1. CHAPTER IINTRODUCTION TO INSURANCE

2. 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. 3. Insurance benefits in replacement of the monetary losses, butonly to some extent. The possibility that it will rain during a cricket match can be aninsurable risk. The possibility that ones marriage will work out successfully orthat the son will get admission in the prestigious college he hasapplied for are not an insurable risk. Both peril and risk are important in deciding the amount ofinsurance. The amount of sum assured decided on is the amount payableunder life insurance policy. Insurance does not mean that the person can compromise onthe safety to be taken. 4. Principles of insurance works on Sharing Probabilities of large nos. Trust Randomness Mutual help Proportionate contributions. Both Life and Non-Life insurers can transact Microinsurance. 5. 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 ahuman beings value. A human being is an asset which perishes when he diesor become disabled to work 6. The insurance as a trustee is responsible to pay agenuine claim. The insurer as a trustee is also responsible to see thatthe life Fund is safe And earns maximum interest It is also responsible to give priority to thepolicyholders. 7. Risk is not common to all assets. The greater the number of trials, greater theprobability of the actual experience comingcloser to the estimate. The probability of an event is mentioned eitheras a percentage or as a ratio. 8. The probability of one in a hundreds 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 islikely. Insurance covers harmful consequences. 9. Life Insurance is arranged if someone may die orsomeone may live The principle of indemnity is not applicable tolife insurance. 10. Insurance benefit individuals, society and in turnthe country. Insurance not only reduces the burden onindividuals families, but also theSociety. 11. Life insurance is better than other avenues ofsavings in respect ofa. Marketability b. Liquidity c. Transferability And most important useful in emergency. 12. Insurance is related to probable loss In Insurance, Premium is based on Expectationsof losses. In Insurance, all the policyholders do not sharethe losses equally, it does not prevent risk and itdoes not compensate the losses in full. 13. An insurer placing insurance with anotherinsurer 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 mutuallyexclusive There is no substitute for life insurance. 14. Microsoft ExcelMicrosoft WordWorksheetDocument Microsoft Word Document 15. Chapter 2 Principles of Life Insurance 16. A life insurance policy is a contractenforceable by law. The principle of utmost good faith applies tolife insurance as well as non life insurance The principle of utmost good faith applies tomedical as well as non medical cases. 17. The principle of utmost good faith is meant toprotect the interest of the community ofpolicyholders The principle of utmost good faith is importantto ensure That the premium charged is correct That no one gets an undue advantage That there is no adverse selection 18. The responsibility to comply with the principle ofutmost good faith rests with both the parties proposeras 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 19. Capacity to contract applies to both parties Consent to the contract can be implicit Facts which happen after the policy hascommenced need not to be reported Facts which happen before policy hascommenced need to be reported. 20. A life insurance policy becomes invalid if, the statements in theproposal are found to be substantially wrong. The principle of utmost good faith will operate in an existingpolicy 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 21. In the case of Life insurance, insurable interestshould exist at the inception of insurance policy. In the case of life insurance the principle ofinsurable interest operatesdifferently than in other forms of insurances. 22. Under general insurance, because of principle ofindemnity assessment of losses are made at thecommencement of proposal as well as claim,which can lead to difference of opinion betweeninsurer and claimant. 23. The Claim payable is proportionate in non lifeinsurance & dependable on Sum assured in lifeinsurance . The Claim payable doesnt depend upon incomeof deceased person neither loss of income tothe family nor as per determined by a surveyor. 24. To find Human life value accurately is difficultbut it can be reasonably estimated. 25. The need of insurance doesnt depend on theage of person , place where he stays as far as lifeinsurance is needed. 26. Insurance can be for a purpose of collateralsecurity and also to have comfortable retired life. People hesitate to buy life insurance becausethey are not aware of their risk as well as theyprefer to enjoy the present. 