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Life Insurance

SYBBI Submitted to – Mrs Celsa

Group Members
Sr.No Name Roll no. Marks

1.

Royston Carvalho

3

2.

Alton Lobo

17

3.

Shriyesh Nair

22

4.

Olav D’Souza

33

5.

Prithviraj Rathod

38

6.

Avinash Crasto

41

1

Process of Taking Life Insurance Conclusion References 16 19 21 2 . 8. 1. Introduction History of Life Insurance 4 5 3. Benefits of Life Insurance 11 5. Acknowledgement 3 1.Index Sr.no Topic Page No. 2. 7. Types of Life Insurance 13 6. Features of Life Insurance 8 4.

for the valuable information provided by them in their respective fields. monitoring and constant encouragement throughout the course of this Project. sisters and friends for their constant encouragement without which this project would not be possible. brother. The blessing. Our parents. I am grateful for their cooperation during the period of our assignment.Acknowledgement We take this opportunity to express my profound gratitude and deep regards to our guide Mrs Celsa for her exemplary guidance. We are obliged to our classmates of SYBBI. help and guidance given by him time to time shall carry me a long way in the journey of life on which I am about to embark. Lastly. We thank almighty. 3 .

divorce. The exact meaning of life insurance policy is safeguarding during financial crisis.Introduction Definition of 'Life Insurance' A protection against the loss of income that would result if the insured passed away. the payment is made at the time of your death. health. lifestyle. but certain policies allow you to take a portion of the death benefit if you are terminally ill and need the money to pay for healthcare. For example. With a term policy. who will be responsible for your funeral costs and final medical bills? Would your family have to relocate? Will there be adequate funds for future or ongoing expenses such as day-care. Otherwise. With a permanent policy. you're no longer insured. The insurer sets the cost. mortgage payments and college? It is prudent to re-evaluate your life insurance policies annually or when you experience a major life event like marriage. your premium is fixed. the birth or adoption of a child. A contract that is made between the insurer and the insuree is called as Insurance. and other factors. Life insurance policy is something that will safeguard your family in case of any financial hassles. Life insurance policy is generally made for the benefit of your family as a whole and not on individual basis. The insurer refers to the insurance company and the insuree is the insured person. When the term ends. With a permanent policy. Meaning of 'Life Insurance’ The goal of life insurance is to provide a measure of financial security for your family after you die. you must renew the policy for another term or change your coverage. based on your age. but with a term policy it typically increases when you renew your coverage to reflect the fact that you're older. You pay an annual premium. before purchasing a life insurance policy. In most cases. You may select either term or permanent insurance. 4 . So. or purchase of a major item such as a house or business. you should consider your financial situation and the standard of living you want to maintain for your dependents or survivors. you can buy coverage for your lifetime. you are insured for a specific period of time. typically billed monthly or quarterly. The named beneficiary receives the proceeds and is thereby safeguarded from the financial impact of the death of the insured. for the coverage.

transportation. early forms of insurance ebbed with the decline of travel and long-distance trade. and a surcharge to cover the possibility of loss. During the feudal period.500 years ago. yogakshema. Life insurance came about a little later in ancient Rome. but aspects of it did continue through the Middle Ages. around 450 A. death. nearly 4. as well as help survivors monetarily. cargo. the Code of Hammurabi granted legal status to the practice. and even imprisonment. in China. India Insurance in India can be traced back to the Vedas. Rome In another part of the world. theft. the entire shipment would not be lost. most of the concepts of insurance were abandoned. With Rome's fall.History of Life Insurance Risk protection has been a primary goal of humans and institutions throughout history. the name of Life Insurance Corporation of India's corporate headquarters. and to protect widows and children. or freight. burial societies were formed in the Buddhist period to help families build houses. was so prevalent. in fact. In 2100 BC. in the ancient land of Babylonia. The term suggests that a form of "community insurance" was prevalent around 1000 BC and practiced by the Aryans. insurance was seen as a preventative measure against piracy on the sea.D. that as a way of spreading the risk. It formalized concepts of “bottomry” referring to vessel bottoms and “respondentia” referring to cargo. Such contracts contained three elements: a loan on the vessel.. disability. where burial clubs were formed to cover the funeral expenses of its members. is derived from the Rig Veda. These provided forms of member insurance covering risks like fire. particularly with merchant and artisan guilds. In effect. a number of ships would carry a portion of another ship's cargo so that if one ship was captured. These provided the underpinning for marine insurance contracts. an interest rate. Protecting against risk is what insurance is all about. Piracy. But during the 14th to 16th centuries. For instance. traders used to bear risk of the caravan trade by giving loans that had to be later repaid with interest when the goods arrived safely. ship owners were the insured and lenders were the underwriters. flood. China Over 5000 years ago. commerce. 5 . And similar to ancient Rome. and insurance would again re-emerge.

