IC 33 Synopsis of

Key concepts
IC 33 New Course
Prepared By : Sachin Kamath

This is a summary of Important Concept / terminologies collected from every chapter of the new
course , ased on !re"uent "uestions which have een appearing in e#am $ To e used/ handed
over as %etention / emphasised pointers after completion of chapters during IC 33 %efresher
trainings $ It can e used during Safaalya , for understanding the reasoning of the correct answers
given in the T&ST 'ode $
Chapter () * Introduction to Insurance
)$The concept of Insurance involves a transfer of %ISK $
+$Insurance is a process of Transferring %ISK from the owner , Insured - to the Insurance company
in return for a consideration , .remium -$
3$Insurance helps in /iving .rotection , investment options , Ta# planning / catering to different
needs of life stages $
0$taled as elow
1anca2asuarnce Selling Insurance Through 1an3s
'icro Insurance !or 4ower Income !amilies $ .remiums mostly collected wee3ly $
5ppro# %s )6 $ 'inimum S5 * 6777, 'a# S5 * 67777
I%85 /rievances &mail * complaints9irda$gov$in : Toll free Numer * )66+66
.rinciple of Indemnity 8istinguishes etween 4ife ; Non 4ife Insurance $ 8oes not allow any
one to ma3e profit out of Insurance $compensates only to the e#tent
of losses that too not fully$
5ctuary Calculates standard prices , premium- of Insurance products ,<ses
statistical data for claims ratio , wor3s on future liailities , announces
1onus , does =54<5TI>N every year as per I%85 guidelines
T.5 , third party
5dministration-
?or3s in uilding @ospital N&T?>%K$ 5lso helps in settling claims
during cashless hospitaliAation
N/> /Self @elp group @elps in spreading awareness of Insurance $ 1rings 1uyers ; Sellers
together$
I%85 /rants licenses to Insurance Company$ %egulates the industry$ @elps
to protect .olicyholders against grievance from Insurer
%einsurance They are Insurer of Insurance Company $ %e insurer ta3es up a
percentage of %is3 from the Insurance company for a consideration
, premium- $ Insurer approach reinsurance when ris3 is eyond their
Capacity$
8irect Sales ; Indirect
sales
& sales, >n line sales - advertisement y Insurer, employees selling
directly are e#amples of 8irect method it
reduces intermediary costs li3e Commission etc $
5gents , 1ro3ers , comparison wesites, ancassurance etc are
Indirect method sales $
1ro3ers They represent the Client $ They compare etween insurance
companies products which suit the est for their client $
( Chapter + * %ISK ; Insurance
)$ 4ung cancer is a .&%I4 ; Smo3ing is a @aAard $
+$4evel of %is3 is normally assessed y !re"uency , proaility - of event happening and the
severity , e#tent - of event if it does happen /
3$.roaility that certain person will die in one year is calculated y actuary and is put in mortality
tale$
.age *)
0$Taled elow *
.eril ; @aAard .eril is an event that may cause 4oss or damage $peril are the ris3
eing insured against $ @aAard , danger - is a condition that either
increases the chance that peril will happen or cause its effect to e
worse if it happens
.hysical haAard !amily history of heart , lood pressure etc
'oral haAard %efers to haits and attitude of person that might increase ris3 $ &g *
smo3ing or drin3ing
!inancial %is3 4oss of life , disaility , retirement , saving accumulations re the
financial ris3 we need to plan insurance for $
.articular %is3 They are personal or local in nature $might effect one person or Bust
one community /locality $,
.ure %is3 No possiility of ma3ing profit $Insurance is given for .ure %is3$
.ooling of %is3 !undamental principles of Insurance $Collection of premium from
several people who are e#posed to similar ris3 $ Insurance company is
the trustee$
(Chapter 3 5 *.rinciples and practises of 4ife Insurance
)$ Contract Taled 1elow*
>ffer ; 5cceptance @as to e <nconditional $If condition is 3ept then , counter offer
re"uired $
Consideration In insurance Contract ,this is the .%&'I<'
Capacity @as to e over )C Dears of age , sound mind ,not dis"ualified y law$
5ny contract entered y people who are not meeting these criteria
would ma3e it N<44 ; =oid
Consensus 5d Idem .roposer and Insurer should understand and agree upon same things
Capaility of performance 5 person as3ing for @igh S5 should e ale to pay high .remium$
+$Insurance Interest is one of the essential elements to ma3e the Contract =54I8 $
3$@as unlimited Insurale interest on own life $
0$life Insurance *, Insurale Interest to e#ist at the time of ta3ing a policy $Need not e proved again
at time of claim $
6$ /eneral Insurance*Insurale Interest re"uired while ta3ing policy as well as Claim $
E$ 'arine Insurance , Insurale Interest has to e proved at the TI'& of Claim$
F$5ll material Information that would effect in assessing the %ISK has to e disclosed =oluntarily in
the .rinciple of <T'>ST />>8 !aith $
C$1reach of <tmost /ood !aith Taled elow *
Non 8isclosure >mission to disclose material facts either Inadvertently or proposer
thought it was Immaterial$ &g * 5Bay does not disclose his surgery
undergone during childhood $ @e has completely recovered now and
thought it was immaterial to disclose now
Concealments 5Bay consumes alcohol / or smo3es daily $ 8oes not disclose this
during ta3ing Insurance policy $
!raudulent
'is2 representation
5Bay states his age 6 years less than actual to gain premium enefit
while ta3ing a policy
Innocent
'is2 representation
Inaccurate statement which are elieved to e True $&g Some hoies
li3e paragliding not mentioned while ta3ing policy
.age (+
.age (3
G$ 8uty of disclosure is for oth Insurer as well as Insured $
