life insurance2

8/7/2019 Life Insurance2

1/33

Deepak Chaturvedi


2/33

Life InsuranceHistory of Life Insurance

Uncertainty and Risk

Hazard and PerilKinds of Risks

Risk Management

Importance of Insurance in Society and Nation


3/33

History of Life InsuranceIts about assurance

Assurance Vs Insurance

Lord Krishna in Geeta Yogekshemum

VahamyahamSage / Rishi Manu in Manusmriti

Joint Family system in India

Lloyds cafe

Kinds of Risks

Risk Management



4/33

GlossaryUncertainty and Risk

Peril and Hazard

Assets

Insuring Assets General InsuranceHuman Asset / Human Life Value- HLV

MICE Premium Components

CART of Risk Management



5/33


6/33

Risk ManagementCART of Risk ManagementC: Control

A: Avoid

R: Retain

T: Transfer

Individual > Life Insurance > Re-insurer >Re-Insurer > (called Retrocession)

Risk management should have elements ofeffectiveness and efficiency

Risk management process must be easy tounderstand and execute


7/33

Risk to Human Life(Asset)4 Ds we all are exposed toD : Death (Dying young)

D : Diseases

D : Disability

D : Destitution (Living too long, may lead to this)

Individual > Life Insurance > Re-insurer > Re-Insurer > (called Retrocession)

People exposed to same risk because of similarperil come together

Contribute (Premium)

Pool (Insurance fund)

Share (Losses)


8/33

Insurance ContractIndian Contract Act 1872,Offer and Acceptance

Consideration

Capacity to Contract

Consensus ad idem (one-mind and thought)

Legal purpose

Capability of performance

Intention of Legal relationshipBilateral Contract Vs Unilateral Contract

Commutative Contract Vs Aleatory Contract

Contract of Indemnity Vs Contract of Value


9/33

Traditional Life Insurance

PlansPure Term Plans

Pure Endowment Plan

All traditional plans are amalgamation of theabove two plans and have another dimensioncalled Premium Payment Term in them, anendowment plan is under;

SP Limited Premium

Regular Premium


10/33

Traditional Life InsurancePlansEndowment Plan

Anticipated Endowment Plan (Money back)

Whole Life Plan

SP Limited Premium

Regular Premium

SP

Limited Premium

Regular Premium

Term

B asedPlans

Limited Premium

Regular Premium

SP

AgeBasedP

la ns

Age X

Age 100


11/33

Unit Linked InsurancePlans ULIP


12/33

Unit Linked InsurancePlans ULIP

100% Equity

70% - 80% Equit

30% - 20%

Debt

60%-50% Equity

40% - 50% Debt

20% Equity

80% Debt &Securities

100% Debt

& Securities

Premium

Allocation

Initial

Charges

Switch

Choose SA

in Multiples

ChoosePremium


13/33

ULIP Blueprint


14/33

ULIPS Working MethodologyAfter Initial Charges, Ongoing

Charges are leviedOngoing charges are FMC or

AMC, Mortality and Policyadministration

FMC or AMC is charged by

shaving off a predetermined %on a daily basis from the fundthus being managed

When market rises (fundgrows), it results in more FMC

Mortality and Policyadministration charges are

deducted by Canceling no ofUnits, market fall will result inmore no of units beingdeducted.


15/33

RevisionINTRODUCTION TO INSURANCE

What is insuranceLaw of large numbers

Law of averages

Purpose and need of insuranceUncertainty and risk

Hazard and Peril

Classification of risks: Standard, Sub-standard and declined

The human asset: Money making machine

Insurance as a social security tool

Role of Insurance in economic development


16/33

RevisionPRINCIPLES OF LIFE ASSURANCE

Life insurance contracts.Ubbaerimae fides

Unilateral Contract

Aleatory ContractContract of Value

Principle of utmost good faith.

