MERCHANT BANKING AND

FINANCIAL SERVICES
 MODULE 1 (8 Hours)

• Bank and Banking –

• Permissible banking activities-

• Types of banks in India-

• Role of RBI as a regulator-

• Banker and customer-

• Types of relationship between bank and customer –
• Bank`s obligation to customers –
• Types of accounts and customers-

• Types of lending-
• charging of securities –

• Banks and technology- Various IT products and services-

• International banking services
 MODULE 2 (6 Hours)

• Insurance service- Need and importance Life and non life insurance-

• Players in life and non life insurance-

• Essentials of insurance contracts-

• Risk appraisal and selection-

• Life and non life insurance products including unit linked plans
 MODULE 3 (8 Hours)

• Merchant Banking-
• SEBI guidelines for merchant bankers –

• Issue Management –
• Equity issues –
• Rights issues –
• Debenture issues –

• Book building –

• Private Placements –
• Pre & Post issues activities –

• Raising capital from International markets: ADRs, GDRs , ECB etc.

 MODULE 4 (8 Hours)

• Lease and Hire purchase- –

• Meaning and Types of leasing –

• Legislative frameworks –
• Matters on Depreciation and Tax –
• Problems on leasing –

• HirePurchasing-
• Concepts and features –
• Tax and Depreciation implications –
• Problems on Hire Purchasing.
 MODULE 5 (4 Hours)

• Credit rating and Securitization of debts –

• Definition and meaning-
• Process of credit rating of financial instruments-

• Rating methodology-

• Rating agencies –

• Rating symbols of different companies Securitization of debt-

• Meaning-
• Features-
• Special Purpose Vehicle-

• Pass Through Certificate & mechanism –

Benefits of Securitization –
• Issues in Securitization
 MODULE 6 (7 Hours)
•
Depository Service and Mutual funds: -
• Depositary services-
• Role of depositories and their services—

• Advantages of depository system –NSDL and CDSL-

• Depository participants and their role-

• Stock Broking Services including SEBI guidelines –

• Mutual Funds – Structure of Mutual Funds-

Types Mutual Funds –

• Advantages of mutual funds –

• Exchange Traded Funds –

• Hedge funds-
• Regulations on mutual funds –

• Accounting aspects –
Performance Evaluation.
 MODULE 7 (10 Hours)

•
Money Market Instruments –
• Treasury Bill –
• Commercial bill –
• Commercial paper –
• Certificate of deposit –
• REPO/Reverse REPO –
• Call money-
• Notice money –
• Term money –
• Credit card –
• Bill discounting –
• Factoring –
• Forfaiting –
• Consumer finance –
• Reverse mortgage service
 MODULE 8 (5 Hours)

• Marketing of Financial Services –

• Conceptual framework –
• Distribution –
• Pricing –
• Promotion –
• Attracting & retaining customers –
• Segmentation –
• Positioning –
• Development and launching of new products –
• Behavioral profile of customers.
RECOMMENDED BOOKS:

1. Financial Services—M.Y.Khan – TMH

2. Merchant Banking –J.C.Verma
3. Financial Services & Systems– S.G.Guruswamy – Thomson
Learning

REFERENCE BOOKS:
1. Indian Financial System—M.Y. Khan – TMH
2. Financial Services – Gorden & Nataraju – HPH
3. Indian Financial System – Pathak - Pearson Education.
4. Merchant Banking Principles and Practice : H.R,Machiraju – New
Age International
5. Financial Institutions and Markets L.M.Bhole – TMH
6. Financial Markets & Institutions—S.G. Guruswamy—Thomson
Learning
7. Services Marketing --S.M.Jha – HPH
8. Indian Financial System – Machiraju – Vikas
9. Merchant banking and financial services – N. Mohan – Excel books
INSURANCE
 MODULE 2 (6 Hours)