)7$1reach of <tmost good faith leads to contract ecoming null and void from eginning of term $
))$If it is !raudulent mis2 representation or concealment of material facts then the Insurer may alo
3eep the premium $
)+ Sec 06 * Indisputaility Clause *applied in first two Dears $.olicy can ecome null and void $
.remiums can e 3ept ac3 y the insurer $ 5fter two years fraud has to e estalished y the
Insurer if it wants to ma3e the contract N<44 and =>I8 $
( Chapter 3 1 * .rinciples and .ractises of 4ife Insurance
)$ Key 8ocuments ; Terminologies Taled 1elow
.roposal !orm To e filled y proposer in own handwriting $
Contains details li3e* Name , age , occupation , previous policy ; rider
details , @ealth related information , nomination $
This is a asis of contact $
8eclaration in proposal
form
.uts <tmost /ood faith on signing the declaration $ If proposer Illiterate
then left Thum impression of the proposer along with declaration y
third party is must with his address ta3en $
5ge .roof Standard * 1aptism Certificate , school certificate , passport , .5N card ,
service register $ %oman catholic 'arriage certificate &tc
Non Standard * =oter card , =illage panchayath , ration card , horoscope
!.% &vidence of contract that It has egun $Contains *Name , address , 8>C ,
.remium details, S5 , maturity date etc
%.% .roof of payments $ Issued on paying the second premium $
+$ !%&& loo3 or Cooling period is of )6 days from receiving the .olicy document y the
policyholder, to withdraw from the contract $Insurance company has to return the premium after
deduction costs li3e %is3 cover for those days , Stamp duty ,medical e#penses if any $
3$ .olicy 8ocument taled 1elow *
@eading Name and address of the company with logo
.reamle States the proposal ; declaration signed y the proposer
>perative clause 4ays down mutual oligation $ Contains premiums to paid y proposer
; S5 to e paid y Insurer in case of event
.roviso .rovisions related to guaranteed Surrender value , Nomination ,
assignment and provision of loan etc
Schedule Contains 8ate of commencement , .remiums to e paid ; due dates ,
S5 , maturity date , 4ien , nominee details , special e#clusion , rider
details
Copy of proposal ?ill e added in the policy document
5ttestation Signature to authenticate the document signed y authorised official of
insurance company $
Terms ; Condition Contains *8ays of grace , conse"uences of failing to pay premium ,
availaility of loan $@ow to assign , surrender ,ma3e claims
&ndorsement To ma3e changes in any terms and condition $ Can e made on lan3
paper and attached to the policy document $ &ndorsement is a part of
.olicy document $ 'odification on S5 , N>'IN&& , assignment, policy
term , premium payment method ; fre"uency etc can e canged and
mentioned through endorsement
.olicy Information
Statement
Contains * method ; fre"uency of premium payment , person / office
re"uired to e contacted for service issue , >mudsman address
.rospectus States * scope of enefits , conditions , warranties ,entitlement etc
0$ Key terminologies Taled 1elow *
8ays of /race >ne month for Dearly / half / "uterly mode of premium payment ; )6
days for monthly mode of payment $ 8eath Claims arising in days of
grace period would e settled in full afyter deduction of unpaid
premiums $
.aid <p value 5pplicale for .olicy having saving elements li3e endowment plans $
'inimum 3 years premium have to e paid to get .aid <p value $ >n
maturity , S5 may e less than actual S5 , ecause of paid up $ 1onus
accrued till lapse is given full$
%enewal Insurer may renew the e#isting policy or change the term / increase the
.remium $ 'aterial facts need to e disclosed if it has changed from
inception time $
Surrender value 5lso 3nown as C5S@ value $insurer stipulates 3 to F years loc3 in efore
any surrender $
>nly policy with Saving element can e surrendered eg * &ndowment
plan etc $
If H ; D ta3e policy with S5'& S5 , .remium and surrender on the
Same date , then The .olicyholder whose term is 4onger will get 4ower
S= $
%evival %e"uirement for revival * payment of outstanding premiums with
Interest , proof of good health ; %e instatement !ees $
6$ Important concepts taled 1elow
Nomination 'ultiple nomination can e made with no specific share$
5 person having policy on other life cannot ma3e nomination $
Can e changed y doing &ndorsement during the policy term $
In Boint life .olicy , Nomination can e made Iointly $
5ppointee is to e made if Nominee is 'inor $ If no appointee ,
then claim is given to legal heir if nominee is still 'inor $
Nominee has no right over claim .roceeds $
5ssignment 5ssignor * one who transfers his policy $
5ssignee * Individual or Institution to which policy is eing assigned $
Cannot e changed / altered y assignor once it is assigned $
Nomination ceases for assignor when assigned $ Same time , assignee
cannot ma3e any nomination$
Can e endorsed without stamped , or on separate deed which has to
e stamped $
Conditional 5ssignment Can revert in case * assignee predeceases
the assignor $
>r when assignor survives until maturity
5solute assignment 5ssignees ecomes the titleholder ; can
deal with the policy the way he chooses
E$ Important Terms taled 1elow
4oan ?ould e certain percentage of S= $ , endowment / whole life plan-
can e repaid in part or fully $ S= 3eeps increasing when premiums are
3ept paying $
.age (0
Chapter (0 * <nderwriting
)$Terms of <nderwriter Taled 1elow *
<nderwriter 5sses the ris3 of people in the .ool $
calculates suitale .remiums $
8ecides on terms ; conditions ; scope of cover to e given $