27. Life insurance can support in the event ofsudden death , to have comfortable retirementas well as to have ones investment plans. Many People think that they do not need lifeinsurance and there is no hurry to buy lifeinsurance it may be due to less awareness. 28. Risk can be retained , there is insurable interestexisting between partners. 29. Microsoft Excel Microsoft WordMicrosoft Word Worksheet DocumentDocument 30. CHAPTER-3 PREMIUMS AND BONUSES 31. The premium is the price paid by thepolicyholder to secure insurance. The amount of premium varies according tothe insurance plan. The premium under a life insurance policy maybe paid monthly , quarterly, semi annually orannually. 32. The annual premium may be less than twelve timesthe monthly premium. The annual premium is not equal to the SA dividedby the term of the policy and The annual premiumdoes 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 lessthan for a short term policy. 33. Premium depends upon Age of the person,family history and the Medical history of theperson to be insured. The premium actually paid by the policyholderdepends upon the level of risk as assessed bythe insurer. 34. The premium collected in the early years is more thanwhat is required. The pure premium will be Less than the officepremium. The net premium will be Less than the risk premium. 35. The premium is loaded because of Likely expenses. The premium rates printed in the promotionalliterature are Office premiums. 36. The reason for charging level premiums is that therisk increases as age increases and it is convenient toboth policyholder and insurer. The practice of charging level premiums, makes itconvenient to the policyholder reduces the likelihoodof lapses and adds to the reserves of the insurer. 37. Adjustments are made to the tabular premiumsbecause of The health of the person insured,The frequency of premium payment, Theoccupation of the person insured. Premium rates are determined by the actuariesof insurers. The age next birthday is either higher than theage nearest birthday or equal to nearestbirthday. 38. The premium calculated on mortality alone is calledrisk premium. Insurers collect premium in advance. In life insurance, profit is determined by The actuarywho makes a valuation 39. In the business of life insurance, valuationmeans an actuarial exercise to determineadequacy of funds. The addition to the life fund in a yearrepresents the moneys set aside by the insurerfor the policyholders. The addition to the life fund arises because ofthe practice of charging level premiums. 40. A life insurer does a valuation because it is astatutory requirement, it is necessary to be ableto declare dividends to shareholders and it tellsthe insurer how well it is managing thebusiness. The surplus in the life fund represents theprofits of the business, the excess premiumcollected by the insurer and the dues to theshareholders. 41. The surplus disclosed in a valuation means that theinterests of the policyholders are safe, the funds ofthe insurer are adequate to meet its liabilities and thebusiness is being managed well. The life fund belongs to the policyholders. In a valuation, the actuary calculates the fund that theinsurer must have and the liability of the insurer 42. Bonus is declared out of the surplus declaredby the actuary. The minimum percentage of the surplus to beset-aside for policyholders is ninety. Interim bonus valid Till the next declaration ofbonus. 43. A bonus becomes possible because actual experienceis better than expectations, the assumptions made inconstructing the premium were conservative andthere is a loading for bonus in the premium. Surplus in the life fund does not signify, that thepremium rates must be revised downwards, thepremium rates are appropriate, or the company is toomiserly in expenditure. It only signifies that insurer issolvent. 44. When a certain level of bonus is declared, itdoes not means that this level will bemaintained in future years but it is the bonusfor that particular year. 45. Microsoft Word Microsoft Excel DocumentMicrosoft Word WorksheetDocument 46. CHAPTER- 4 Life Insurance Products 47. A plan of insurance is said to be different fromanother if, the conditions when the sum assuredbecomes payable are different. Every plan of insurance is a combination of two basicplans Plans of insurance cannot be compared by comparingthe premium rates A whole life plan is basically a term insurance planwith an indefinite term 48. The sum assured under some policies increasesevery year whereas under some policiesreduces every year 49. 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 longafter the death of the insuredThe SA can be payable in a lump sum as well as in instalments. 