• Insurance service- Need and importance Life and non life insurance-

• Players in life and non life insurance-

• Essentials of insurance contracts-

• Risk appraisal and selection-

• Life and non life insurance products including unit linked plans
 History

 Insurance existed in mutual protection form in the Aryan tribes some

3000 years back.
 The word ‘Bima’ was derived from the Persian word ‘Bim’ meaning
‘Fear’ and ‘Bima’ means ‘expense to get rid of fear’.
 Traders in olden times devised a system of contract in which, the
supplier of the capital for business would agree to cancel the loan if the
trader was robbed of his goods.
 The trader who borrowed the capital paid an extra sum (a premium) for
this kind of protection over and above the usual interest. As for the
lender, collecting these premiums from many traders made it possible
for him to absorb the losses of the unfortunate few, who really suffered
the loss.
 The first insurance policy was issued in England in 1583.

 Insurance primarily creates counterpart of the risk, which is

security.

 Insurance is a co-operative device to spread the loss caused

by a particular risk over a number of persons who are
exposed to it and it does not reduce the risk nor alters
probability of risk but it only reduces/spreads financial losses.
 In Financial sense:

Insurance is a social service in which a group of individuals (insured) transfer risk to another

party (insurer) in order to combine loss experience, which permits statistical prediction of losses

and provides for payment of losses from funds contributed (premiums) by all members who

transferred risk.

• LEGAL SENSE:
Insurance is a contractual arrangement whereby one party agrees to compensate another party

for losses. The legal definition spells out the legal rights, duties and obligations of all the parties

to the contract.

• Insurance is defined as the equitable transfer of the risk of a loss, from one entity to
another, in exchange for payment.
• An insurer is a company selling the insurance;

• an insured or policyholder is the person or entity buying the insurance policy.

• The insurance rate is a factor used to determine the amount to be charged for a certain
amount of insurance coverage, called the premium.
 Characteristics of Insurance

 The basic characteristics of insurance are:

1. Pooling of losses.
2. Payment of fortuitous losses.
3. Risk Transfer.
4. Indemnification.
 Characteristics of Insurance

Pooling of Losses
 Pooling is spreading of losses incurred by the few over the
entire group, so that in the process average loss is
substituted for actual loss.
 Pooling implies:
1. Sharing of losses by the entire group
2. Prediction of future losses with some accuracy based on the
Law of Large Numbers.
 Characteristics of Insurance

Payment of Fortuitous Losses

 A fortuitous loss is one that is unforeseen & unexpected and
occurs as a result of chance. The loss must be accidental.
 Characteristics of Insurance

Risk Transfer
 Risk Transfer means that a pure risk is transferred from the
insured to the insurer who typically is in a stronger financial
position to pay the loss than the insured.
 Characteristics of Insurance

Indemnification
 Indemnification means that the insured is restored to his or
her approximate financial position prior to the occurrence
of the loss.
 Benefits of insurance

1. Reimbursement for losses

2. Reduction in tension & fear
3. Avenue for investment (attractive return)
4. Prevention of losses
5. Credit multiplication
 Principles of Insurance

 Following are the distinctive characteristics and legal

doctrines applying to insurance contract.
1. Principle of Indemnity
2. Principle of Insurable Interest
3. Principle of Subrogation
4. Principle of Utmost Good Faith
5. Principle of Proximate Cause
6. Principle of Contribution
 Principles of Insurance

Principle of Indemnity
 Indemnity means the insured should be placed in the same
financial position after as before the incurred loss.
 The insured should not profit from an insurance transaction.
 Any departure from this rule should be on the side of under
compensation.
 Principles of Insurance

Principle of Indemnity
 There are two exceptions to the rule.
1. Life Insurance: Because the economic value of human life cannot be
measured precisely before death, life insurance cannot be the contract
of indemnity. A person could not be put in exactly the same financial
position occupied before death because that position includes unknown
future income. However insurance companies take care in over
insurance as it creates an unacceptable moral hazard for life insurers,
who do not want their insured worth dead more than alive.
 Principles of Insurance

Principle of Indemnity
2. Replacement Cost Insurance: This insurance is written when the insurer
promises to pay an amount equal to the full cost of repairing or
replacing the property without deduction or depreciation.

