This document provides information about a life insurance assignment submitted by a student. It includes an executive summary of the report, definitions of life insurance and the main types (term and whole life), features of life insurance policies, the role of insurance in Bangladesh's economic growth, prospects for growth in human life insurance, and challenges and opportunities for insurance in Bangladesh's business sector. The conclusion reiterates that insurance contributes significantly to social and economic development and outlines steps to further develop the insurance sector in Bangladesh.

1. Department: School of Business
Course no: BBA 224
Course Title: Insurance and Risk Management
Session: Spring 2018
Assignment on
Life Insurance
Supervised by: Submitted by:
Md. Mahfujur Rahman
Assistant professor
Nayma Akter Meem
ID: 18.01.02.045
Section: B
Email: 180102045@aust.edu
Submission date: 02 sept 2020

2. Letter of Transmittal
5 sept 2020
Mr. Md. Mahfujur Rahman
Assistant professor
School of business
Ahsanullah University of Science & Technology.
Subject: Submission of assignment on “ LIFE INSURANCE ”
Dear Sir,
It is indeed a great pleasure for me to be able to hand over the report on “LIFE INSURANCE”.
Working on this report has been an interesting & informative experience for me. I learned
many unidentified facts, which will be supportive in my life & professional career in future. I
have enjoyed working on this report. The information of this report is mainly based on
Internet information. Please feel free for any query or clarification that you would like me to
explain. Hope you will appreciate my hard work and excuse the minor errors. Thank you for
your valuable guidance and advice for preparing this report.
Sincerely Yours,
Nayma Meem
180102045

3. Table of Contents
EXECUTIVE SUMMARY .................................................................................................................. 4
Life Insurance............................................................................................................................... 5
Types of Life Insurance.................................................................................................................. 5
I. Term.................................................................................................................................5
II. Whole life/permanent .......................................................................................................5
Features of Life Insurance............................................................................................................. 7
Role of Insurance on Economic Growth in Bangladesh....................................................................8
Prospects of humanlife in Insurance ............................................................................................. 9
Challenges and Opportunities of Insurance in Business Sectorin Bangladesh................................. 11
Conclusion ................................................................................................................................. 12

4. EXECUTIVE SUMMARY
When asked what insurance does, most people are likely to say that it provides protection
against financial aspects of a premature death, injury, loss of property, loss of earning power,
legal liability or other unexpected expenses. All that is true. However, the industry’s
contribution to the economy goes much further. One could point to the millions of people
employed in insurance and related activities, to the billions of income taxes and premium
taxes paid and to extensive charitable works. But, significant as they are, these are
byproducts of the contributions of an industry that is at the heart of the growth and progress
of every modern economy.
Those contributions can be grouped under three broad categories:
 safety/ security
 economic/financial stability
 Development.

5. Life Insurance
Life insuranceis a contract between an insurer and a policyholder in which the insurer
guarantees payment of a death benefit to named beneficiaries when the insured dies.
The insurance company promises a death benefit in exchange for premiums paid by the
policyholder
Types of Life Insurance
There are two major types of life insurance—term and whole life. Whole life is sometimes
called permanent life insurance, and it encompasses several subcategories, including
traditional whole life, universal life, variable life and variable universal life. Life insurance
products for groups are different from life insurance sold to individuals. The information
below focuses on life insurance sold to individuals.
I. Term
Term Insurance is the simplest form of life insurance. It pays only if death occurs during the
term of the policy, which is usually from one to 30 years. Most term policies have no other
benefit provisions.
There are two basic types of termlifeinsurance policies:
i. level term
ii. Decreasing term.
Level term means that the death benefit stays the same throughout the duration of the
policy.
Decreasing term means that the death benefit drops, usually in one-year increments, over
the course of the policy’s term.
In 2018, virtually all (97 percent) of the term life insurance bought was level term.
II. Wholelife/permanent
Whole life or permanent insurance pays a death benefit whenever you die—even if you live
to 100!
There are three major types of whole life or permanent life insurance—
i. traditional whole life
ii. universal life
iii. Variable universal life.