50. In a limited payment policy, the premium isnot paid as long as thepolicy is in force. premium stops before theend of the term. 51. For the same age and SA, the premium under anordinary Whole Life policy Will be lessthan in a limited payment Whole Life policy For the same age, SA and term, the premium under anEndowment policy Will be lessthan in a limited payment Endowment policy 52. Limited payment plan policies may be preferredby persons Who are first class LIVES AND INTHE BEST OF THEIR LIVES. Limited payment plan policies may be preferredby persons Who do not expect to be in activeemployment for long The educational annuity policy is NOT anannuity policy, ALSO IT is NOT meant forONLY persons having young children 53. IN AN INCREASING TERM POLICY, SAINCREASES EVERY YEAR Only participating policies are entitled to thebenefit of bonus 54. IN A CONVERTIBLE PLAN THECONVERSION IS DONE WITHOUTUNDERWRITER In a convertible plan, the conversion is doneon the request of the policyholder 55. 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 inbonuses 56. A joint life policy MAY cover a married coupleunder one policy A joint life policy may cover partners inbusiness under one policy The premium of a joint life policy DOESNOT depend on the age of the older person 57. The bonus on a joint life policy is calculated onTHE SINGLE SA AND NOT THEDOUBLE SA IN A JOINT LIFE POLICY The premiumCHARGED will be less than the cost forinsuring the two persons separately IN A CHILDRENS POLICY ITS THEMINOR CHILD WHO IS INSURED 58. IN A CHILDRENS POLICY The insured child becomes theowner of the policy on vesting date IN A CHILDRENS POLICY The vesting date is a policyanniversary IN A CHILDRENS POLICY The deferred date is a policyanniversary IN A CHILDRENS POLICY The policy vests at age 18 lastbirthday IN A CHILDRENS POLICY Risk will commence ondeferred date automatically 59. IN A CHILDRENS POLICY On the deferred date,the insured child need not be a major IN A CHILDRENS POLICY THE POLICYHOLDER CAN DO THE ASSIGMENT AT ANYPOINT OF TIME IN A CHILDRENS POLICY The ownership of thepolicy changes on the vesting date AS THE CHILDBECOMES A MAJOR AND HENCE THEOWNER OR THE POLICY HOLDER 60. On vesting UNDER A CHILDRENS PLAN, the insuredperson CANNOT change the term of the policy On vesting UNDER A CHILDRENS PLAN the insuredperson CANNOT increase the SA A variable insurance plan combines an insurance plan with aninvestment plan A variable insurance policy DOES NOT guarantee a return oryield A variable insurance plan is good when investment conditionsare favourable AND THE stock market is booming 61. Industrial assurance is NOT meant only for industrialworkers Industrial assurance is meant for people with lowincomes A salary savings scheme policy is NOT an industrialassurance plan A salary savings scheme policy can be taken for a SAof Rs.10 lakh In industrial assurance the lapse rates tend to be high 62. salary savings scheme plans, the premium isdeducted from the pay roll industrial assurance plans, the premium isPAID BY THE INDIVIDUAL. THE POLICY HOLDER , THE INSURERAND the AGENT ALL ARE benefited if apolicy is under the salary savings schemE 63. The premium under a SSS policy is paid monthly The premium under a SSS policy is one twelfth theannual premium In a SSS policy, the policyholder has to ensure thatpremium is paid In a SSS policy, the responsibility to pay premium iswith the employeE In life insurance, the word rider refers to additionalclauses 64. A rider DOES NOT modify THE existing conditionin the policy A rider supplements or adds to an existing conditionin the policy Riders provide supplementary benefits to the basicplan A premium waiver option is allowed as a rider The premium on riders cannot exceed specified limitsof the basic premium 65. IN SOME OF THE riders, THE PREMIUMdepends on the age of the insured person The premium on a rider varies according to the basicplan There is no death risk cover in an annuity IN AN ANNUITY POLICY the payments may bepaid every month An annuity is NOT ONLY paid to the person whotakes out the annuity policy, IT CAN BE PAID TOTHE FAMILY MEMBERS ALSO 66. An annuity CAN BE paid AFTER the death of theperson ALSO DEPENDING UPON THEPREFERENCE OF THE PERSON WHO HASTAKEN the annuity policy An annuity policy guarantees a pension NO MEDICAL IS REQUIRED IN AN ANNUITYPLAN Under an annuity certain policy, the annuity DOESNOT stop after ANY certain period, IT JUST GETSCONVERTED INTO A LIFE ANNUITY 67. Under a deferred annuity policy, the annuitycommences ONLY AFTER THE COMPLETIONOF DEFERMENT PERIOD I,E AT THEVESTING 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 allcommence on the same date I,E ON VESTING 68. In a deferred annuity policy, the premiumCAN be paid in a lump sum AS WELL AS ININSTALLMENTS In group insurance, the proposal is made bythe employer Group insurance covers a large numbers ofpersons in one policy 69. Group insurance is relatively cheaper thanindividual insurances Salary savings schemes