 The principle of indemnity has two main purposes:

1. To prevent the insured property from a loss.
2. To reduce moral hazard.
 Principles of Insurance

Principle of Insurable Interest

 If people could insure property or life in which they had no financial
interest, insurance would become gambling.
 The principle of insurable interest states the insured must be in a
position to lose financially if a loss occurs.
 Insurance contracts must be supported by an insurable interest for the
following reasons:
1. To prevent gambling
2. To reduce moral hazard.
3. To measure the amount of insured loss in the property insurance.
 Principles of Insurance

Principle of Insurable Interest

 Examples of Insurable Risk for Property and Liability Insurance:
a) Ownership of property can support an insurable interest.
b) Potential legal liability can also support insurable interest. Ex. a watch
repairer, a tailor, a dry-cleaner has an insurable interest in the property of
the customer.
c) Secured creditors have insurable interest. A commercial bank or savings
and loan institutions that lends money to buy a house has an insurable
interest in the property.
d) Contractual right supports an insurable interest. Ex. A business firm that
contracts to purchase goods from abroad on the condition they arrive
safely in India has an insurable interest in the goods because of the loss of
the profits if merchandise does not arrive.
 Principles of Insurance

Principle of Subrogation
 Subrogation means substitution of the insurer in place of the
insured for the purpose of claiming indemnity from a third person
for a loss covered by insurance. The insurer is therefore entitled
to recover from a negligent third party any loss payment made to
the insured.
 Subrogation does not apply if a loss payment is not made.
However, to the extent that a loss payment is made, the insured
gives to the insurer legal rights to collect damages from the
negligent third party.
 Principles of Insurance

Principle of Subrogation
 Purpose of Subrogation: It has three basic principles:
1. Subrogation prevents the insured from collecting twice for the
same loss. The principle of indemnity would be violated because
the insured would be profiting from a loss.
2. Subrogation is used to hold the guilty person responsible for the
loss.
3. Subrogation helps to hold down the insurance rates. Subrogation
recoveries can be reflected in the rate making process, which
tends to hold rates below where they would be in the absence of
subrogation.
 Principles of Insurance

Principle of Subrogation
 Importance of Subrogation: There are five important corollaries of the
principle of subrogation:
1. The general rule is that by exercising its subrogation rights, the insurer
is entitled only to the amount it has paid under the policy. One
commonly held view is that the insured must be reimbursed in full for
the loss; the insurer is then entitled to any remaining balance up to the
insurer’s interest without the remaining going to the insured.
2. The insured cannot impair the insurer’s subrogation rights. The insured
cannot do anything after a loss that prejudices the insurer’s right to
proceed against the negligent third party. If the insurer’s right to
subrogate against a loss is adversely affected, the insurers right to
collect from the insurer is forfeited.
 Principles of Insurance

Principle of Subrogation
3. The insurer can waive its subrogation rights in the contract. The insurer
may decide not to exercise its subrogation rights after a loss occurs. The
legal expenses may exceed the possible recovery; a counter claim
against the insured or insurer may be filed by the alleged wrong doer,
the insurer may wish to avoid the embarrassment to insured or the
insurer company may wish to maintain good relations.
4. Subrogation dos not apply to life insurance. Life insurance is not a
contract of indemnity and subrogation has relevance only for contracts
of indemnity.
5. The insurer cannot subrogate against its insured. If the insurer could
recover a loss payment for a covered loss from an insured, the basic
purpose of purchasing the insurance would be defeated.
 Principles of Insurance

Principle of Utmost Good Faith

 Insurance contract is based on the principle of utmost good faith-
that is, a high degree of honesty is imposed on both parties to an
insurance contract than is imposed on parties to other contracts.
 The principle of utmost good faith is supported by three legal
doctrines: representations, concealment and warranty.
 Representations are statements made by the applicant for
insurance.
 The legal significance of a representation is that the insurance
contract is voidable at the insurer’s option if the representation is
(a) material (b) false and (c) relied on by the insurer.
 Principles of Insurance