6. In the case of traditional whole life, both the death benefit and the premium are designed to
stay the same (level) throughout the life of the policy. The cost per $1,000 of benefit
increases as the insured person ages, and it obviously gets very high when the insured lives to
80 and beyond. The insurance company could charge a premium that increases each year,
but that would make it very hard for most people to afford life insurance at advanced ages.
So the company keeps the premium level by charging a premium that, in the early years, is
higher than what’s needed to pay claims, investing that money, and then using it to
supplement the level premium to help pay the cost of life insurance for older people.
In the 1970s and 1980s, life insurance companies introduced two variations on the traditional
whole life product—universal life insurance and variable universal life insurance.

7. Features of Life Insurance
1) Waiverof premium. Thisfeature paysthe premiumof a policyif youbecome seriouslyill or
disabled.
2) Accelerateddeathbenefit. Thisfeature allowsyoutoreceive cashadvancesagainstthe
deathbenefitof yourpolicyif you're diagnosedwithaterminal illness.Manypeople with
thisbenefituse the moneytohelppayfortreatmentandotherexpenseswhentheyhave
onlya short time tolive.
3) Guaranteedpurchase option. With thisfeature,youcanpurchase coverage at designated
future datesor life eventswithoutprovingyou're ingoodhealth.
4) Long-termcare riders. Some life productsinclude thisoption,whichallowsyoutouse the
benefitsof yourpolicytopayfor long-termcare inexchange forareducedlife benefit.
5) Spouse or childterm riders. Life policieswiththisfeature allowyoutopurchase termlife
insurance foryourspouse or dependentchild,uptoage 26. This optioncanbe a more
affordable waytopurchase coverage if youcan't affordseparate policies.
6) Cash value plans. This type of policypaysout uponyourdeathand alsoaccumulatesvalue
duringyourlifetime. Youcan use the cash value asa tax-shelteredinvestment,asafund
fromwhichyou can borrowand use to pay the policypremiumslater.
7) Mortgage protection. This feature,typicallyfoundontermlife policies,willpayyour
mortgage if you die.
8) Cash withdrawals and loans. Many universal andwhole life policiesallowyoutowithdraw
or borrowmoney,usingthe cashvalue of the policyascollateral.Interestratestendtobe
relativelylow. Youcanalso use the cash value of yourlife policytopayyour premiumsif
youneedor wantto stop payingpremiumsforaperiodof time. You mustpay back the loan
or your beneficiarieswill receiveareduceddeathbenefit.
9) Survivor support services. Some life policiesofferservicesthatprovide objective financial
and legal assistance tobeneficiaries.
10) Employee assistance programs. Thisfeature makesresourcesavailabletoyouforproblems
that can affectyourpersonal and professional life. Resourcesare usuallyfree andhelp
addressissuessuchassubstance abuse,stress,marital problems,legalconcernsandmajor
life events.

8. Role of Insurance on Economic Growth in
Bangladesh
Rightafterindependence in1971, insurance sectorwasinitiatedinBangladeshthroughthe
establishmentof 2nationalizedinsurance companieswhere one waslifeinsurance,andanotherwas
general insurance companyincludinganotherforeigninsurance company(BB,2019).At present,62
companies are operatinginBangladeshunderInsurance Act2010 and out of them18 are life
insurance companiesincluding1foreigncompanyand1 are state-ownedcompanyand44 general
insurance companiesincluding1state-ownedcompany(BB,2019). The insurance companiesare
controlledbyInsurance DevelopmentandRegulatoryAuthority(IDRA) whichbecame operational
since 2011. The marketshare of thissectoris comprisedof 73.5% forlife insurance companiesand
26.5% fornon-life insurance companieswhereasMicro-insurance andIslamicInsurance are also
included(Islam,2019).
In 2017, non-life insurersearnedagrosspremiumincome of Taka2,908.1 cores and life insurers
Taka 8,203.1 cores(Islam,2019) that showsthe significance andearning caliberof insurance
companiesinBangladesh.Gradually,the interestof people oninsurance isincreasingdaybydayas
the income of the people hasbeenenhancedoverthe lastdecade.Insurancepenetrationin
BangladeshisexpectedtoworthapproximatelyUSD2.2 billion(in termsof insurance premiums) by
the year 2020 that indicates7.04%incrementfromthe 2015 whenit wasUSD 1.58 billion((PwC
report,2019). Not a bulk,even1%rise ininsurance penetrationcanleadtosignificantchange inthe
economyof Bangladeshasitcan reduce uninsuredlossesandsignificantlycontribute toitsGDP
growth(Rashid,2019). Besides,the unemploymentrate will be reduced,andforeigndirect
investmentwill be increasedif the insurance sectorcanbe restructuredinwaythat can garb the
potentiallyof insurance marketinBangladesh.The capital marketwillbe flourishedthough
insurance growththatwill ultimatelyleadtothe growthof Bangladesh.Insurance canincrease the
flowof fundsinthe economyas itreducesthe riskof investment.Butthe non-life insurance
contributionisnotsignificantlyimprovedforthe lastsix yearsas itwas 0.2% in 2012 andalso 0.2% in
2018 accordingto statistical analysispublishedbyLloyd'sof London(Islam, 2019).