policies SHOULDNOT BE CONFUSED AS group insurancepolicies In group insurance the premium changes everyyear 70. In group insurance the premium is NOT paid by thepersons who are covered BUT BY THEEMPLOYER The members of a housing society can negotiate for agroup insurance policy The members of a housing society can negotiate for agroup insurance policy A bank can take out a group policy for its account holders A finance company can take out a group policy for thosetaking loans from 71. The amount of cover in a group policy is NOTDECIDED by individual members OF THATGROUP The amount of cover for each member is fixed by theterms of the policy A master policy is issued in a group insurance policy NONE OF THE memberS in a group policy paysthe premium directly to the insurer Copies of the master policy are NOT given to allmembers by the insurer BUT ONLY TO THEEMPLOYER 72. 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 atthe option of the members Group business is socially very relevant A trade union can take out a group insurance policyfor its members 73. A group insurance contract is NOT A CONTRACTbetween the insurer and the insured persons Premiums under some group policies are paid bygovernments group insurance differ from salary savings schemesIN FOLLOWING WAYS: IN TERMS OF THE PERSONS WHO PAY THEPREMIUM Responsibility to pay the premium THE PERSON Deciding to take the policy 74. Group insurance differs from salary savings schemesIN the FOLLOWING WAYS: NUMBER OF PERSONS INSURED UNDER APOLICY Responsibility of employer Issue of premium receipt A group of travelers on a package tour cannot takegroup insurance Members of a toddy tappers association can takegroup insurance In group policies, the chance of adverse selection islow 75. Microsoft Excel Microsoft WordMicrosoft Word DocumentDocument Worksheet 76. CHAPTER - 5 UNDERWRITING 77. Proposal form is both a request and an offer toenter an insurance contract. Selection and underwriting are same.(Underwriting can also be termed as selection.) Policy is issued after the assessment of risk byunderwriter. In first class life or normal or standard life, thepremium charged is equal to tabular premium andno extra bonus is given for the life being normalor standard and bonus is given only as per thenormal terms and condition of the contract. 78. An underwriter acts in the interest of thepolicyholder as well as the insurance company.An underwriter charges extra premium forphysical hazards.Body measurements may indicate physicalhazards. 79. Physical hazard affects the probability of death. Financial underwriting is done to evaluate thepossibility of moral hazard. The underwriting assessment includes the intentionof proposer for taking insurance and the genuinenessfor the need of insurance. 80. Moral hazard may be suspected in cases where life tobe insured is old or insurance is for a very largeamount. It is not possible to quantify the extent of moralhazard. An underwriter uses financial and medical data . Medical referee is a doctor in the panel and not theunderwriter. 81. The medical referee only sees the reportsreceived by the insurer and does not examinethe life to be insured. 82. In some cases, the underwriter consults the reinsurersbefore deciding. If the underwriter feels that the risk is more, he mayimpose a lien. A lien may be imposed by the underwriter if theadditional risk is expected to wear off in course oftime . A lien operates for a specific period. A clause restricts the benefits under the policy. 83. A clause excludes specific risks. Medical examination may not be required in all thepolicies. The system of non - medical underwriting isintroduced because Medical examiners are notavailable in all areas The system of non - medical underwriting isintroduced because most of the cases are found to bestandard lives (acceptable at Ordinary Rate OR) 84. Under the system of non-medical underwriting, thereis restriction on both the SA and age. Working and educated women are treated on par withmen. The agent is expected to make his report commentingon the risk factors and the agents report is importantfor the underwriter. 85. By writing a truthful report, the agent ishelping the insurer and the life to be insured. Smoking and drinking are hazards invitingadditional premium. Underwriting is the process of verifying thelevel of risk of each new entrant. 86. In the case of a lien, the amount payable ondeath will vary from year to year 87. Microsoft WordMicrosoft Word Microsoft Excel DocumentDocument Worksheet 88. CHAPTER-6 INSURANCE DOCUMENT 89. The proposal is the basis of the insurance contract. The proposal can be signed in any language and notnecessary to be signed in the language in which it isprinted. The proposal should be written by the proposerhimself / herself. 