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8/6/2019 NISM Insurance Session
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Concept of Risk & Insurance
Life Insurance Products
General Insurance Products
Insurance History & Regulations
Contents
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An uncertain event leading to a loss
Kinds of Risk
Personal Risk
Property Risk
Liability Risk
Loss can be categorized as Financial Loss
Non Financial Loss
What is a risk?
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Death (Loss of Income)
Disability (Loss of Income temporarily)
Critical Illness (High treatment charges) Illness & injuries (Hospitalization expenses)
House: Fire, theft, calamity
Motor: Accidents, theft, calamity
Common risks faced by us
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Risk avoidance
Risk reduction
Risk transfer (Insurance) Risk retention
How can one manage risks?
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Insurance is the a risk management tool
Insurance is transfer of risk to a third party
(insurance company).
Its contract between Insured (Individual) and Insurer
(Insurance Company). Called Policy
Insured pays premium & Insurer pays sum
assured to the insured/family who has faced theevent. Risk Sharing concept
Life Insurance & General Insurance
What is insurance?
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1. Insurable interest
Exists if insured suffers from financial loss in case of event
Should own the object/property
Blood relations, employee-employer
2. Utmost good faith
Greater duties of faith on proposer & insurer
Disclosure of information and facts. E.g health history
3. Indemnity (Applicable to General Insurance Only)
Actual compensation of loss. No additional gain
4. Subrogation: Transfer of rights of insured to insurer.
5. Contribution: Sharing of loss by all insurers.
Principles of Insurance
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Concept of Risk & Insurance
Life Insurance Products
General Insurance Products
Insurance History & Regulations
Contents
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Add Needs (A)
Outstanding Loan Amount
Family Commitments specially childrens future Future Expenses of family
Deduct Resources (B)
Current Investment Assets
Current Life Insurance Coverage
Present Value of Spouse Income
Life Insurance Need Analysis
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1. Term Policy
2. Endowment Policy
3. Whole Life Policy4. Moneyback Policy
5. Annuity & Pension Policy
6. ULIP (Unit Linked Insurance Policy)
Types of Life Insurance Policies
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Provides cover for a specific period only
Premium is low.
No returns/refund of premium No investment element
100% Risk Cover
Sum assured paid on death Best policy for adequate life cover
Buy based on life insurance need analysis
Term Policy
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Most popular insurance policy
Combines Investment + Risk Cover
Sum assured paid on death or survival atmaturity
Bonus paid along with Sum Assured on
maturity Premiums are higher than term due to a
savings component
Endowment Policy
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Pays either at death or maturity
Maturity usually 100 years age.
Premium paid for life time
Works for estate planning as benefits are
generally enjoyed by family
Whole Life Policy
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Covers death & survival benefits
Lump sum paid periodically.
20% + 20% + 20% + 40% of SA at predefined intervals Full sum assured paid on death
Popular for planning Childrens Education &
Marriage Specially designed Childrens Policies available in
market
Moneyback Policy
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Combination of MFs + Term
Units are priced as per current market value
On death higher of 2 or both is paid Sum assured
current value of units
High flexibility in policy structure
High costs too.
ULIP (Unit Linked Insurance Policy)
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Mortality charges
Cost of insurance coverage
Premium allocation charges Usually goes towards agents commission
Fund management charges
To manage investment component like MFs Policy administration charges
Surrender charges
Various costs of investment oriented
insurance policies specially ULIPs
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Accidental Death
Additional Sum Assured if death
Critical Illness If critical illness diagnosed
Waiver of Premium
Waives off premium if something happens toperson who is paying premium
Used mainly in Childrens Policies
What are Riders?
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Nomination
Entitles to receive the sum assured
Has to distribute it to the legal heirs
Policy Lapse
Loan against policy
Free Look Up Period Premium Paying Term & Options
Grace period
Important Concepts
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Concept of Risk & Insurance
Life Insurance Products
General Insurance Products
Insurance History & Regulations
Contents
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Health Insurance Policy
Motor Insurance Policy
Home Insurance Policy
Overseas Travel Insurance Policy
Critical Illness Policy
Personal Accident/Disability Policy
Types of General Insurance Policies
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Hospitalization Expenses over 24 hours
Room charges, Medicine & Test Charges,
Operation, doctor fees etc covered Family floaters available
Group mediclaim policy
Eligible for tax benefits under 80D 1-5 lakhs cover recommended based on
affordability
Health Insurance
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Own Damage
Accidents
Thefts
Natural Calamities
Third Party Liability
Death /Disability
Property Damage
Accidental Death
Limited to a small amount
Motor Insurance Policy
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Fire
Theft
Calamities earthquakes, floods
Furniture, fittings, gadgets & appliances
Jewellery & precious items
Sum Insured separately for Home Structure
Home Contents
Home Insurance Policy
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Medical Treatment
Personal Accident
Loss of Luggage
Flight Cancellation
Loss of Passport
Personal Liability to Third Party
Overseas Travel Insurance
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Cancer, Heart Attack, Kidney Failure, Organ
Transplant, Paralysis, Bypass Surgery
Full Sum assured given on diagnosis Existing ailments not covered
Medical checkup a pre-requirement for many
5-20 lakhs based on family health history &affordability recommended
Critical Illness Policy
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Death 100%
Permanent Total Disability -100%
Permanent Partial Disability Varying
Temporary Total Disablement
1% of Sum Insured per week
Low Premium
Acts as Income replacement
Personal Accident Policy
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Concept of Risk & Insurance
Life Insurance Products
General Insurance Products
Insurance History & Regulations
Contents
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First policy issued in England in 1583
In India first policy issued in 1870
The Insurance Act 1938 (amended)
LIC of India formed in 1956 after nationalization of lifeinsurance Business of 245 private insurance companies
General insurance business of107 insurancecompanies was nationalized in 1972 & four public
sector General Insurance Companies were formed Insurance sector opened up in India for private players
in 2000
History of Insurance in India
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Insurance Regulatory & Development Authority(IRDA)
Insurance Regulatory & Development Authority
Act 1999 Controlling and regulatory apex body in the
country for insurance sector
Chairman and members appointed byGovernment of India
Head Quartered at Hyderabad
IRDA
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Individual Agents
Corporate Agents
Bancassurance Insurance Brokers
Directly from companies
Branches
Online from websites
Where to buy insurance?
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IRDA (licensing of agents) regulation 2000
IRDA (surveyors & loss assessors ) regulation, 2000
IRDA (insurance advertisement & disclosures) regulation, 2000
IRDA (obligations of insurers to rural sectors) regulation, 2000 IRDA (investments) regulation, 2000
IRDA (third party administrators) regulation 2001
IRDA (protection of policyholders interest ) regulations, 2002
IRDA (licensing of corporate agents) regulations 2002
IRDA (manner of receipt of premium) regulation, 2002
IRDA (micro-insurance) regulations, 2005
IRDA (licensing of brokers) regulation, 2002
Regulations Issued by IRDA
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