9. Prospects of human life in Insurance
There are many good signs for the insurance business in Bangladesh. The factors that can
facilitate the insurance business in our country are discussed below. These facts can be
measured as the prospective fields for insurance business in Bangladesh.
Increased population:
There is a big opportunity lies ahead for the insurance companies as the population of our
country are increasing day by day. Although most of people of our country live under extreme
poverty level and want to avoid insurance policy number of potential policy holders in
Bangladesh is growing with growth of the population. There is somewhat relationship
between growing populations with the number of public vehicle.As we know allpublic vehicle
must have an insurance policy. So growing population also increase the motor insurance too.
That is growth in population opens greater scope for every kind of insurance business that
results in growing prospect for insurance companies.
Higher GDP:
The GDP of our country is increasing than the previous years which results in increase of per
capita income. So this growing GDP and income holds bright prospects for insurance
companies. The major problem is the incapability of our people to pay the premium charged
by the insurance companies. . With the growth in the income more and more people are now
willing to take an insurance policy for safeguarding themselves from any danger.
Health Insurance:
The insurance companies of Bangladesh can be developed health insurance policy as large
scale like other developed and developing countries. That increases the scope of insurance
business in Bangladesh. Though there are some insurance companies created this at small
range but that not enough to meet the crying need of health insurance in nearby decades.
Marriage Insurance:
Bangladesh is Muslim country. So marriage plays a vital role in our social life. Now a day’s it
become costly. Guardians of daughters as wellas sons facethis problem that is why they want
to overcome this problem. This situation creates a vast opportunity for insurance business in
Bangladesh.

10. Agriculture sector:
The economy of Bangladesh is predominantly an agrarian one, with most people engage in
farming and fishing. The uncertainty of agriculture due to crop failure caused by climate
variation, drought, cyclone, flood and pests affects farmer income as well as government
revenue. Furthermore, in the last few years commercialization has occurred in some sections
of the agricultural sector. Increase in investment in the agricultural sector is creating a new
opportunity for insurance industry. Various agricultural insurance services are becoming
common these days. Demand for insurance protection against crop loans, livestock loans,
fisheries loans and equipment loans are also increasing day by day.
Business sector:
Nowadays in Bangladesh the SME plays an important role in the economic development. But
they are deprived from taking loans from bank for largeamount. If insurance business focuses
this section in Bangladesh they are able to contribute more in the economy .Thus insurance
business has a bright prospect in business sector in a developing country like Bangladesh
Education sector:
Insurance companies can provide different types of scheme to expand education plan
insurance. In Bangladesh the higher educational facilities is not as rich as developed
countries. It is very costly except public sectors educational institutions. So, education sector
should create vast facilities for insurance business in future.
Finally, if the above steps can be taken, more and more people in Bangladesh will be
interested in buying insurance.