Principle of Utmost Good Faith

 Material means that if the insurer knew the true facts, the policy
would not have been issued, or it would have been issued on
different terms.
 False means that the statement is not true or is misleading.
 Reliance means that the insurer relies on the misrepresentation
in issuing the policy at a specified premium.
 An innocent misrepresentation (not intentional) of material fact
makes the contract voidable.
 Principles of Insurance

Principle of Utmost Good Faith

 Concealment
 A concealment is intentional failure of the applicant for
insurance to reveal a material fact to the insurer.
 To deny a claim based on concealment, insurer must prove
to things:
1. The concealed fact was known by the insured to be
material.
2. The insured intended to defraud the insurer.
 Principles of Insurance

Principle of Utmost Good Faith

 Warranty
 A warranty is a statement of fact or promise made by the insured,
which is part of the insurance contract and must be true if the insurer is
to be liable under the contract.
 Ex. In exchange for reduced premium, the owner of a retail store may
warrant that an approved burglary and robbery alarm will be
operational at all times. The clause describing the warranty becomes
part of the contract.
 Warranty can be affirmative warranty (something has happened or
exists) or something will happen (promissory warranty). The warranties
can be written/expressed warranties or understood/implied warranties.
 Principles of Insurance

Principle of Proximate Cause

 The principle of proximate cause is based on the principle of
cause and effect.
 Insurance companies will only make good the loss which has
occurred due to insured peril and not otherwise.
Ex 1: Suppose Rakesh takes personal accident policy which does
not cover for sickness. He met with an accident. He was injured
but lay on the road for hours in that cold and rainy night before
somebody came and transferred him to the hospital. He fell sick
due to pneumonia and lost his life.
The insurer will pay only the cost of hospitalization and nothing
else.
 Principles of Insurance

Principle of Proximate Cause

Ex 2: In one ship, oranges and lemons were insured a cargo
against collision of ship. The ship actually collided and in
emergency was put into a port for repairs. For convenience of
repairs, the cargo was unloaded and reloaded on the ship after
repairs. The fruits when reached the destination had been
destroyed.
Here, which is nearest cause of loss?
Collision or loading and unloading.
The perishable nature of the fruits and unloading-loading of
cargoes were the proximate causes. This was not insured and
hence no damages were paid.
 Principles of Insurance

Principle of Contribution
 This refers to the sharing of the loss between co-insurers
when insured takes multiple policies against one loss and one
intent.
 Principle of contribution says that the insurer paying the claim
has the right upon other insurers to pass or transfer part of his
burden.
 Insurers will share the total loss ratably.
 The right arises only after paying the insured for his loss.
 Principles of Insurance

Principle of Contribution
 Essentials of this principle are:
1. The insured should be same for all contracts.
2. The policies should cover the same peril, which caused the
loss.
3. All protect the same interest of the same insured.
4. All policies should be in force when loss occurs.
 Consequences of Ignoring the Principles

 People might take policies on non existing things

(Principle of Insurable Interest)
 People may do double insurance and hide policies already taken.
( Principle of Indemnity)
 A few dishonest policies will take huge claims from the insurance company and
suffering will be caused to many innocents.
(Principle of Insurable Interest and Principle of Indemnity)
 People will insure anything and everything without insurable interest.
(Principle of Insurable Interest)
 People will not guard/maintain their assets once insured.
(Principle of Insurable Interest)
 Whole insurance system may crumble.
 Types Of Insurance

Types of Insurance

Life Insurance Non Life Insurance

General Insurance Misc. Insurance

Endowment

Fidelity Guarantee
Money back Marine Insurance
Insurance

pension
Fire Insurance Crop Insurance
Women, girl child
& Couple
Personal Accident
Whole Life Insurance
Burglary Insurance

Child Insurance
policy Vehicle Insurance Flood Insurance
 Life Insurance.
• Life insurance is a business proposition resting on the
combined operation of the law of mortality and
interest.
• The first essential of life insurance is to fix the
amount of contribution to be made by each policy
holder so that the fund should be adequate to meet
the whole of the claims.
• Life insurance or life assurance is a contract between the policy owner and the insurer,

where the insurer agrees to pay a designated beneficiary a sum of money upon the occurrence

of the insured individual's or individuals' death or other event, such as terminal illness or critical

illness.

