lecture- 6 life insurance

7/30/2019 Lecture- 6 Life Insurance

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Need & Importance

1. Superior to any other saving plan

2. Encourages and forces thrift

3. Easy settlement and protection against creditors

4. Administrating the legacy for beneficiaries5. Ready marketability and suitability for quick borrowing

6. Disability benefit

7. Accidental Death benefit

8. Tax benefit


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Classification of Life insurance

1. Whole Life Policies

2. Endowment Assurance Policy

3. Term Assurance Plan

4. Money back policy5. Annuities

6. Variable Life Insurance

7. Universal Life Insurance


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Endowment Policies Combining risk cover with financial savings, endowment policies is

the most popular policies in the world of life insurance.

In addition to the basic policy, insurers offer various benefits such

as double endowment and marriage/ education endowment plans.

The cost of such a policy is slightly higher but worth its value.

In an Endowment Policy, the sum assured is payable even if theinsured survives the policy term.

If the insured dies during the tenure of the policy, the insurance

firm has to pay the sum assured just as any other pure risk cover.

A pure endowment policy is also a form of financial saving,whereby if the person covered remains living beyond the tenure of

the policy, he gets back the sum assured with some other

investment benefits.

1. Money back plan

2. Educational endowment assurance plan


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Term Assurance Plan/Policy

A term insurance policy is a pure risk cover for a specified

period of time. What this means is that the sum assured is

payable only if the policyholder dies within the policy term.

For example, if a person buys Rs 2 lakh policy for 15-years, his

family is entitled to the money if he dies within that 15-year

period.

What if he survives the 15-year period? Well, then he is not

entitled to any payment; the insurance company keeps the

entire premium paid during the 15-year period.

So, there is no element of savings or investment in such apolicy. It is a 100 per cent risk cover. It simply means that a

person pays a certain premium to protect his family against

his sudden death. He gives up the amount if he outlives the

period of the policy. This explains why the Term InsurancePolic comes at the lowest cost.


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Money back policy Money back policy is a policy opted by people who want

periodical payments. A money back policy is generally issued

for a particular period, and the sum assured is paid through

periodical payments to the insured, spread over this time

period.

In case of death of the insured within the term of the policy,

full sum assured along with bonus accruing on it is payable by

the insurance company to the nominee of the deceased..


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Annuities A person entering into an annuity contract agrees to pay a

specified sum of capital lump sum or by installment to the

insurer. The insurer in return promises to pay the insured a

series of payments until insured's death.

Generally life annuity is opted by a person having surpluswealth and wants to use the money after his retirement.

There are two types of annuities

1. Immediate annuities

2. Differed annuities


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Features of Life insurance Contract

1. Nature of General Contract

2. Insurable interests

3. Utmost good faith

4. Warranties

5. Proximate Cause

6. Assignment & nomination

7. Return of premium

8. Other Features


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Scope of Insurance Industry In India

1. Population (25 to 30)

2. Saving Habits

3. Dependency

4. Literacy Ratio5. Employment Opportunity


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Principles of Life insurance

1. Principles of utmost good faith

2. Indemnity

3. Law of Subrogation

4. Law of Contribution5. Insurable Interest

6. Proximate Cause


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Supplementary benefits

1. Participation/non participations

2. Loan

3. Surrender value

4. Reduced paid up insurance5. Extended term insurance

6. Automatic premium loan

7. Conversion option

8. Guaranteed additions

9. Loyalty addition

10. Return of premium


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Classification of PoliciesA. Duration of policy

1. Whole- life

2. Term insurance

3. Endowment insurance

B. Method of premium payments1. Single Premium Policy

2. Level Premium Policy

C. Participation in profit

1. Non-Participating/ Without Profit

2. Participating/With Profit

D. Number of lives covered or the Number of Persons Insured

1. Single Life Policies

2. Multiple Life Policies


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E. Method of payment of claim amounts

1. Lump Sum Policies

2. Installment or Annuity Policies

F. Non-Conventional Policies1. Policies under LIC Mutual Fund

2. Jeevan Akshay

3. Jeevan Dhara

4. Jeevan Kishor

5. Jeevan Chhaya

lecture- 6 life insurance

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