11. Challenges and Opportunities of Insurance in
Business Sector in Bangladesh
Though Bangladeshisexposedtoavarietyof risks,insurance coverage isnotas muchas that level.
Insurance companiesof Bangladeshhave beenfacinglotof hurdlestooperate the insurance
activitiessmoothlyandtogaina competitive sustainable development.Mamun(2016) identified
fourmajor areasof problemsoninsurance sectorof Bangladeshandamongwhichmarketing
problemsare inverystrongpositiontofurthergrowthof thisindustry.The otherproblemsare
relatedtohuman resource management,operationsandethical issues.Amongthe HRproblems,
lowqualificationof agentsisthe mostsignificantone,policyholders’lackof understandingof
insurance policiesandlackof awarenessof the insurance benefitsare the majormarketingproblems
(Mamun,2016). Lack of technical knowledge of employee,poorITsupportandinefficient
managementare the majormarketingproblemswhereasunhealthycompetitionandagent
malpractice are the prime problemsrelatedtothe ethical issues(Mamun,2016).Ali (2018)
mentionedthatdue tovolatile nature of capital market,insurance companiesare notlikelytoinvest
instock and lackof qualifiedmanpowerandlegal restrictionsare entangledwiththissectormaking
insurance unpopularinBangladesh.Apartfromthese,low returnoninvestmentinstock,lackof
transparency,tendencytoinvestinfixedassetsandgovernmentsecuritiesare alsothe impediments
of thissector.Ineffectivemarketingstrategies,lackof advertisement,knowledge gapof clients,
unskilledmarketingagent,impropermarketsegmentation,ethical issuesandbureaucratic
procedure are significantcurrentchallengesof insurance industryinBangladesh.
However,there isscope tobe optimisticaboutthe growthof insurance sectorinBangladeshas
economicexpansionishappeninginBangladeshandthere isa highchance of growingfire insurance,
marine insurance andmicrofinance insurance inBangladesh(Mamun,2016). Bangladesh’s
macroeconomictrendsdemonstratethatpotential progressinthe insurance sectorispossible.As
the country becomesmore industrialized,the demandforfire andpropertyinsurance aswellas
workers’compensationislikelytosee asubstantial growthindemand.Besides,natural disastersand
frequentroadaccidentare the commonphenomenainBangladesh.Therefore,increasingawareness
aboutthose incidents’securityandtheirintegrationwithinsurancewillincreasethe demandof
insurance andenhance the growthof thissector.Basedon the analysisof limitationsof insurance
sector,Mamun (2016) suggestedthattakingsome initiativesmayimprove the currentconditionof
thissectorin Bangladeshwhichincludesattractingandretainingqualifiedprofessionals,organizing
frequenttrainingprograms,focusingonITdevelopment,adaptingcreativemarketingstrategies,
eliminatingunhealthycompetition,increasingreturnoninvestmentandgoingformergerand
acquisitionif required.Besides,developingandimplementingcreativemarketingstrategies,
adoption of uniformpolicies,focusingoninnovation,logical needbasedsegmentationof clients,
increasingawarenessamongmasspeople,more investmentinresearchanddevelopmentand
implementationof dynamicmanagementstylecanimprove the performance of this sectorand
assistto acquire sustainable competitive position

12. Conclusion
This papertriesto presentthe contributionof insurance oneconomicgrowthandchallengesaswell
as prospectsof insurance sectorinBangladesh.Insurance sectorhassignificantcontributioninsocial
and economicgrowthof bothdevelopedanddevelopingcountries.Thoughinsurancesectorof
Bangladeshhassome limitations,thereisroomtofurtherdevelopment.Thissectorhasoperational,
economical and sectorial prospectsto expanditsmarket.Insurance companies,regulatoryagencies
and governmentshouldtake initiativestoboostupthissectorovercomingthe barrierstogrowth.A
regulatoryframeworkwithstrongprinciplescanrestructure thissectorthroughproperrisktransfer
and reasonable premiumthatwill attractandretainthe clientsforthe longrun.
Talentedandskilledhumanresource ishighlyrequiredtoimprove the currentperformanceof
insurance.Academicinstitutionsneedtodevelopseparate curriculumoninsurance tofoster
insurance educationandcreate professionalsforthissector.Insurance companiescango formutual
alignmentwithbankswhichwill accelerate thissectoraspeople relyonbanksthanthe insurance
agents.Besides,bankingsectorhasalreadybeenestablishedasthe commonplatformtodeposit
money,so,throughusingthistransactionplatform, insurance companiescancollecttheirprimum
more smoothly.Thispapercan be a base to conduct more researchon the discussedlimitationsand
theirimpacton the performance of the insurance companies.More studiescanalsobe conducted
focusingoninsurance asan indicatorof social,economicandfinancial growthof acountry.
Thank you
ID: 180102045
Name: Nayma Meem