8ecision of underwriter Can reBect , accept , charge e#tra premium , accept with modified
conditions , apply lien,postpone for certain period
8ecision To .roposer I%85 guidelines states the decision of the <nderwriter has to e
conveyed to the .%>.>S&% within )6 8ays of receiving the proposal
'ortality Tale Contains tale of details of actuarial calculation on death $
'.4 is ma#imum possile loss $
+$ /athering <nderwriting Information Taled 1elow *
.roposal !orm <nderwriter gets information from this $ Carries details of 5ge , history ,
medical conditions , occupation , previous policy details etc
5gent Confidentiality
report , 5C% -
Is prepared y agents $, primary underwriter-$
If amount of S5 is @igh , then 5C% has to e more detailed $ Information
can e gathered from !riends , relatives etc
'oral @aAard %eport Sometimes for @igher S5 , %eport to e made y senior employees of
company , <nit manager / S54&S manager -$
Insurance Investigation agency are also used for gather Information on
@I/@ S5 .roposal
5dditional report 5dditional information on proposerJs medical report can e sought $
Special reports has to e done y the Senior >fficials of insurance
company ; agents $ This may contain Income , occupation , life style
haits etc
3$@aAards
.hysical @aAards %efers to physical characteristics of %is3 $ &g * 5/& , se# , occupation ,
haits , personal medical history , @oies etc
'oral haAard Intention / 5TIT<8& $ eg * rec3less / careless attitude Towards health
li3e smo3ing / drin3ing $
5s3ing for @I/@ S5 eyond earning powers $
Ta3ing @I/@ Insurance on spouse life who is not earning $
0$8etails on @uman 4ife =alue taled 1elow *
@4= 5mount of Insurance needed can e arrived from @uman life =alue $
It captures &conomic value of the .erson in monitory =alue $
5s age increases , @uman life value will decreases$
Income replacement
method in @4=
Ta3es into consideration , the future income earning potential of
a person during wor3ing years $
This method e"uates @4= to present value of future earning $
8iscount rate , ..! - is used while calculating this $
Simple 'ethod in @4= 8oes not ta3e salary increase over the years into consideration $
1an3 !8 , 9 CK- is ta3en into consideration for calculating this $
6$ clause taled elow *
4ien <sed to sustitute to charging @igh premium to @igh S5 $
%is3 would e decreasing over a period of time $
If death happens during lien period , !<44 S5 is not .aid $
4ien should decrease in an e"ual amount over a specific period
of time$
If the term of the policy is multiple of Three , then lien operale
should e )/3rd of the term$
age (6
E$.remium ; 1onus taled elow *
.remium 5ctuaries using statistical data calculate premium tale $
In level premium ,same premium paid across the term of plan $
In fle#ile premium plan , the proposer can choose to have level or
change the amount of premium on affordaility $ <sually increases y
6K annually $
.remium will depend on 5/& , @ealth , S5 , enefits promised
%is3 .%&'I<' 'ortality tale differ etween insurance companies $
'ortality tale is the proaility that certain person
will die efore the ne#t irthday$
%is3 premium is charged Bust to meet the claim for
the year $ %ISK .remium L 'ortality rate M S5
Net .remium .remium INT&%&ST &5%NIN/
4oading 5ddition to premium is loading $ Contains provision
for * 1onus , medical e#penses ,processing fees ,
claim settlement e#penses , profit margin$
'a#imum e#penses are incurred during Initial stages
of the policy $
1onus 5ctuary does valuation every year $
1onus is declared for Nwith profitO policy $
Simple
%evisionary
/ets added to the S5 $ Is paid c3 to policyholder
either during claim or any other date specified $
Compound
revisionary
Computes annual onus on compounded interest $
&g *onus is added on S5 and ne#t onus will e
calculated on enhanced S5
Terminal onus 5lso called .&%CIST&NCD 1>N<S $ 5pplicale for
policy with long term i$e +7/+6/37 Dears $
.aid at maturity along with other onus P S5
Interim 1onus .aid to policies which come for claim etween two
valuation $ .aid at previous valuation onus rate $
Chapter (6 * 1asic of 4ife insurance products
)$.rotection needs taled elow *
INC>'& Term .lan can help in protecting future income loss
'edical Needs 'edical insurance plans to cover emergencies
8ependants !or child education ; marriage * children education plans $
5sset ; 4iailities !or protection against loans , home loans , credit card etc - * term plan
for untimely death $
!amily maintenance Term plan can supplement income loss or pension plan can give
regular income $

+$ two asic elements of 4ife insurance are * 8eath cover and maturity enefit $
3$ at lower age , Income protection is high priority and should loo3 for term plans $
0$Term plan is est against @ome loans liailities covering $
6$two people opting for same term and product may have difference in premium amount due to
5/& / S5/@&54T@ reasons
.age (E
E Insurance product Taled elow *
Term .lan Cheapest form of Insurance $ Covers death only $
<sed for income protection as well as protection against liailities li3e
@ome loan , car loan , credit card etc
.ure endowment plan @as only survival enefit which is paid at maturity $
&ndowment .lan 8eath cover plus survival enefit $
@as saving element in them and i given as onus at the end in Nwith
profit policies $
1ecause of saving elements , 4>5NS cn e ta3en in this $
.lan is ta3en for specific goals li3e * Saving for future , children
education etc
?hole 4ife Term plan with unspecified term $
4oans can e ta3en $ .artial withdrawal facility availale during term