90. The declaration in the proposal must be signed by theproposer. The information in the proposal form is used forunderwriting,if found incorrect can nullify theinsurance contract If the proposal form is filled up in a language notknown to the proposer, The person who filled up theform has to sign a declaration. 91. Personal statements are required in all thecases and need not be witnessed by the agents. A copy of the proposal has to be given to theproposer. A copy of medical report is never given to theproposer . 92. The medical report, The agents confidential report tothe insurer, The medical referees advice areconfidential and will not be given to the proposer. The proposal form and personal statement containinformation relevant to determine the level of risk,Moral hazard and Insurable interest. 93. FPR is the evidence of the insurance contractbegun. Policy document is the evidence of theinsurance contract. The medical examiner depends upon thestatements in the personal statement. 94. The FPR is issued when The first premium isadjusted in the office. The date of commencement of the policyCannot be later than the date of issue of theFPR. Policies can be back dated to any date withinthe financial year . 95. The second quarterly (monthly,half-yearly)premium after commencement is calledrenewal premium. If a policyholder has doubts about the policyhe has applied for, he can Ask for cancellationwithin fifteen days (free-look period) of issueof the policy. 96. In the case of SSS policies, the employer doesnot get the renewal premium receipts. In the event of a dispute, the policy documentwill be referred to. A policy is specific and relevant only to aparticular contract. 97. The nomination may be made later by anendorsement. The change in terms will be made byendorsements. When a policy is converted, an endorsement ismade on the policy. 98. Changes in the terms of the policy are madethrough endorsements. When a policy is converted, an endorsement ismade on the policy. IRDA has not prescribed proposal forms forall insurers 99. Endorsements on a policy form part of theinsurance contract , and it must be typed on orattached to policy. The family history appears in the personalstatement. Clauses and Endorsements modify theconditions in the policy. 100. Microsoft Word Microsoft Excel DocumentMicrosoft Word WorksheetDocument 101. Chapter 7Policy Conditions 102. If the age proof submitted along with proposal formlater 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 agefrom the commencement , Insurer can revise the premium & other terms of thecontract. Age is material information which can affect the termsof underwriting. 103. Age is not only important for the underwritingbut 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 30/31or15. 104. If premium is not paid within the days of grace ,the policy lapses. In the case of SSS , if the premiums arededucted by the employer. 105. If the premium was due on 15th July & 16th August is aSunday , the grace period will end on 17th August(Monday) If the monthly premium was due on 24th February in aleap year (Tuesday), the grace period will end on 10thMarch (Wednesday) If death occurs in grace period , the premium due willnot be waived. 106. The premium is deemed to be paid when thecash, cheque or D.D is received. When a policy lapses the contract comes to anend. When a policy lapses some benefits areprotected 107. If the insured dies during the days of grace , theclaim will be admitted. The non-forfeiture clause is relevant only when thepremium is not paid. Non-forfeiture provisions exist because It is not fair to the policyholder to deny everything to thepolicyholder The insurance Act requires it There is an accumulated reserve under the policy 108. Following are non-forfeiture options. Policy becomes paid up Payment of surrender value Automatic advance of premium 109. Surrender value factor increases with theduration elapsed; therefore in case of paid uppolicies surrender value increases. When policy lapses vested bonus will not beforfeited. 110. The reserve accumulates under a policy becauseof level premiums. Paid up option is effective from date of firstunpaid premium. Any paid up policy does not participate in futurebonuses; it will also not be entitled to anyinterim bonus. 111. A policy is made paid up only if the paid up value is ofa minimum amount. If the paid up value is not up to a level the cash valuewill be paid. When premium is advanced from surrender value , thepolicy does not lapse. The premium advanced under the non-forfeituresoption, remains a debt. In case of automatic advance of premium , policies areentitled to bonus. 