• In return, the policy owner agrees to pay a stipulated amount at regular intervals or in lump
sums.
Life Insurance provides risk cover which no other investment option offers.
Following are the advantages of Life Insurance:

• It provides full protection against risk of death.

• Encourages and forces compulsory savings as the saved money cannot be

withdrawn and premium has to be paid regularly.

• Provides loan to tie over a temporary difficult phase and is also acceptable as
security for a commercial loan.

• Provides tax benefits to policyholders.

• Hedges risk against uncertainty.

 Module 2

• How do I compare life insurance policies?

• There is such wide range of policies that it is natural that a person would feel lost in the
jargon. To make the right decision, compare the following features of different policies:
• Premium – the amount of money you have to pay regularly to continue your insurance
coverage. The premium amount is depends on age, policy, premium payment options and
policy term.
• Term – the number of years the policy is valid. The longer the term the lower the premium.
The policy term varies from a minimum of 5 years to a maximum 55 years.
• Term of premium payment - the number of years you have to pay premium on your policy.
It may be the same as the policy term or less. Some policies have the options wherein one
can select the premium payment term.
• Sum Assured – the amount received on death of the policyholder. A lot of policies offer a
larger amount of sum assured than other benefits .So, if you are concerned more about
leaving a bigger amount for your family for the same premium select a policy with more sum
assured
• Bonus – is declared as a proportion of the sum assured, by the insurance company each year
depending on the profit made by the company. It is paid only as a lump sum either on
maturity or to the family upon death.
• Maturity – It is the amount of money you receive from the insurance company if you survive
the policy term.
• Cover – is also known as death benefit. It is the amount of money your nominee receives
from the insurance company upon your death. It is the sum assured plus the bonus.
• Returns – the amount of money realised at the end of the term of the policy calculated in
percentage terms every year. It can be compared to the rate of interest that you receive
from other investment.
• Riders-Insurance companies offer some options in addition to the regular policy features for
a small increase in premium like personal accident benefit, waiver of premium rider etc.
Thus, for a small increase a larger benefit can be obtained.
• For e.g. you want to have a policy for 10 lakhs. This would mean a large premium however if
you buy a policy of 5 lakhs with a term rider which pays additional 5 lakhs in case you die in
the next 20 years would cost much less.
• Therefore, for a given sum assured and term compare policies on the basis of these
parameters and choose a policy depending on your insurance objectives. – risk cover or 
returns or both
• Factors to consider while taking insurance

• How much insurance can you afford?

• What is your motive for taking insurance?
• How much insurance you need?
• How much insurance can you afford?

• Low premium high cover

• Cover for short term

• Higher cover with high returns

 Low premium high cover
In case you are looking for a policy that is relatively inexpensive but provides a death benefit
that is guaranteed for life, it is advisable to select whole life policies or term policies. They
offer zero or low returns.
• In Whole Life policies ,the Sum Assured is payable on death of the life assured and
premiums are payable throughout life.
It is available with the following variations:
• Option for maturity with or without profit
• Facility of paying the premium for a limited period.
• Single premium payment also possible
• This policy provides just risk cover. Examples of some policies:

LIC
• Jeevan Rekha
• Whole Life Plan

Max New York Life

• Whole Life Participating Policy (eligible for bonus)
• Whole Life Non-Participating Policy (not eligible for bonus)
 Cover for short term

Some people feel that when they grow old their number of dependants will reduce or they will
have sufficient wealth to meet the needs of their dependants.