Convertile plan <seful for people who cannot pay high premium in initial years and later
can increase the premium $ >ption has to e e#ercised during the
specific trem stated in the policy
&g* initially ta3en a term plan and later converted into endowment
/whole life $
No medical or underwriting re"uired at time of conversion
Ioint 4ife .olicies Ideal for married couple or partners $
&ach life is unwritten separately $ Nomination is not needed$
@owever if they want nomination , then it has to e done I>INT4D $
/roup Insurance .lans &mployees ,an3 customers , trade union memers etc $
>ne policy issued * '5ST&% .>4ICD $ 5nd the employer would e
called the 'aster policy holder $
/roup cannot e formed Bust to ta3e insurance $ It should have een
formed earlier for other reasons $
<4I. %eturns are suBected to movements in capital mar3et $
Insured has the fle#iility to choose his own portfolio li3e investment in
e"uity or det or oth $
>n death S5 or 'ar3et value , !und value - is paid $
Settlement >ption * allows the insured to ta3e the !<N8 =54<& at
maturity in a structured manner , in 6 years - instead of ta3ing it in lump
sum $
Child plan 8ual enefit of saving and protection
Child is the eneficiary to receive the enefit $
Can e ta3en in form of &N8>?'&NT , 'oney ac3 or <lip plans
'oney 1ac3 .artial survival enefit and paid during the term of plan $which is T5H
!%&& $
5t maturity the onus along with percentage of S5 is paid $
In case of death etween Term , S5 P onus without deduction of
survival enefits , would e paid to nominee $
F$ Ta# ; Inflation features taled elow *
Investment stage <nder sec C7 C * <p to %s ) 43 can e claimed under premium /year$
.remium should e e"ual to or less than +7K of S5 or S5 should e 6
times the premium $
'aturity Stage 'aturity amount is ta# free under sec )7 ,)7 8- $provided the criteria od
premium e"ual to or less than +7K of S5 is met
Inflation 'oney loses its value $ .lans should e ta3en 3eeping Inflation I'.5CT
in mind during the 'aturity time $
.age ( F
Chapter (E * Saving .roducts
)$ Saving Needs / !actors for saving Taled elow *
Individual ?ithout
Capital
1uilding contingencies fund li3e medical emergencies , childQs
education $ %etirement planning $ @ome loans etc
Individual with Capital To increase their e#isting ?&54T@ $
Need sufficient wealth to e left ehind for 4egacy
8uration of Investment Compounding effect helps those who invest regularly for a long period $
4oc3 In period Investment made for T5H planning in 15NKS IS 6 D&5%S ,4oans cannot
e ta3en in this !8
In &"uity 4in3ed saving schemes it would e 3 years $
%is3 5ppetite Doung people Bust out of college and have Bust started earning will have
@I/@ ris3 appetite as responsiility is lower $
'oderate %ISK 5..&TIT& for people in 'id thirties $
=ery 4ow ris3 appetite for 'I8 !I!TI&S; aove
+$ Types of Saving .roducts taled elow *
1an3 8eposits 5mount , tenure , interest rate , method of payment of interest is fi#ed at
inception of the 8eposit $
.rinciple will e returned at the time of 'aturity $Interest rates varies
with period of tenure $
Traditional Interest is paid on 'onthly / Rtrly/@alf/ Dearly as
chosen $
Cumulative Interest is calculated in "trly on compounding
asis and is returned with principle at maturity $
%ecurring Specified amount is invested every month on a
chosen time horiAon $ Ideal for individual loo3ing
for accumulating money for goals li3e child
education , uying car ,marriage etc
'utual !unds 'anaged y asset managed company$ .ortfolio managers in these
company will manage funds ased on the type of fund that is chosen y
the investor $
'aBor advantage is %ISK 8I=&%SI!IC5TI>N $
'! provides *
%egular Income 8ividends declared
Capital appreciation 'utual fund unit are sold at price higher than the
price at which they are rought$
Shares %epresents the ownership of company$
Stoc3 e#change wor3s as intermediary ; offer a trading platform $
Individual cannot uy or sell direct through e#change , they can go
through stoc3 ro3ers $
Share provides * 8ividend Income , capital appreciation , onus shares
1onds Investors are lending the money to get interest $corporate ond , T ill
,commercial papers , /S&C $
4i"uidity is another reason for people to invest in this $
.ost >ffice 5ll products individual has to Invest in lump sum amount for a fi#ed
period $Interest rate is fi#ed at the inception $
Individual to uy following instruments will go to .ost office *
Kisan =i3as .atra ,NSC , ..! ,.ost office saving ,'onthly Income
scheme, senior citiAen saving schemes , recurring deposit account $
.age ( C
/old ; Silver /old is traded li3e 'utual fund through &T! $
>ne />48 &T! unit measures around 7$6/) /m of gold $
/>48 &T! provides *8iversification ,good returns ,insurance against
uncertainty ; hedge against Inflation
3$ T5H implications taled elow *
C7 C 4ife insurance .remium , NSC , ..! , .> TI'& 8&.>SIT 6 D&5%S
,&4SS, pension plan , tuition fees paid for children $.rinciple of @ome
4oan
C7 CC! 5llowed investment in IN!%5ST%<CT<%& 1ond $ >ver and aove Sec
C7 C
C7 8 8eduction allowed from @ealth Insurance $
.remium paid for parents will e getting e#tra deductions $
Senior citiAen , aove E6 years -would get higher than enefit than other
individual $
+0 1 SuBect to specified provision , Interest on @ome loan is deductale
0$Implication of Interest
Increase In Interest Interest rates on loans ; deposits goes up $
4ending products from an3s and financial institution falls due to
orrowing ecomes e#pensive $
1ond purchase will increase $
Share prices will drop $
8ecrease in Interest 4oans ecome attractive leading to consumption $