112. In amount of SA payable on death; automaticpremium advance is same as extended termassurance. In the duration for which the policy will remain inforce; automatic advance of premium differ fromextended term assurance. In automatic premium advance option ,the fullinstallment premium is advanced. Non-forfeiture options seeks to protect thepolicyholders interest 113. When policy lapses it is neither beneficial to thepolicy holder nor to the Insurer. A lapse is effectively a case of adverse selection. Lapse may happen because of temporary financialdifficulties. A revival is the opposite of a lapse. A revival is as important as a new proposal forinsurance. Revivals are in the interest both, policyholder as wellas insurer 114. In case of revival Requirement of medical examinationis depends on the S.A & varies according to theduration of lapse. On revival ,the relevant S.A for revival will be theoriginal S.A less paid up value. A revived policy effectively is, a new contract. Non-disclosure at the time of revival can nullify thepolicy. 115. On revival, the original terms of the policy maybe changed. Duty to disclose all material facts, revives onrevival. 116. Assignment changes the title to the policy Nomination doesnt 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 theassignee is absolute owner of the policy 117. 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 doesnt transfer the property. 118. The assignment can be made on separate paper . Assignment becomes effective immediately onceit is made . Nomination becomes effective after it isnotified to the insurer. 119. Assignor receives rights as per the conditionsmentioned in conditional assignment. A policy which is absolutely assigned , the rightscan be again retransferred to the assignor whenthe assignee reassigns the policy. 120. A NOMINATION CAN BE MADE UNDERA CHILDRENS DEFERRED POLICYAFTER VESTING DATE . THE NOMINATION IS INTENDED TOMAKE CLAIM SETTLEMENTS EASIER 121. THE NOMINATION CAN BE IN FAVOUROF MORE THAN ONE PERSON IN THE CASE OF MANY NOMINEES,THE CLAIM WILL BE PAID TO THEMJOINTLY, ITS NOT DIVIDED AMONGTHEM. NOMINATIONS CAN BE MADE BEFOREPOLICY COMMENCES . 122. THE NOMINATIONS CAN BE MADE ONLY BYTHE INSURED HIMSELF. ASSIGNEE IS FREE FROM THE ASSIGNORSOBLIGATIONS UNDER THE POLICY. NOMINATIONS CAN BE DONE TO A MINOR . A NOMINEE DOESNT BECOME THE OWNEROF POLICY. 123. A PERSON TO WHOM ONE OWNS MONEYS CAN BEMADE A NOMINEE A NOMINATION CAN BE MADE IN FAVOUR OF ANINSTITUTION IF THE NOMINEE IS A MINOR, THE CLAIM CANNOTBE PAID TO THE GUARDIAN , ITS PAID TOAPPOINTEE. IF THE NOMINEE DIES, THE CLAIM CANNOT BE PAIDTO THE HEIRS OF THE NOMINEE ,AS THERE IS NOTRANSFER . ( THE INSURED NEED TO CHANGE THENOMINATION 124. IF THE ASSIGNEE IS DEAD, THE CLAIM CANBE PAID TO THE ASSIGNEES HEIRS . AN ASSIGNEE CAN ASSIGN THE POLICYFURTHER TO ANOTHER PERSON THE ASSIGNEE CAN TAKE A LOAN UNDERTHE POLICY. THE NOMINEE CANNOT MAKE A FURTHERNOMINATION UNDER THE POLICY 125. THE CLAIM AMOUNT BELONGS TO THEHEIRS OF THE DECEASED AN ASSIGNEE BECOMES THEPOLICYHOLDER A NOMINATION CAN BE MADE IN JOINT LIFEPOLICIES THE POLICY HAS TO BE GIVEN TO THEINSURER AT THE TIME OF SURRENDER ORLOAN 126. LOANS CAN BE GIVEN TO A POLICYWHICH MAY BE IN FULL FORCE ORWHICH MAY BE LAPSED PROVIDEDPOLICY HAS A SURENDER VALUE. LOANS ARE AVAILABLE ON PAID UPPOLICIES 127. A POLICY IS FORECLOSED WHEN THEPRINCIPLE LOAN AND ACCUMULATEDINTERESTCOULD BECOME MORE THANTHE SURRENDER VALUE. A POLICY IS NOT FORECLOSED WHEN THELOAN IS NOT REPAID A POLICY IS NOT FORECLOSED AT THETIME OF CLAIM 128. OUTSTANDING AMOUNTS OF LOANS AREDEDUCTED FROM THE CLAIM AMOUNT FORECLOSURE ACTION CANNOT BE TAKENTILL A NOTICE IS SERVED ON THEPOLICYHOLDER A POLICY WHICH IS FORECLOSED CAN BEREINSTATED FORECLOSURE CAN BE DONE ONLY AFTERINFORMING THE POLICYHOLDER 129. MWPA UNDER A MWP ACT POLICY, THE BENEFICIARIES MUST BESPECIFIED AT THE COMMENCEMENT OF THE POLICY IF APOLICY IS UNDER THE MWP ACT, IT CANNOT BE SURRENDERED BY THE BENEFICIARIES A LOAN CANNOT BE TAKEN BY THE TRUSTEESIF A POLICY IS UNDER THE MWP ACT, THE POLICYHOLDERIS NOT THE LIFE INSURED NOT THE BENEFICIARIES THE TRUSTEE THE BENEFICIARIES UNDER THE MWP ACT CANNOT BEANY MEMBER OF THE FAMILY. IT SHOULD BE EITHERWIFE OF CHILDREN. THE BENEFICIARIES PERMITTED UNDER THE MWP ACTDEPEND ALSO ON RELIGION MWP ACT POLICY CANNOT BE SURRENDERED 130. Microsoft Word Microsoft Excel DocumentMicrosoft Word WorksheetDocument 131. CHAPTER 8- CLAIMS 132. A claim is a demand by the policy holder tofulfill the insurers obligations. A claim arises when the insured eventhappens. A request for a loan or surrender is notconsidered a claim. 133. A claim is paid after the completion of theclaims settlement process not immediately ondeath THE INSURERS DO NOT MAKEENQUIRIES IN THE CASE OFMATURITY CLAIMS . 134. THE INSURER MAKES ENQUIRIES ONLY INTHE CASE OF EARLY CLAIMS A DEATH CLAIM WITHIN TWO YEARS OFCOMMENCEMENT OR REVIVAL IS TREATEDAS AN EARLY CLAIM A DEATH CLAIM WITHIN TWO YEARS OF ANALTERATION IS NOT TREATED AS ANEARLY CLAIM. 