Hence in such cases it is best to take a limited term policy which would meet the short and
medium term needs of the individual.

These policies have a lower premium.

• LIC’s Two Year Temporary Assurance Plan, Anmol Jeevan and

• Max New York Life’s Level Term policy are some of the options
 Higher cover with high returns

• Some people want more than risk cover from their policy.
• They look upon it as another source of investment.
A lot of Insurance products yield more compared to regular investment options, with the added
advantages of providing incentives and risk cover.
Insurance companies provide a wide range of options and the individual has to select a policy
based on his risk appetite.
• Some of them are

BAJAJ ALLIANZ

• The Invest Gain Plan

• The Unit Gain Plan

ICICI Prudential

• InvestShield Life
• InvestShield Cash
 Life Insurance products

• Jeevan Anurag
• Komal Jeevan CDA Endowment Vesting At 21
• Marriage Endowment Or
• Educational Annuity Plan CDA Endowment Vesting At 18
• Jeevan Kishore
• Jeevan Chhaya
• Child Career Plan
• Child Future Plan
• Child Fortune Plus  

• Jeevan Aadhar
• Jeevan Vishwas
 
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment
Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan
Jeevan Amrit

Jeevan Shree-I
Jeevan Pramukh

Two Year Temporary Assurance Policy

The Convertible Term Assurance Policy
Anmol Jeevan-I
Amulya Jeevan-I
The Money Back Policy-20 Years
                                 
   

The Money Back Policy-25 Years

Jeevan Surabhi-15 Years
Jeevan Surabhi-20 Years
Jeevan Surabhi-25 Years
Bima Bachat

Jeevan Bharati - I

The Whole Life Policy

The Whole Life Policy- Limited Payment
The Whole Life Policy- Single Premium
Jeevan Anand
Jeevan Tarang
Jeevan Saathi Plus
Jeevan Saathi
 Market Plus I
Jeevan Nidhi
Jeevan Akshay-VI
New Jeevan Dhara-I
New Jeevan Suraksha-I
O

Market Plus I
Profit Plus
Money Plus-I
Child Fortune Plus
Jeevan Saathi Plus
 New Bima Gold

Health Protection Plus

O

Bima Nivesh 2005

Jeevan Saral

Jeevan Madhur
Jeevan Mangal
Group LIC's Superannuation Plus

Group Term Insurance Schemes

Group Insurance Scheme in Lieu Of EDLI

Group Gr-atuity Scheme
Group Super Annuation Scheme

Group Savings Linked Insurance Scheme

Group Leave Encashment Scheme

O
Group Mortgage Redemption Assurance Scheme
Gratuity Plus
Group Critical Illness Rider
JanaShree Bima Yojana (JBY)
Shiksha Sahayog Yojana
Aam Admi Bima Yojana

Jeevan Nischay
Wealth Plus
Jeevan Aastha

Jeevan Varsha
Fortune Plus
Health Plus
• LIFE INSURERS IN INDIA
• Bajaj Allianz Life Insurance Company Limited
• Birla Sun Life Insurance Co. Ltd
• HDFC Standard Life Insurance Co. Ltd
• ICICI Prudential Life Insurance Co. Ltd
• IndiaFirst Life Insurance Company Ltd
• ING Vysya Life Insurance Company Ltd.
• Life Insurance Corporation of India
• Max New York Life Insurance Co. Ltd
• Met Life India Insurance Company Ltd.
• Kotak Mahindra Old Mutual Life Insurance Limited
• SBI Life Insurance Co. Ltd
• Tata AIG Life Insurance Company Limited
• Reliance Life Insurance Company Limited.
• Aviva Life Insurance Company India Limited
• Sahara India Life Insurance Co, Ltd.
• Shriram Life Insurance Co, Ltd.
• Bharti AXA Life Insurance Company Ltd.
• Future Generali India Life Insurance Company Limited
• IDBI Fortis Life Insurance Company Ltd.
• Canara HSBC Oriental Bank of Commerce Life Insurance Company Ltd.
• Aegon Religare Life Insurance Company Limited
• DLF Pramerica Life Insurance Company Limited
• Star Union Dai-Ichi Life Insurance Company Limited
 General Insurance
• General Insurance comprises of insurance of property against fire, burglary etc, personal
insurance such as Accident and Health Insurance, and liability insurance which covers legal
liabilities. There are also other covers such as Errors and Omissions insurance for professionals,
credit insurance etc.
 