Share price Increases $
Investment in %eal estate e"uities would increase
6$prioritiAing needs Taled elow *
Contingency fund Should have 32E 'onths saving for this $
Should invest in saving product which offers 4IR<I8ITD$
15NK 8&.>SITS ; 1onds are preferred
Insurance Term .lan for INC>'& .%>T&CTI>N $&ndowment , <4I. , ?hole life etc
for saving $
ChildJs plan *%is3 averse investors should go for endowment plans ;
other higher ris3 appetite individuals can loo3 at <4I. Investment
5ssets &'I should not e#ceed more than 07K of monthly ta3e home salary $
!or home loan F6K or C7K of total loan is provided y an3
%etirement ?or3ing professionals partially meets retirement through *&.! ,
/ratuity,pension
Ta# 1uying decision should e on N&&8S and not on T5H purpose only $
E$Needs taled 1elow *
.erceived need 5 need which the person thin3s is important ut it actually is not $ &g *
loo3ing to uy an e#pensive car , whereas real need could e planning
for childJs education
Short term Saving for emergencies $ 8uration * )2 6 years
'edium Term Saving for childrenJs education / marriage$ 8uration * 62)6 years
4ong term !or retirement planning $ 8uration * )6 or more years
.age (G
Chapter ( F * >ther 3ey financial .roducts
)$ @ealth Insurance Terminologies Taled elow
!amily !loater Can over Individual , spouse , children ; .arents $
5ll get covered under one single insurance cover
/roup insurance .lan <sually employees of the company covered for medical contingencies
8aily @ospitaliAation cash
1enefit
8aily amount is fi#ed and may e more or less than actual $.aid daily on
hospitaliAation $
@as a limit of total numer of days in a year $
IC< * may pay additional amount $
.ricing .remium depends on 5ge , haits , family health , fitness $
.remium ?ill e @igh for older age $
Cashless facility .hoto I8 card is provided $
>n admission on networ3 hospital , invoices are settled y company directly
to hospital $
Not all e#penses may e settled as per e#clusion list in the Terms ;
condition of the policy
.re e#isting Illnesses Insurance cover starts post Nwaiting period N
information is specified in the terms ; conditions of the policy documents
No claim 1onus Insurance company will give 8iscount on .%&'I<' due ne#t year , if no
claims have come in the running year $
Individual .lan Caters to single individuals health
+$Type and terminologies of %iders taled elow *
5ccidental enefit rider
, 51% -
.aid on death due to accident , e#ternal , violent , visile $unforeseeale
means -
Critical Illness %ider .aid on diagnosis of Critical illness $
<sually covers * aorta surgery , heart attac3 , cancer , maBor organ
transplant ,stro3e , lindness ,paraplegia ,multiple sclerosis$
%ider enefit ceases once it is paid $
.ayout can e used for any purpose including treatment
?aiver of premium !uture premiums are waived off due to disaility to policyholder y
illness or accident $
@elps in preventing policy getting lapsed due to disaility $
some child plan comes with uilt in ?>. $
Surgical %ider Treatment cost for surgery of heart , lungs rain , liver etc
/uaranteed Insuraility
%ider
/ives right to increase T@& C>=&% in response to life stage events li3e , child
irth , marriages etc
3$%ider %egulations Taled 1elow *
@ealth ; Critical rider .remium of all these riders , in case of T&%' ; /%><. .>4ICD product
cannot e#ceed )77K of the premium of ase policy
>ther %ider .remium of all riders put together cannot e#eed 37K of premium of ase
policy
S5 clause 1enefits of under each rider cannot e#ceed more than than the S5 of ase
policy

0$ 5nnuity types Taled elow *
Immediate 1ecome payale immediately after purchasing it in lump sum $ 5nnuity
commences at end of month , half , "trly , yearly
8eferred .aid in series of payment efore vesting date $ Can e paid in lum sum efore
the vesting period
.age ()7
6$ Type of annuity taled elow *
4ife annuity 5nnuity paid through out 4ife and ceases on death of the annuitant
/uaranteed period .aid for minimum fi#ed period such as 6/)7/)6/+7/+6 years, regardless of
annuitant death $ If he survives the period then annuity will continue till
death $
Ioint life , last survivor @usand ; wife get annuity $
4evel annuity paid through out till last survival $
'ay also have reduced annuity if the first annuitant dies then the
second one will get reduced percentage li3e +6/67/F6K of the
throughout depending on term and condition
4ife 5nnuity with
return of price
5nnuity is paid till death of the annuitant and then the purchase price is
returned to the nominee / legal hier
Increasing annuity 5nnuity will increase every year in fi#ed percentage or in line of agred
inflation inde# $
E$ 1enefits of pension Taled elow *
Commutation 1efore receiving the annuity , )/3rd of the accumulated fund can e
withdrawn ta# free $
>pen mar3et >ption 5fter the accumulation phase the annuitant can ta3e annuity from same
insurer or other $ This helps in getting etter 5nnuity rate
'inimum /uarantee
returns
I%85 has specified 0$6K %&T<%NS if all premium paid and no partial
withdrawal done
Ta# )/3rd Commutation is ta# free under Sec )7 )7 a$
5nnuity is ta#ale $
.remium paid during accumulation phase is ta# e#empted under C7 C

Chapter (C *Identifying client needs
)$ .rofessional insurance mar3et will cater to real N&&8S $ .rocess involves * Identify SS "uantify
SS prioritiAe
+$4ife stages and product suitaility Taled elow *
Childhood .arents need to 3eep income protection in mind and then lo3 at saving
instrument for education $ Term plan ; then Child plan , low ris3 then
&ndowment - higher ris3 appetite then <4I.
