Life insurance


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Life insurance

  1. 1. Life insuranceLife insurance is a contract between an insurance policy holder and an insurer,where the insurer promises to pay a designated beneficiary a sum of money (the"benefits") upon the death of the insured person. Depending on the contract, otherevents such as terminal illness or critical illness may also trigger payment. The policyholder typically pays a premium, either regularly or as a lump sum. Other expenses(such as funeral expenses) are also sometimes included in the benefits.The advantage for the policy owner is "peace of mind", in knowing that the death ofthe insured person will not result in financial hardship for loved ones and lenders.It is possible for life insurance policy payouts to be made in order to help supplementretirement benefits; however, it should be carefully considered throughout the designand funding of the policy itself.Life policies are legal contracts and the terms of the contract describe the limitationsof the insured events. Specific exclusions are often written into the contract to limitthe liability of the insurer; common examples are claims relating to suicide, fraud,war, riot and civil commotion.How Insurance WorksWhile it may seem complex, insurance is really quite simple: The payments (orpremiums) of the many pay for the losses of a few. Your premiums go into a largepool, if you will, at your insurance company. The claims of the few are paid from thatpool. Because there are more people contributing to the pool than there are makingclaims, there is always enough to pay the claims – even large single claims likewhen someone is permanently disabled as a result of a car collision, or many smallerclaims like those resulting from a natural disaster. (The 1998 ice storm that hit partsof Ontario, Quebec and New Brunswick resulted in an estimated 700,000 claims fordamage totalling $1.4 billion.)
  2. 2. Classification of Life InsuranceInsurance business can be dividend into two broad categories, life and non-life life insuranceis concerned with making provision for a specific event happing to the individual , such asdeath whereas non life (or general insurance ) is more commonly concerned with theprovision for a specific event which affect a properly , such as fire ,flood ,theft etc. In thiscourse we will only cover life insurance . So , let us now move on to definition on lifeinsurance.Definition of Life InsuranceAccording to the U.S Life Office Management Association Inc. (LOMA), life insurance isdefine as follow : Life insurance provide a sum of money if the person who is insured dieswhilst the policy is in effect” .
  3. 3. NEED FOR LIFE INSURANCERisk and uncertain are part of life great adventure – accident , illness, theft , nature disaster-they all built into the working of the Universe, waiting to happen . Insurance then is mansanswer to the vagaries of life . If you cannot beat man-made and nature calamities , well atleast be prepare for them and their aftermath .Insurance is a contract between two partiesthe insurer and the insured wherein the insurer agrees to pay the insured for financial lossesarising out of any unforeseen event in return for a regular payment of “premium” . Theseunforeseen event are defined as “Risk” and that is why insurance is called a risk cover .Hence , insurance is essentially the means to finically compensate for losses that life throwsat people – corporate and otherwise . The principle of insurance works on the concept of alarge number of people exposed to a similar risk making a contribution to a common fund .Those who suffer losses due to the occurrence of these event are compensated for themthis fund.
  4. 4. TYPE OF LIFE INSURANCE  Wealth creation plans insurance  Education insurance plan  Premium guarantee plans  Protection plansWealth creation plans As an individual who doesn’t desire the best from life? You would undoubtedly want to plan your finances such that you can achieve all your goals - a car, a beautiful home and of course, the comfort and contentment of your family. All of these goals are long term in nature. Wealth insurance plans have been designed to ensure that you can save for these long term goals along with the benefit of life cover and provide protection to your family. Education insurance plans As a loving and caring parent, you have big dreams for your child and you want to make those dreams come true. To bring your dreams to life, you need an investment that is designed to provide adequate money for key educational milestones in your childs life, no matter what happens. With this objective in mind ICICI Prudential now presents ICICI Pru Smart Kid Regular Premium Plan. This is a participating endowment regular premium life insurance plan, with two options to receive guaranteed educational benefits, no matter what the uncertainties in your life. ICICI Pru Smart Kid – Regular Premium plan comes with a unique Payer Waiver Benefit (PWB). This benefit ensures that in case of death of the parent, the company pays all future premiums on behalf of the parent. This means that the child gets money at important stages of his/her student life and education never suffers due to lack of funds.
  5. 5. Protection plan The sole objective of these plans as their name indicates ,is to serve the protection needs of the customer and by doing so , safeguard one family from the financial implication of unfortunate circumstance than one cannot forces.Premium Guarantee planThe latest addition to the life insurance product portfolio of ICICI Prudential is thePremium Guarantee plan – Invest Shield Life New. Premium Guarantee plans arethe ideal insurance-cum-investment option for customers who want to enjoy thepotentially higher returns(over the long term) of a market linked instrument, butwithout taking any market risk.Under the Premium Guarantee Plans platform, ICICI Prudential brings to you thefollowing products: Plan Name Plan Type Invest Shield Life New Unit Linked Invest Shield Cashbook Unit Linked
  6. 6. THE INSURANCE REGULATORY AND DEVELOPMENTInsurance Regulatory and Development Authority (IRDA) is an autonomous apexstatutory body which regulates and develops the insurance industry in India. It wasconstituted by a Parliament of India act called Insurance Regulatory andDevelopment Authority Act, 1999 and duly passed by the Government of India.The agency operates its headquarters at Hyderabad, Andhra Pradesh where itshifted from Delhi in 2001.The IRDA Act, 1999 was passed as per the major recommendation of the AmphoraCommittee report (1994) which recommended establishment of an independentregulatory authority for insurance sector in India. Later, It was incorporated as astatutory body in April, 2000. The IRDA Act, 1999 also allows private players to enterthe insurance sector in India besides a maximum foreign equity of 26 per cent in aprivate insurance company having operations in India. It serves as an Authority toprotect the interests of holders of insurance policies, to regulate, promote and ensureorderly growth of the insurance industry and for matters connected therewith.WHY PRIVATE INSURANCE  All the private companies have a lock in period of 3 yrs hence no disinvestments possible.  Minimum net worth of 500 Cr required for acquired license with a minimum paid up capital of 100 Cr their insurance venture.  Commitment to increase the paid up capital manifold in next five years.  Re insurance for all its policies worth more than 5lakhs. Reinsurance partners, best and the worth –general cologne and Swiss reinsurance.  Audit of account by at least 2independent approved auditor each years.