IIPM 4.Life Insurance

8/3/2019 IIPM 4.Life Insurance

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IIPM-4.Life ins. 1

LIFE INSURANCE


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IIPM-4.Life ins. 2

NEED FOR LIFE INSURANCE Family depends on income of breadwinner

Income is lost or reduced due to

-Death

-Retirement-Disability

-Disease


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IIPM-4.Life ins. 3

NEED FOR LIFE INS. Life insurance provides risk cover plus

savings

Risk cover is against loss of incomedue to contingency

Life insurance is seen as an instrument ofwealth accumulation and tax savings


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IIPM-4.Life ins. 4

LIFE INSURANCE BUSINESS

OPERATES ON ACTUARIAL PRINCIPLES that provide

the mathematical and statistical basis

LEGAL PRINCIPLES that govern therelationship between Insured and Insurer

REGULATORY LAW that regulates theconduct of business


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IIPM-4.Life ins. 5

LIFE INSURANCE PRODUCTS

Different Products are designed to

satisfy different insurance needsSum Assured(S.A.) Amt. payable

by Insurer is fixed and guaranteed


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IIPM-4.Life ins. 6

CLASSIFICATION OF LIFE

PRODUCTS Group - Individual

Linked - Non-linked

Without profit - With profit

Assurance - Annuity


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IIPM-4.Life ins. 7

INDIVIDUAL >< GROUP Individual Insurance An individual enters into

a contract for insurance on his own life

Group Insurance Under one contract a number

of individuals are insured, & a master policy

issued;could have additions & deletionse.g. A Corporate enters into a contract for

insurance of individuals under its employment.


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IIPM-4.Life ins. 8

LINKED >< NON-LINKED Linked The quantum of benefits payable

by insurer under the policy is linked to

Market Value of underlying investments

Non-linked The quantum of benefits

payable under the policy is guaranteed


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IIPM-4.Life ins. 9

WITHOUT PROFITS>


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ASSURANCE >< ANNUITY Assurance Type of Policies provide

DEATH Benefits

Annuity Type of Policies provide Lifelong

Survival Benefit ( Pension )


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IIPM-4.Life ins. 11

LIFE INSURANCE BENEFITSThe entire Life Insurance Business is concerned with

only Four Benefits, payable by Insurer:

Survival Benefit - Payment if the Life Assuredis alive on a fixed future date.

Death Benefit - Payment on death of the LifeAssured.

Accident/Disability Benefit - Payment on theLife Assured being involved in Accident

Critical Illness Benefit - Payment if the LifeAssured is afflicted by a serious disease.


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IIPM-4.Life ins. 13

LIFE ANNUITY Annuity means installments paid by Insurer

may be annual,half-yearly, quarterly or

monthly

Life annuity means installments are

payable so long as the person is alive

Objective Guaranteed income during oldage


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IIPM-4.Life ins. 14

LIFE ANNUITY OPTIONS Return of Corpus on Death-Lump Sum by

annuitant is returned to nominee but the

annuity installment is lesser.

Pure Annuity-Nothing is payable on death

but the annuity installment is higher

Immediate life annuity

Deferred life annuity


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IIPM-4.Life ins. 15

LINKED LIFE INSURANCE Unit linked insurance

-Assured death benefit

-Market linked survival benefit

Flexibility

Transparency

Options for investment types


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IIPM-4.Life ins. 16

UNIT LINKED

INSURANCE(ULI) Unit Linked Life Insurance combines

Insurance and Investment

Insurance Insurer pays a guaranteedamount on happening of the contingencyi.e.Death,Accident/Disability,Disease

Investment

Similar to Mutual Fund Unbundled the two aspects are shown

distinctly separate


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IIPM-4.Life ins. 17

HOW ULI OPERATES.. Policyholder pays premium

Certain charges are deducted from premium

Balance goes to investment pool

Policyholder`s share is reckoned in units

Value of units NAV based


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HOW ULI OPERATES.. Value of units not guaranteed by insurer

Investment risk passed on to policyholder

Charges may be reviewed and revised

Transparency of charges

NAV published daily


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IIPM-4.Life ins. 19

OPTIONS TO

POLICYHOLDER Term of policy

With Life Cover for specified Sum Assured

OR

With Option to convert into Life Annuity

( Pension ) Types of investment

Partial / full withdrawal


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IIPM-4.Life ins. 20

CHARGES Allocation Charge

First Year / Subsequent Years

Mortality charges Rider Premium Charge

Policy Administration Charge

Fund management charges

Switching Charge

Partial Withdrawal Charge

Surrender Charge


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IIPM-4.Life ins. 21

RIDERS Main Policy provides

-Death Benefit

-Survival Benefit

Riders are add-ons providing additional cover for

-Accident

-Critical Illness etc. Optional - added subject to additional premium


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IIPM-4.Life ins. 22

LIFE INSURANCE

CONTRACT General principles of contract

-Commercial

-Indian Contracts Act

Additional principles

-Utmost good faith-Insurable interest

-Proximate cause


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LIFE INSURANCE

CONTRACT Prospectus

Proposal

Underwriting

Acceptance


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IIPM-4.Life ins. 24

LIFE INSURANCE

CONTRACT Policy document

Conditions regarding premium payment

Days of grace

Lapse and revival

Non-forfeiture

Claim death/maturity Nomination

Assignment


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IIPM-4.Life ins. 25

DISTRIBUTION OF LIFE

PRODUCTS

Primarily through insurance agents

Personal contactsLife ins. is sold, seldom bought

Documents

IIPM 4.Life Insurance