Doung <nmarried ?ith no dependent * can loo3 at <4I. $
?ith dependent *.rotect Income first , term plan - then loo3 at long term
wealth creation $
Doung married 8oule Income No KI8S * Individual T&%' plan for oth partners $ Then loo3
at <4I. for high returns and accumulation of wealth $
Single Income !amily *Term plan is first preference$
Doung married
?ith Children
8oule Income family *T&%' .lan for oth , then child plan , ne#t health plan
with family floater and then retirement plan $
Single Income family *Term plan followed y child plan and @ealth plan with
family floater
'arried with >lder
children
Income protection , childrenJs education / marriage saving , retirement
planning , @ealth plans
.re %etirement %etirement plan , ; health plan
%etirement Invest funds to ensure regular income through pension plan
review of health plans ; &state planning$
.age ())
3$ !actors effecting 4ife stages taled elow *
.ulic sector
employed
4ife , pension , health insurance needs are not high
.rivate sector
employee
4ife , health insurance may e provided uy .lanning for retirement is
important $ No defined age for retirement
Self employed Term plan , child education plan ; retirement planing high priority
<nemployed Should have disaility insurance and also have emergency funds
8ivorce , widow,
separation
If housewife then on divorce / separation *protection ; retirement plan
?idow *manage asset or preserve assets for dependent children $
0$ >pen end "uestions *encourages client to spea3 freely $
6$ Close ended "uestions * ma3es client give specific answers $ 4i3e D&S or No $
Chapter ( G *!act finding ; !inancial .laning
)$Identify , "uantify and prioritiAe the real needs in fact finding $
+$ Information gathering for fact finding taled elow *
.ersonal details Name , age ,occupation , marital status etc , haits , 8>1
&mployment details &mployee enefits li3e &.! , gratuity, salary , onus etc details for
employed $
!or self employed * clients profit ; amount drawn from usiness to family
e#penditure
!inancial 8etails 5ssets ; liailities $
Clients with @igher assets * investment advice
clients with limited assets *suggest to match clients need and aility to pay
&#isting Insurance ;
investments
/ather information of e#isting plans related to protection , wealth ,
health , :lapsed policies etc
'onthly income ;
e#penditure
?ill help to identify funds availale for investment post the monthly
e#penditure $
3$Important concepts on !act finding Taled elow *
1enefit illustration
documents
8istinguishes etween /uaranteed ; Non guaranteed enefits $
!or non guarantee enefits illustration is shown at EK ; )7K as per
4ife insurance council $
Shows charges levied which in turn shows reduced investment
returns $
Commission of agents can also een seen in the <4I. &1I $
Signature in the &1I y the customer indicates that he is aware of
the features and understands the enefits of the plan $
KDC , KN>? Dour
customer -
.hotograph , .roof of identity ,84 /.assport/.an Card /voter I8 /8efence I8-
.roof of address ,84 /passport/ telephone 1ill/ electricity ill , ration card
etc -
%ecommendation %ecommend the product that est suits the clients need $
Chapter ( )7 */ood client .ractise
)$ 5gent acts as an intermediary etween Insurance company and the client $
+$ 5gent should disclose commission to client when as3ed for $ 5nd should never give reate $
3$ agent can receive ma#imum upto 36K of commission in first year , F$6K in +
nd
and 3
rd
year and
then 6K there on , this all does not apply for Immediate / deferred annuity -$
0$during the first )7 years of insurer usiness , ma#imum of 07K first year commission can e paid
to agents $
.age ()+
6$commission of renewal premium cannot e#ceed 0K in any case $
E$on renewal commission post termination clauses taled elow *
%enewal commission () Should have wor3ed for 6 years and not less than .olicies with %s 673
S5 are in force , one year efore the termination of agency
%enewal commission (+ Should have wor3ed for )7 years , and after ceasing , is not directly or
indirectly involved in soliciting insurance
F$ in case of agents death , commission is payale to legal heirs$
C$Important terminologies taled elow *
Churning %epeatedly encouraging customer to switch or invest policies
from one to another is churning $
Some times agents use this to gain @I/@&% commission y
surrendering old policy and giving new one $
Client suffers ecause of surrender charges and no long term
enefit $
5dvice to surrender has to e done only when it is in the est
interest of the client $
If sales target gets reduced , chances of churning might
decrease $
.ersistency %efers to the amount of usiness insurance company is ale to
retain without surrender / lapse of the policy
a low persistence effects insurance industry $
4ow persistency for insurer leads to less profit ; reduction in
accumulation of reserve $ !or agent it means reduction in
renewal commission $
4ow persistency ratio means large numer of polices are
getting 4apsed or Surrendered $ Increase in .ersistency ratio
means , lapse / surrender is eing controlled well $
@igh persistency helps in reducing costs to the insurer $
5gents can get higher persistency y selling need ased
polices and giving service to the client regularly $
