Deepak Chaturvedi

Life Insurance
History of Life Insurance
Uncertainty and Risk
Hazard and Peril
Kinds of Risks
Risk Management
Importance of Insurance in Society and Nation
History of Life Insurance
It’s about assurance
Assurance Vs Insurance
Lord Krishna in Geeta ‘Yogekshemum
Vahamyaham’
Sage / Rishi Manu in Manusmriti
Joint Family system in India
Lloyd’s cafe
Kinds of Risks
Risk Management
Importance of Insurance in Society and Nation
Glossary
Uncertainty and Risk
Peril and Hazard
Assets
Insuring Assets – General Insurance
Human Asset / Human Life Value- HLV
MICE – Premium Components
CART of Risk Management
Importance of Insurance in Society and Nation
Risks
Critical and non-Critical risk (degree of potential
loss)
Important and un-important risk (retention)
Dynamic and Static (Nation/widespread vs
local)
Pure and Speculative Risks, Pure risks insured
subject to conditions:
By Chance
Specific and definite
Should be predictable
Measurable
Shouldn’t be catastrophic for Insurer
Risk Management
CART of Risk Management
C: Control
A: Avoid
R: Retain
T: Transfer
Individual –> Life Insurance –> Re-insurer –>
Re-Insurer –> (called Retrocession)
Risk management should have elements of
effectiveness and efficiency
Risk management process must be easy to
understand and execute
Risk to Human Life
(Asset)
4 D’s we all are exposed to
D : 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)
Insurance Contract
Indian 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 relationship
Bilateral Contract Vs Unilateral Contract
Commutative Contract Vs Aleatory Contract
Contract of Indemnity Vs Contract of Value
Traditional Life Insurance
Plans
Pure Term Plans
Pure Endowment Plan
All traditional plans are amalgamation of the
above two plans and have another dimension
called Premium Payment Term in them, an
SP
endowment plan is under;
Limited Premium

Regular Premium
Traditional Life Insurance
Plans
Endowment Plan
SP Limited Premium

Term Based Plans

Regular Premium
Anticipated Endowment Plan (Money back)
Limited Premium
SP

Regular Premium

Age Based Plans

Whole Life Plan Limited Premium Age 100
SP

Regular Premium
Age X
Unit Linked Insurance
Plans ULIP
 Unit Linked Insurance
Plans ULIP
Choose
100% Equity
Premium Premium 60%-50% Equity
Allocation 40% - 50% Debt

Choose SA Initial 100% Debt 70% - 80% Equity

in Multiples Charges & Securities 30% - 20%
Debt

20% Equity
80% Debt &
Securities

Switch
ULIP Blueprint
 ULIPS Working Methodology
 After Initial Charges, Ongoing
Charges are levied
 Ongoing charges are FMC or
AMC, Mortality and Policy
administration
 FMC or AMC is charged by
shaving off a predetermined %
on a daily basis from the fund
thus being managed
 When market rises (fund
grows), it results in more FMC
 Mortality and Policy
administration charges are
deducted by Canceling no of
Units, market fall will result in
more no of units being
deducted.
Revision
 INTRODUCTION TO INSURANCE
What is insurance
Law of large numbers
Law of averages
Purpose and need of insurance
Uncertainty 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
Revision
PRINCIPLES OF LIFE ASSURANCE
 Life insurance contracts.
Ubbaerimae fides
Unilateral Contract
Aleatory Contract
Contract of Value
Principle of utmost good faith.
Insurable Interest: Suffer after loss
Principle of Indemnity
Different risks
Critical, Important, Dynamic, Pure and Speculative
Revision
PREMIUMS AND BONUS
What is Premium
 Fees for a pre-determined cover; always collected annual
in advance
 Level Premium System Vs Natural Premium System
 MICE; Premium Loading:- mortality, investments etc

Premium calculation
 Age, 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
Revision
LIFE 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 (Critical
illness / Major Surgical & Hospital cash), Term riders
Annuities: Accumulation phase and Annuity phase
Group Insurance: Entity as a group
Revision
UNDERWRITING
Introduction to Underwriting
Classification of risk
 Insurable Risk
 Ordinary rates
 Accept with Lien
 Deferred Risk: Lien, Defer or Decline
 Declined Risk
Financial underwriting
Assessing risks: Self declaration, Medical tests, Earnings
Adverse selection: Suppression of material facts
Non-medical underwriting
Recent Trends
Revision
INSURANCE DOCUMENTS
Proposal form and Personal statement
First / Renewal Premium Receipt
Policy Document
Endorsements
Prospectus
Revision
POLICY CONDITIONS 
Age (nearer birthday / last birthday), Days of
grace
Lapse and Non – forfeiture
Paid up value
Revival
Assignment , Nomination
Surrenders and loan
Foreclosure; Insurer does it for protecting interest
of others
Alterations
Married Women’s Property Act policy
Revision
CLAIMS

Maturity claims
Survival benefit payments
Death claims.
Accident and disability benefits.
Claims Concession
Revision
LINKED 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
Revision
INSURANCE 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.
Revision
LAW 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.
Insurance Contract
Indian 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 relationship
Bilateral Contract Vs Unilateral Contract
Commutative Contract Vs Aleatory Contract
Contract of Indemnity Vs Contract of Value
Life Insurance
History of Life Insurance
Uncertainty and Risk
Hazard and Peril
Kinds of Risks
Risk Management
Importance of Insurance in Society and Nation
History of Life Insurance
It’s about assurance
Assurance Vs Insurance
Lord Krishna in Geeta ‘Yogekshemum
Vahamyaham’
Sage / Rishi Manu in Manusmriti
Joint Family system in India
Lloyd’s cafe
Kinds of Risks
Risk Management
Importance of Insurance in Society and Nation
Glossary
Uncertainty and Risk
Peril and Hazard
Assets
Insuring Assets – General Insurance
Human Asset / Human Life Value- HLV
MICE – Premium Components
CART of Risk Management
Importance of Insurance in Society and Nation
Risks
Critical and non-Critical risk (degree of potential
loss)
Important and un-important risk (retention)
Dynamic and Static (Nation/widespread vs
local)
Pure and Speculative Risks, Pure risks insured
subject to conditions:
By Chance
Specific and definite
Should be predictable
Measurable
Shouldn’t be catastrophic for Insurer
Risk Management
CART of Risk Management
C: Control
A: Avoid
R: Retain
T: Transfer
Individual –> Life Insurance –> Re-insurer –>
Re-Insurer –> (called Retrocession)
Risk management should have elements of
effectiveness and efficiency
Risk management process must be easy to
understand and execute
Risk to Human Life
(Asset)
4 D’s we all are exposed to
D : 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)
Insurance Contract
Indian 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 relationship
Bilateral Contract Vs Unilateral Contract
Commutative Contract Vs Aleatory Contract
Contract of Indemnity Vs Contract of Value