Insurable Interest: Suffer after loss

Principle of Indemnity

Different risksCritical, Important, Dynamic, Pure and Speculative


17/33

RevisionPREMIUMS AND BONUS

What is PremiumFees for a pre-determined cover; always collected annual

in advance

Level Premium System Vs Natural Premium System

MICE; Premium Loading:- mortality, investments etc

Premium calculationAge, Gender, Genetics, Profession, Hobbies, Lifestyle and

Medical history

Life fund: Total of all funds across all policies /plans of a plan / company

Actuarial Valuation:

Bonus: Profits earned by insurance plan


18/33

RevisionLIFE INSURANCE PRODUCTS

Basic Elements

Pure Term

Pure Endowment

Some popular plans

Maha Life Gold etc

Variable Insurance plans

Salary Savings Schemes

Riders:-

Accidental Riders (ADB, PTD,PPD), Health (Criticalillness / Major Surgical & Hospital cash), Term riders

Annuities: Accumulation phase and Annuity phase

Group Insurance: Entity as a group


19/33

RevisionUNDERWRITING

Introduction to Underwriting

Classification of riskInsurable Risk Ordinary rates

Accept with Lien

Deferred Risk: Lien, Defer or Decline

Declined Risk

Financial underwriting

Assessing risks: Self declaration, Medical tests, EarningsAdverse selection: Suppression of material facts

Non-medical underwriting

Recent Trends


20/33

RevisionINSURANCE DOCUMENTS

Proposal form and Personal statement

First / Renewal Premium Receipt

Policy Document

EndorsementsProspectus


21/33

RevisionPOLICY CONDITIONS

Age (nearer birthday / last birthday), Days ofgrace

Lapse and Non forfeiture

Paid up valueRevival

Assignment , Nomination

Surrenders and loan

Foreclosure; Insurer does it for protecting interestof others

Alterations

Married Womens Property Act policy


22/33

RevisionCLAIMS

Maturity claims

Survival benefit payments

Death claims.Accident and disability benefits.

Claims Concession


23/33

RevisionLINKED LIFE INSURANCE PRODUCTS

What is a Linked Policy

Option of Funds

Net Asset Value(NAV)Flexibility

Lock-In

Charges

ULIP and traditional insurance

Annuities and pensions


24/33

RevisionINSURANCE AGENCY

Definition of an agent.

Agents Regulations.

Procedure for becoming an agent.Methods of remunerating agents.

Functions of agents.

Agency as a profession.

Responsibilities of an agent.

Prerequisites for success.

Ethical behavior.


25/33

RevisionLAW AND REGULATIONS

Insurance Act 1938.

LIC Act, 1956.

IRDA Act 1999.Consumer Protection Act, 1986.(COPA)

Ombudsman,

Income tax Act,

MWP Act.

Rural and social sectors.

Micro Insurance.


26/33


Consideration



Legal purpose






27/33

Life InsuranceHistory of Life Insurance

Uncertainty and Risk

Hazard and PerilKinds of Risks

Risk Management



28/33

History of Life InsuranceIts about assuranceAssurance Vs Insurance

Lord Krishna in Geeta YogekshemumVahamyaham

Sage / Rishi Manu in Manusmriti

Joint Family system in India

Lloyds cafe

Kinds of RisksRisk Management



29/33

GlossaryUncertainty and RiskPeril and Hazard

Assets

Insuring Assets General InsuranceHuman Asset / Human Life Value- HLV

MICE Premium Components

CART of Risk Management



30/33

RisksCritical and non-Critical risk (degree of potential

loss)

Important and un-important risk (retention)

Dynamic and Static (Nation/widespread vslocal)

Pure and Speculative Risks, Pure risks insuredsubject to conditions:

By Chance

Specific and definite

Should be predictable

Measurable

Shouldnt be catastrophic for Insurer


31/33

Risk ManagementCART of Risk ManagementC: Control

A: Avoid

R: Retain

T: Transfer

Individual > Life Insurance > Re-insurer >Re-Insurer > (called Retrocession)

Risk management should have elements ofeffectiveness and efficiency

Risk management process must be easy tounderstand and execute

Risk to Human Life


32/33

Risk to Human Life(Asset)4 Ds we all are exposed toD : Death (Dying young)

D : Diseases

D : Disability

D : Destitution (Living too long, may lead to this)

Individual > Life Insurance > Re-insurer > Re-Insurer > (called Retrocession)

People exposed to same risk because of similar

peril come together

Contribute (Premium)

Pool (Insurance fund)

Share (Losses)


33/33


Consideration



Legal purpose





life insurance2

Documents