%eview of policy 'ight arise during child irth , marriage , change of Bo , moving
house
%ecommendation stage C@&CK clients commitment ,outline the reasoning for
recommendation ,accept the decision of the client $ If reBects then
agent should as3 the reason for not going for the recommendation $
Chapter ( )) * Claims
)$Insurer will not pay claim till the event that has een insured happens
+$ 5 lac3 of insurale interest will have the contract void $
3$ reach of good faith , and reach of warranty will ma3e the contract void $
0$<nder disputiility clause , Insurance companies can hold ac3 the premium after ma3ing the
policy Null and void in case of fraudulent /concealment of material facts $
6$ claim is a demand to fulfil insurer oligation $
E$Insurance company ma3es en"uiries only in death cases $
.age ()3
F Types of Claim Taled elow *
'aturity Claim 5ction is initiated y the Insurer $
.ost dated che"ues are sent efore the maturity date on signing of
discharge voucher $
If .olicy is lost , Indemnity ond is signed and claim settled $ Some
times advertisement in news paper is also given stating the policy
eing lost $
In case of asolute assignment , claim is settled to assignee $
In case settlement option , claims will e paid in structured manner
over a period of ma#imum 6 years from date of maturity instead of
lump sum $
Survival 1enefit 5ction initiated y insurer $ .ost dated che"ues are sent $
If policy document is lost , then duplicate policy is issued on which
endorsement would e made $
'oney ac3 policy is an e#ample which gives periodic payouts as
survival enefit across the term $
8eath Claim 5ction is initiated y the Claimant $
In case of <4I. , S5 or fund value whichever is @igher is paid $
Insurer has to e#ercise caution while settling death claim $
In certain policies , death enefit may not e paid at time of death ,
ut would e paid on specific date as per term and conditions of the
policy , ChildJs education / marriage age -$
!inal death pay out may have deduction ased upon any loan due /
premium due $
C$Important claim concepts taled elow *
%educed S5 There would e reduction in S5 at maturity if the .olicy has ecome .5I8
<. $
%ider 1enefit <nder 5ccidental enefit %ider 2 additional S5 is paid along with
1ase .olicy enefits$
<nder @ospital care %iders treatment costs in case of
hospitaliAation is paid $
.resumption of
8eath
.roof of death is essential for death claim settlement $
<nder Indian evidence act )CF+ , missing person not eing heard for
F years would e termed under presumption of death $
8ecree of court is re"uired to settle the death claim $
.remiums have to e paid till otaining decree of court
<nnatural 8eath !I% ,.anchanama , forensic report , coroners report , post2mortem report
needed
8ocument re"uired
for death claim
settlement
.olicy document
deeds of assignment / reassignment
proof of age if not sumitted earlier
death certificate
claimant statement
legal evidence of title if no nominee / assigned
discharge voucher signed and witnessed
&arly death Investigation will happen $
5dditional document may e as3ed for in order to ma3e certain that
material facts were not suppressed during inception of policy
.age ()0
G $ I%85 regulations on claim
Time 4ines 5dditional documents or "ueries to e as3ed has to e done in N>
piece meal asis within )6 days of receiving the claim intimation $
5 claim to e paid or disputed with reasons , has to e done in 37
days of receiving the claim intimation $
5ny investigation to e done , has to e completed in E months $
.enalty If insure is ready with claim pay out uy claimant has not claimed ,
then the interest rate applicale would e same as an3 saving rate $
If delay in settlement from Insurance company side , then +K over
an3 saving rates needs to e paid to the claimant
Chapter ( )+ * 4egislation ; client 5dvise
)$ Important provisions Taled 1elow *
5gent Sec 07,)- of insurance act )G3C deals with remuneration$
Sec 0) ,)- prohiits agents from giving reate $
4IC !ormed in )G6E
I%85 Controller of Insurance sector $
.rotects the interests of policyholders $
%egulates , promotes and ensures orderly growth of industry$
+$ Important concepts taled elow *
.revention of
money laundering
,.'45-
Stages of money laundering * .lacement SSlayering SS Integration
compliance of .'45 is for all financial sectors regulated y S&1I ,
%1I ; I%85 ; 544 !IN5NCI54 INT&%'&85%I&S
5nti 'oney
4aundering , 5'4 -
/uidelines Include * Internal policies; procedures : Compliance
officer : internal audit control : Training to agents and employees$
KDC , Know your customer - *I%85 states re"uirement of customers
5ddress proof, identity proof , income proof $
>thers %is3 profile * 4ow ris3 , salaried , /ovt$ &mployee-
@igh %is3 .rofile * .olitically e#posed .erson , N%I , N/> , 5nti"ue
dealers , film stars , person dealing with %eal estate $
.remium in cash cannot e#ceed %s 67,777
3$ Important 4egislations Taled 1elow *

'?.5 4ife assured will e married / widower/or divorcee '5N only $
1eneficiary could e wife ; Children / adopted child
T%<ST to e formed $ Could e an individual or entity $ Trustee, if
person has to e more than )C$ can have more than one as a trustee$
.olicy is insured as a T%<ST $
Claim will e paid to the trust who will hold for the eneficiaries $
.olicy cannot e surrendered , nomination /assignment cannot e