• Non-life insurance companies have products that cover property against Fire and allied perils,
flood storm and inundation, earthquake and so on.

• There are products that cover property against burglary, theft etc.

• The non-life companies also offer policies covering machinery against breakdown, there are 
policies that cover the hull of ships and so on.

• A Marine Cargo policy  covers goods in transit including by sea, air and road.
In Short,
• Insuring anything other than human life is called general insurance. Examples are insuring
property like house and belongings against fire and theft or vehicles against accidental damage
or theft. Injury due to accident or hospitalisation for illness and surgery can also be insured.
Your liabilities to others arising out of the law can also be insured and is compulsory in some
cases like motor third party insurance.
•  
 INSURANCE

General Insurance:

Commercial Line of Insurance for:

Small and tiny industries
(fire, burglary, cash, motor and miscellaneous)

Traders
(shopkeepers policy, dukan mitra policy, burglary etc)

Professional
(aviation, marine,, banker, stock exchange, doctors,
accountants, architects, sports etc)

Operation covers
(fire, marine, workman, burglary, motor, neon sign, third party
lift, public liability, industrial all risk)
 INSURANCE

General Insurance:

Personal Line of Insurance for:

Property Insurance (House, Television etc)

Accident insurance (personal accident, passenger flight etc.)

Health Insurance (Mediclaim Insurance, cancer insurance,

videsh yatra mitra policy)

Liability Insurance (Professional indemnity, doctors indemnity,

directors and officers legal liability)
Key Factors for General Insurance

While buying a particular general insurance, you need to analyze certain angles to make sure
that it would cater to your requirements to its fullest capacity. These angles or key factors
are:
• A suitable product or service that matches your particular need
• Cost of the insurance product
• Flexibility of the product or services O

• Terms and policies of the product

• Benefits of General Insurance

On availing general insurance, you can fight off financial losses against your assets and
belongings.

• You can insure your as well as your family member's health by opting for personal accident
policies or medical insurance.
O

• These policies prove hugely beneficial in case of sudden occurrence of any accidents.
 General Insurance-Products:

• Health insurance
• Motor Insurance
• Personal accident
• Group Medical Policy
• Group Accident Policy
• Shop Insurance
• Stock insurance
• Office insurance
• Fire Insurance
• Marine Insurance
• Plant and Machinery Insurance
• Flat Insurance
• Society Insurance
 NON-LIFE INSURERS:

• Bajaj Allianz General Insurance Co. Ltd. ICICI Lombard General Insurance Co. Ltd.
• IFFCO Tokio General Insurance Co. Ltd. National Insurance Co.Ltd.
• The New India Assurance Co. Ltd. The Oriental Insurance Co. Ltd.
• Reliance General Insurance Co. Ltd. Royal Sundaram Alliance Insurance Co. Ltd
• Tata AIG General Insurance Co. Ltd. United India Insurance Co. Ltd.
• Cholamandalam MS General Insurance Co. Ltd.
• HDFC ERGO General Insurance Co. Ltd. O
• Export Credit Guarantee Corporation of India Ltd.
• Agriculture Insurance Co. of India Ltd.
• Star Health and Allied Insurance Company Limited
• Apollo DKV Insurance Company Limited
• Future Generali India Insurance Company Limited
• Universal Sompo General Insurance Co. Ltd.
• Shriram General Insurance Company Limited
• Bharti Axa General Insurance Company Limited
• Raheja QBE General Insurance Company Limited
• SBI General Insurance Company Limited
• Max Bupa Health Insurance Company Limited
 Unit Linked Insurance Plan (ULIP)