135. MATURITY CLAIM CHEQUES ARE PAIDTO THE TRUSTEES IN A MWP ACTCASE. AND NOT TO BENEFICIARIESOR POLICY HOLDERS 136. MATURITY PROCEEDS ARE PAID TOTHE HEIRS, IF THE POLICYHOLDERDIES EARLIER TO TAKING THECLAIM. MATURITY PROCEEDS ARE NOT PAIDTO THE NOMINEE, IF THEPOLICYHOLDER DIES EARLIER TOTAKING THE CLAIM. 137. CLAIMS MAY BE PAID ON THE BASISOF INDEMNITY, IF TITLE IS NOTESTABLISHED 138. 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 COURTJUDGMENT . IN THE CASE OF A MISSING PERSON, THECLAIM ARISES FROM THE DATE THE COURTDECREES HIS DEATH AND NOT THE DATEFROM WHICH HE IS MISSING . 139. SURVIVAL BENEFITS CANNOT BE SETTLEDON INDEMNITY BASIS, IF ORIGINAL POLICYIS LOST. A DUPLICATE POLICY HAS TO BEMADE . IF ORIGINAL POLICY IS LOST, DUPLICATEPOLICY IS NOT NECESSARY FOR MATURITYPAYMENTS. 140. Microsoft Word Microsoft Excel DocumentMicrosoft Word WorksheetDocument 141. Chapter 9 Linked Life Insurance Products 142. ULIPS PROVIDE FOR FLEXIBILITY IN ULIPS, NAVS ARE NOT DECIDED BY THEINSURERS THEMSELVES IN ULIPS THE DEATH BENEFIT MAY NOT BE A GUARANTEED FIGURE IN ULIPS THE ENTIRE PREMIUM PAID ISINVESTED IN THE CHOSEN FUND THE PREMIUMS, IN EXCESS OF RISK COVER,IS INVESTED AS DESIRED BY THEPOLICYHOLDER 143. IN ULIPS THE INSURANCE COVERMUST BE A MINIMUM MULTIPLE OFTHE PREMIUM ULIPS CAN BE SURRENDERED ONLYAFTER THREE YEARS LOANS ARE NOT GIVEN UNDER ULIPS ULIPS CANNOT BE ISSUED ASPARTICIPATING POLICIES 144. THE NAVS OF ALL THE FUNDS OF ALL THEINSURERS WILL VARY THE OFFER PRICE CAN BE HIGHER THANTHE BID PRICE THE OFFER BID SPREAD, WILL IN SOMECASES BE ZERO THE OFFER BID SPREAD IS THEDIFFERENCE BETWEEN THE TWO PRICES 145. A POLICYHOLDER CAN SWITCHBETWEEN FUNDS AT ANY TIME THE PREMIUM TO BE INVESTED INTHE FUND CAN BE INCREASED INANY YEAR THERE IS ALWAYS A CHARGE FORSWITCHING BETWEEN FUNDS 146. DEATH CLAIMS ARE PAID DURING THELOCK-IN PERIOD OF THREE YEARS THE NAV OF A FUND CAN BE LESS THANPURCHASE PRICE THE SA MUST NOT BE LESS THAN 5 TIMESINSTALMENT PREMIUM THE SA MUST NOT BE LESS THAN 1.25 TIMESSINGLE PREMIUM 147. ONLY THE ALLOCATED PREMIUM ISINVESTED IN THE FUNDS THE POLICYHOLDER IS RESPONSIBLE FORTHE BENEFITS UNDER THE POLICY THE INSURER IS NOT RESPONSIBLE FORTHE BENEFITS UNDER THE POLICY THE NAVS ARE PUBLISHED REGULARLY 148. ONE CAN PAY ADDITIONAL PREMIUM INANY YEAR FOR INVESTMENT IF ONE INCREASES THE PREMIUM, THE SAWILL NOT BE INCREASED. THE LOCK IN PERIOD WILL APPLY, IFADDITIONAL PREMIUM IS PAID ANY YEAR IF THE POLICY IS TERMINATED EARLIERTHAN THE SPECIFIED TIME, A CHARGE HASTO BE PAID 149. AN ADMINISTRATIVE CHARGE HAS TO BE PAIDEVERY YEAR RIDERS CAN BE AVAILED OF THE DEATH BENEFIT MAY BE INTEGRATED THE DEATH BENEFIT WILL BE THE BASIC SA ONLY PARTIAL WITHDRAWALS ARE PERMITTEDPERIODICALLY THE SA AND THE VALUE OF UNITS WILL BE PAIDTO THE LIFE ASSURED 150. Microsoft Excel Microsoft Word WorksheetMicrosoft Word DocumentDocument 151. CHAPTER 10- INSURANCE AGENCY 152. The laws of The Insurance Act The ContractAct, The Income Tax Act, affect working ofinsurance agent. A person is an insurance agent because of thenature of his duties. An agent must look after the interests of theinsurer and the proposer. 153. The functions of an agent differ according to theinsurer he is working for. A person is eligible to get the insurance agency licenseonly if he is above 18 yrs Of age, has undergonetraining and has passed IRDA Examination. A License for insurance agency is given only if insurerrecommends the person. 154. Individuals, Companies & Co-operative societies can get theinsurance agency license. A person with a criminal record will not be given theinsurance agency license. Broker is an intermediary, A specified person work for thecorporate agent, A cooperate insurance executive can work foronly one life insurance company. A Life insurance Agent is not an employee of an insurer, Hecan work accordingly to his schedule, can also represent aMutual Fund, Small Savings Schemes, can also be a sharebroker. 155. Commissions may continue to be paid to the heirs, after the death of theagent. A Life insurance agent should try to be aware of all the financialinstruments, Know the benefits of all life insurance plans, understand income tax lawsand Should also advise the best financial plans to the prospect. Its good for life insurance agents to be expert in other financialinstitutions. A life insurance agent should always carry his license and literature withhim and should not appear shabby. Life insurance always does not meet all the needs of all people, is notalways better than other investments and tax advantage is not only thereason for buying Life insurance. 156. A person cannot get commission on the premiumbought by him under policies if he does not havelicense. A life insurance job is not over as long as thepolicyholder or any member of his family is alive. When a policy lapses it means that the agent hasfailed in his duties and has not explained the benefitsof insurance to the policyholder. 