done $
In 'ohammedan, the name of the eneficiaries have to e named
as its Npersona designate N
I%85 %egulation on
5dvertisements
<nfair or misleading advertisement * fail to e identified as insurance
product : ma3ing claim eyond aility of policy :enefits not
matching with the product $
.age ()6
C>.5 Can e approached for redress al of grievances
district level *up to %s +7la3h
State level * <p to %s ) cr
National 4evel * aove the Burisdiction of the state forums and also
appeals against the decision of state forums $
Chapter ( )3 * %egulations ; Client advice
)$ %egulations ; %oles taled elow *
Central /overnment Can supersede I%85 y issuing notification
Issues /rant to I%85 after due appropriation y parliament law $
annual statement of I%85 has to e audited ; certified y comptroller
; audit general of India and then forwarded to central /ovt$ $
Can as3 directions on "uestions of polices $
@as allowed +EK sta3e for foreign investors in Insurance sector $
4ife Insurance
Council
Its the face of Insurance Industry
helps in promoting role ; enefits of life Insurance $
Conducting research , training and seminar for 4ife insurance
industry$
!ormed under Insurance act )G3C
Tariff advisory
Committee
Controls and regulates advantages , rates , term ; conditions with
respect to /eneral insurance $
T5C has een designated y I%85 as 85T5 %epository for general
insurance $
Now pricing of insurance product has een de tariffed $
Insurance Institute
of India
&arlier 3nown as !ederation of Insurance Institute in )G66 $
.romotes insurnce education and training in India
National Insurance
5cademy
, NI5 .une -
Set up in )GC7 y /ovt with support from 4ife insurance council , /IC
; 0 general insurer council $
8esign , implement , ; operate on Insurance Training architecture$
+$ 5/&NT 4icensing details Taled 1elow *
5pplication %s +67 has to e paid $ To ecome an agent !orm ; fees , has to undergo
67 hours of training , e#amination y III , at least )+
th
.ass , sound mind
%enewal 5fter 3 years o licensing
has to undergo +6 hours of practical training $
8uplicate license !ees of %s 67 $
>perating without license has to pay a !ine of %s 677
3$ Important 1odies taled elow *
%1I %egulates , monitors and controls the monitory policy
S&1I %egulates ; protects the investors in security mar3et
I%85 &stalished in )GGG
licensing of Insurance companies
specifies "ualification , training , code of conduct for intermediaries
regulates investment funds of insurance companies $
5dBudicates in disputes etween Insurance company and
intermediaries$
%egulates the maintenance of solvency margins $
.age ()E
Chapter ( )0 * Customer .rotection
)$ In process of S54&S , the agent , insurer ; intermediary will shall act as per code of conduct
prescried y * 4I council , the authority ; recognised professional ody or association $
+$@5N84IN/ C>'.45INTS Taled elow *
Consumer 5ffair
department
/ives special focus to oversee the compliance 1D INS<%&% of
I%85 %&/<45TI>N $
&mpowers the consumers y educating them on grievance
process redressing $
Integrated grievances
management system
, I/'S-
/ate way for policyholder to register complaint with Insurer and
then escalate to I%85 $
Internal grievances cell Complaints can e registered through Call centre , help des3 , y
email etc
wesites , prospectus , policy documents carry complaint
handling numers / email address of the company$
Nodal >fficer /rievance redress al officer named y the ranch / state Aone
level to handle complaints of consumers $
If not satisfied y Nodal officers interventions , can move the
complaint to higher officers named N 5ppellate authority N
+$ >mudsman details taled elow *
%ole %esolves complaint related to claims , disputes with regard to term of
policy , premium paid , non issues of .olicy documents $
)+ locations have omudsman $
.ower is restricted to insurance contract till %s +7 43
Time lines Insurers have to honour the award passed y omudsman in )6 day $
Complaint to >mudsman has to e made within ) year of insurer
response $
recommendation y omudsman has to e made within ) month of
the complaint registered with >mudsman $
If compliant agrees with the recommendation , then has to give in
writing within )6 days of the date of receipt of ac3nowledgement $
5ward has to e granted within 3 months of the complaint registered
with the omudsman $
5ctions !irst the complaint should have made complaint with the Insurer and
if not satisfied with the response , can approach the omudsman$
The complaint should not e pending efore any consumer forum ,
court or aritrator $ &lse , omudsman would dismiss the complaint $
If not complaint is not satisfied with the award of the omudsman ,
can approach other consumer forums , courts etc $
If the complainant is not in the same Burisdiction of the omudsman ,
the case can e dismissed$
Chapter ( )6 * &thics ; code of conduct
)$I%85 has laid down code of conduct for agents $and insurer $
+$Insurance company can prescrie its own code of conduct $
3$ Churning is a ad e#ample for agent $ Insufficient emphasis on long term relation leads to lower
persistency ratio$
0$ If free loo3 / lapsation /surrender has decreased for a company it indicates that the ethicl
practises has improved for the company $
5ll the 1est
.age ()F