IVANIOS COLLEGE
  17. 17. 17 PRODUCTS OFFERED  Anmol Jeevan  Amulya Jeevan  Two Year Temporary Assurance Policy  The Convertible Term Assurance Policy DEPARTMENT OF COMMERCE, MAR IVANIOS COLLEGE
  18. 18. Types of Life Insurance 2.ENDOWMENT INSURANCE 18  In an endowment policy, periodic premiums are received by the insured person (in 10, 15 or 20 years) and a lump sum is received either on the death of the insured or once the policy period expires.  Endowment insurance plan is a type of investment oriented plan.  Gives the policy holder triple benefits of savings, wealth creation, and insurance coverage.  Types: Joint Life Endowment Plan  Marriage Endowment Plan  Educational Endowment Plan DEPARTMENT OF COMMERCE, MAR IVANIOS COLLEGE
  19. 19. 19 PRODUCTS OFFERED  The Endowment Assurance Policy  The Endowment Assurance Policy-Limited Payment  Jeevan Mitra (Double Cover Endowment Plan)  Jeevan Mitra (Triple Cover Endowment Plan)  Jeevan Anand  New Janaraksha Plan  Jeevan Amrit DEPARTMENT OF COMMERCE, MAR IVANIOS COLLEGE
  20. 20. Types of Life Insurance 20 3.PERMANENT (WHOLE) LIFE INSURANCE  Remains active throughout the life of the policy holder and premiums have to be paid every year.  When the policy holder dies, the face value of the policy, known as the death benefit, is paid to the person or persons named in the life insurance policy (the beneficiary or beneficiaries).  The insured receives a fixed sum at periodic intervals during survival and full sum assured is paid on death of the policy holder without any deduction (anticipated whole life insurance). DEPARTMENT OF COMMERCE, MAR IVANIOS COLLEGE
  21. 21. 21 PRODUCTS OFFERED  The Whole Life Policy  The Whole Life Policy- Limited Payment  The Whole Life Policy-Single Premium  Jeevan Anand  Jeevan Tarang DEPARTMENT OF COMMERCE, MAR IVANIOS COLLEGE
  22. 22. 22 4.MONEY BACK POLICY  Ensures periodic payments to the policy holder.  In case of survival, the policy holder gets the full sum assured.  In case of death, the beneficiary gets the full sum assured.  Now-a-days new ULIP versions of money back policies are offered by insurance companies. DEPARTMENT OF COMMERCE, MAR IVANIOS
  23. 23. 23 PRODUCTS OFFERED  Money Back with Profit  Jeevan Surabhi (15,20 or 25 years)  Jeevan Bharati  Jeevan Samriddhi  Bima Bachat DEPARTMENT OF COMMERCE, MAR IVANIOS COLLEGE
  24. 24. 24 5.UNIT LINKED PLANS  A combination of insurance as well as investment.  The premium amount is invested in the stock market and returns better income on the maturity period.  Better for long-term investment option.  ULIPs generally provide higher returns as large portion of the funds are invested in equities.  There is also option of switching over from one fund to another if it does not seem to be profitable.  It has emerged as one of the fastest growing insurance products.  It comes under the purview MAR IVANIOS DEPARTMENT OF COMMERCE, of IRDA.
  26. 26. POLICY CLAIM 26 Life insurance claim can be of 3 types : 1. On the maturity of the policy – Maturity Claim 2. On death of the policy holder – Death Claim or Rider Claim 3. Survival up to specified period during the term – Survival benefits DEPARTMENT OF COMMERCE, MAR IVANIOS COLLEGE
  27. 27. 27 1.MATURITY CLAIM  Send maturity claim / discharge form and original policy bond well before maturity date to enable timely settlement.  Companies will then offer / issue post dated cheques and / or make payment through ECS credit on the maturity date.  In case of delay in settlement refer to grievance redressal forum. DEPARTMENT OF COMMERCE, MAR IVANIOS COLLEGE
  28. 28. 28 2.DEATH CLAIM 2 Types:  Premature death claim- within 3 years of commencement of policy  Other claim- after 3 years PROCEDURE  An intimation of death by the nominee or a near relative.  Proof of age if not already admitted.  Proof of death.  Doctor’s certificate who attended the deceased during his last illness. DEPARTMENT OF COMMERCE, MAR IVANIOS COLLEGE
  29. 29. 29 CONT.  Identity certificate from a reputable person who saw the body of the deceased life assured.  Certificate of cremation or burial from a reputable person who attended the funeral.  An employer certificate if any, of the deceased.  Hospital treatment details where the assured was hospitalised.  Certified copies of post-mortem report.  FIR if death is due to an accident or unnatural cause. DEPARTMENT OF COMMERCE, MAR IVANIOS COLLEGE
  30. 30. 30 3.SURVIVAL BENEFITS  Survival benefit is the amount received at the end of insurance policy tenure.  It is not payable in all type of policies but in endowment or money back plans after a lapse of a fixed period say 4 or 5 years.  The survival benefit can take different forms under different of policies. DEPARTMENT OF COMMERCE, MAR IVANIOS
  31. 31. 31 CONT.  In case of term insurance plans, the insured receives only life cover. No amount is payable on completion of the tenure.  In case of endowment policies, the policy holder receives an added bonus, profit or guaranteed amount as survival benefit, as specified in policy documents.  In case of money back policies and unit-linked insurance plans (ULIPs), the insurance company provides returns at regular intervals. On maturity of the policy, the policy holder receives a pre-determined amount, along with any guaranteed additions as survival benefit. DEPARTMENT OF COMMERCE, MAR IVANIOS COLLEGE
  32. 32. PRESENT STANDINGS OF LIFE INSURANCE COMPANIES IN INDIA (FY 12-13) Companies Appro. Market Share Policies Sold 32 LIC 71% 20404281 ICICI Prudential Life Insurance Co Ltd 4.9% 785938 4.6% 698109 3.6% 640483 2.6% 589855 SBI Life Insurance Co Ltd HDFC- Standard Life Co Ltd Bajaj Allianz Life Insurance Co Ltd Source: IRDA DEPARTMENT OF COMMERCE, MAR IVANIOS COLLEGE