157. In Insurance its good to have knowledge of all the benefitsabout the plan, similar plans from the competitors andrelevant tax laws. Some people have no need for life insurance and some buy itonly for tax benefits. In market there are plenty of savings and investmentinstruments available. An agent may not necessarily know everything that theproposer wants to know. 158. Ethical behavior leads to improved business and earningsand it automatically comes when policyholders interest is keptin mind and is prescribed in IRDAs code of conduct. There is no need for an insurance agent to run down otherinsurance companies. An agent has to reveal all the material facts to the customerand should not worry about extra charge. (Utmost GoodFaith). Unethical behavior can affect the settlement of the earlyclaim. 159. When the claim is repudiated, the agenttrustworthiness is affected. The agent must give complete and correctinformation about the life assured. It is wrong if an agent suggests the customer toterminate the existing policy and go for the new onekeeping his first years commission in mind. 160. Microsoft Word Microsoft Excel DocumentMicrosoft Word WorksheetDocument 161. CHAPTER 11- 162. EVERY INSURER IN INDIA HAS TO COMPLYWITH THE INSURANCE ACT THE INSURANCE ACT DEALS WITHREGISTRATION OF INSURERS,INVESTMENTS OF INSURANCE FUNDS,LICENSING OF AGENTS THE INSURANCE ASSOCIATION ISCONSTITUTED BY THE INSURANCE ACT 163. IT IS AN OFFENCE IF AN AGENT GIVES AREBATE IT IS AN OFFENCE IF AN INSURER GIVES AREBATE A POLICYHOLDER HAVING A DISPUTEWITH AN INSURER, HAS A RIGHT TOAPPROACH EITHER IRDA, OROMBUDSMAN OR CONSUMERS REDRESSALFORUM THE OMBUDSMAN IS NOT THE FINALAUTHORITY INVOLVING INSURERS 164. THE INSURER HAS NO LIBERTY TO REJECTTHE DECISIONS OF THE OMBUDSMAN THE OMBUDSMANS AUTHORITY IS NOTLIMITED TO CLAIMS MATTERS ONLY THE OMBUDSMAN IS NOT A JUDICIALAUTHORITY THE OMBUDSMAN WILL NOT HEARMATTERS ALREADY BEFORE OTHERCOURTS 165. THE OMBUDSMANS RECOMMENDATIONSARE NOT BINDING ON THE COMPLAINANT INSURERS HAVE TO COMPLY, IF THECOMPLAINANT ACCEPTS WHAT THEOMBUDSMAN SAYS MATTERS REFERRED TO THE OMBUDSMANHAVE TO BE DECIDED IN ONE MONTHTHE OMBUDSMAN CANNOT MODIFY THETERMS OF ACCEPTANCE OF THE PROPOSAL 166. DISPUTE OVER THE AMOUNTOFFERED BY THE INSURER TOSETTLE A CLAIM, WHETHER APREMIUM HAD BEEN PAID IN TIMEOR NOT , WHETHER THE POLICYSHOULD BE TREATED LAPSED ORNOT CAN BE REFERRED TO THEOMBUDSMAN 167. COMPLAINT THAT THE ENQUIRIES BEING MADEARE UNJUSTIFIED AND DELAYING THE CLAIM,SUCH COMPLAINS CAN BE REFERRED TO THEOMBUDSMAN COMPLAINTS THAT THE INSURER IS DELAYINGTHE CLAIM ON THE GROUNDS OF INVESTIGATIONWOULD BE HEARD BY THE OMBUDSMAN COMPLAINTS THAT THE PREMIUM WAS PAID ONTIME BUT ACCOUNTED BY THE INSURER LATEWOULD BE HEARD BY THE OMBUDSMAN 168. COMPLAINTS THAT THE POLICY SHOULD NOT BETREATED AS LAPSED WOULD BE HEARD BY THEOMBUDSMAN LIFE INSURANCE POLICIES PROVIDE SAVINGS INTAXES THE INCOME TAX RELIEF WILL NOT BE THE SAMETHROUGHOUT THE POLICY TERM THE SURRENDER VALUE IS NOT TREATED ASINCOME THE CLAIM AMOUNT IS NOT TREATED AS INCOME 169. TAX BENEFITS ARE NOT PART OF POLICYCONDITIONS. THE TAX BENEFITS MAY BE CHANGED AT ANYTIME THROUGH LEGISLATION A CONSUMERS FORUM IS NOT A SET UPEXCLUSIVELY FOR INSURANCE MATTERS THERE CAN BE AN APPEAL MADE AGAINST THEDECISION OF THE CONSUMER FORUM THE CONSUMER FORUM CAN SUMMON WITNESSES THE OMBUDSMAN CANNOT SUMMON WITNESSES 170. THE INCOME TAX PRIVILEGES FORINSURANCE ARE NOT GUARANTEED IT IS NOT NECESSARY FOR EVERY AGENTTO DO SOME BUSINESS IN THE RURALAREAS IT IS NOT NECESSARY THAT T HE BUSINESSIN THE RURAL AREAS HAS TO BE DONEONLY BY THE RURAL AGENTS 171. A RURAL AREA IS DEFINED IN THE IRDAREGULATIONS NO AGENTS ARE APPOINTED SEPARATELYTO WORK IN THE RURAL SECTOR ANY AGENT CAN DO BUSINESS FROM THERURAL AREAS THE IRDA HAS SPEICIFIED HOW MUCHMINIMUM BUSINESS THE INSURERS CAN DO IN THE RURAL AREAS 172. THE INSURANCE ACT HAS STIPULATEDTHAT INSURERS MUST DO MINIMUMBUSINESS IN THE RURAL AREAS THE REQUIREMENT OF BUSINESS FROMTHE RURAL AREAS INCREASES EVERY YEAR THE MINIMUM REQUIREMENT IS IN TERMSOF NUMBER OF POLICIES 173. THE SOCIAL SECTOR IS NOT THE SAME ASTHE RURAL SECTOR THE SOCIAL SECTOR INCLUDES BACKWARDCLASSES, UNORGANIZED SECTOR THE SOCIAL SECTOR CAN BE IN THE RURALAREAS AS WELL AS URBAN AREAS MICRO INSURANCE IS NOT MEANT FORTHE RURAL SECTOR ONLY 174. NO SPECIALLY APPOINTED AGENTS AREREQIURED TO SELL MICRO INSURANCE LIFE INSURANCE AGENTS CAN SELL NON-LIFE MICRO INSURANCE PRODUCTS LIFE MICRO INSURANCE POLICY CANNOTEXCEED RS. 50000 SA HEALTH INSURANCE COVERS CAN BEPROVIDED UNDER MICRO INSURANCE 175. COMMISSION FOR SELLING MICROINSURANCE IS LESS THAN ORDINARYINSURANCE THE TERM FOR LIFE MICROINSURANCE POLICIES IS LIMITED A PERSON AGED 45 CAN BE GIVEN ALIFE MICRO INSURANCE POLICY 176. Microsoft Word Microsoft WordMicrosoft Excel Document DocumentWorksheet