• Unit Linked Insurance Plan (ULIP) provides for life insurance where the policy
value at any time varies according to the value of the underlying assets at the time.
• ULIP is life insurance solution that provides for the benefits of protection and
flexibility in investment.
• The investment is denoted as units and is represented by the value that it has
attained called as Net Asset Value (NAV).
• ULIP came into play in the 1960s and is Opopular in many countries in the world.
• As times progressed the plans were also successfully mapped along with life
insurance need to retirement planning.
• In today's times, ULIP provides solutions for insurance planning, financial needs,
and many types of financial planning including children’s marriage planning.
• Unit Linked Insurance Plan - is a financial product that offers you life insurance as
well as an investment like a mutual fund.
• Part of the premium you pay goes towards the sum assured (amount you get in a
life insurance policy) and the balance will be invested in whichever investments
you desire - equity, fixed-return or a mixture of both.
• In India investments in ULIP are covered under Section 80C of IT Act.
• ULIPs also serve the same function of providing insurance protection against death
and provision of long-term savings, but they are structured differently.
• In a ULIP , the insurer deducts charges towards life insurance (mortality charges),
administration charges and fund management charges.
• The rest of the premium is used to invest in a fund that invests money in stocks or
bonds.
• The policyholder’s share in the fund is represented by the number of units.
•
 Why do insurers prefer ULIPs?

• Insurers love ULIPs for several reasons. Most important of all, insurers can sell
these policies with less capital of their own than what would be required if they
sold traditional policies.

• In traditional ‘with profits’ policies, the insurance company bears the investment
risk to the extent of the assured amount. In ULIPs, the policyholder bears most of
the investment risk. O

• Since ULIPs are devised to mobilise savings, they give insurance companies an
opportunity to get a large chunk of the asset management business, which has
been traditionally dominated by mutual funds.
• Unit linked insurance plan (ULIP) is life insurance solution that provides for the
benefits of risk protection and flexibility in investment.

• The investment is denoted as units and is represented by the value that it has
attained called as Net Asset Value (NAV).

• The policy value at any time varies according to the value of the underlying assets
at the time.

• In a ULIP, the invested amount of the premiums after deducting for all the charges
and premium for risk cover under all policies in a particular fund as chosen by the
policy holders are pooled together to form a Unit fund.

• A Unit is the component of the Fund in a Unit Linked Insurance Policy.

• The returns in a ULIP depend upon the performance of the fund in the capital market.

• ULIP investors have the option of investing across various schemes, i.e, diversified equity
funds, balanced funds, debt funds etc.

• In a ULIP, the investment risk is generally borne by the investor.

In a ULIP, investors have the choice of investing in a lump sum (single premium) or making
premium payments on an annual, half-yearly, quarterly or monthly basis.

• Investors also have the flexibility to alter the premium amounts during the policy's tenure.

• For example, if an individual has surplus funds, he can enhance the contribution in ULIP.
Conversely an individual faced with a liquidity crunch has the option of paying a lower
amount (the difference being adjusted in the accumulated value of his ULIP).

• ULIP investors can shift their investments across various plans/asset classes (diversified
equity funds, balanced funds, debt funds) either at a nominal or no cost
 Are ULIPs similar to mutual funds?

• In structure, yes; in objective, no. Because of the high first-year charges, mutual funds are a
better option if you have a five-year horizon.

But if you have a horizon of 10 years or more, then ULIPs have an edge. To explain this
further a ULIP has high first-year charges towards acquisition (including agents’
commissions).

As a result, they find it difficult to outperform mutual funds in the first five years. But in the
long-term, ULIP managers have several advantages over mutual fund managers.

Since policyholder premiums come at regular intervals, investments can be planned out
more evenly.

Mutual fund managers cannot take a similar long-term view because they have bulk
investors who can move money in and out of schemes at short notice.
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