The type of insurance we see today owes its roots to 17th century England. 1761. Lloyd's Coffee House. in fact. In 1897. The year 1735 saw the birth of the first insurance company in the American colonies in Charleston. In 1835. The Presbyterian Synod of Philadelphia in 1759. life insurance also appealed strongly to the gambling instincts of England's burgeoning middle class.S. the British government passed the Workmen's Compensation Act. With the creation of the automobile. ship owners and underwriters met to discuss and transact business deals. The practice of reinsurance. And the first life insurance policy for the general public in the United States was issued. life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688. was the location where merchants. But it wasn't until 80 years later (after 1840). While serving as a means of risk-avoidance. 6 . gained importance and acceptance. Lloyd's of London. public liability insurance. on May 22. Two years later. bets were placed at Lloyd‟s on their anticipated dates of death. or as they were known then.” Making wagers on people's deaths ceased in 1774 when parliament forbade the practice. More advancements were made to insurance during the process of industrialization. that life insurance really took off in a big way. the infamous New York fire drew people's attention to the need to provide for sudden and large losses. SC. 79 merchant underwriters broke away in 1769 and two years later formed a “New Lloyd‟s Coffee House” that became known as the “real Lloyd‟s. The great Chicago fire of 1871 further emphasized how fires can cause huge losses in densely populated modern cities. which made it mandatory for a company to insure its employees against industrial accidents. that when newspapers published names of prominent people who were seriously ill. was devised specifically for such situations. Gambling was so rampant.Modern Insurance Illegal almost everywhere else in Europe. which first made its appearance in the 1880s. sponsored the first life insurance corporation in America for the benefit of ministers and their dependents. wherein the risks are spread among several companies. insurance industry was built on the British model. Insurance moves to America The U. in Philadelphia. The key to its success was reducing the opposition from religious groups. Reacting against such practices. Massachusetts became the first state to require companies by law to maintain such reserves.

Many employers sponsor group insurance policies for their employees. many societies were founded to insure the life and health of their members. while fraternal orders provided low-cost. Even today. Employees contribute a certain percentage of the premium for these policies. membersonly insurance. but sickness and accident benefits and old-age pensions.During the 19th century. 7 . providing not just life insurance. such fraternal orders continue to provide insurance coverage to members as do most labour organizations.

There are several methods of evaluation of risks. accident in motor insurance. Similarly. there is no compulsion here on anybody to purchase the insurance policy. theft in burglary insurance. Value of Risk The risk is evaluated before insuring to charge the amount of share of an insured. marineperils in marine insurance. 4. Since the life insurance contract is a contract of certainty.g. may or may not occur. because the contingency. Sharing of Risk Insurance is a device to share the financial losses which might befall on an individual or his family on the happening of a specified event. consideration or premium. So. he is able to pay the amount of loss. may be one or two years. In other insurance contracts. Payment at Contingency The payment is made at a certain contingency insured. Such a group of persons may be brought together voluntarily or through publicity or through solicitation of the agents. Co-operative Device The most important feature of every insurance plan is the co-operation of large number of persons who. the probability of loss is calculated at the time of insurance. payment is not certain due to uncertainty of a particular contingency within a particular period. agree to share the financial loss arising due to a particular risk which is insured. e.Features of Life Insurance 1. So. For example. The event may be death of a bread-winner to the family in the case of life insurance. So. 2. in effect. if the contingency occurs. in certain types of life policies. the contingency is the fire or the marine perils etc. otherwise no amount is given to the policy-holder. payment is made.. the death or the expiry of term. the payment is certain. If the contingency occurs. by insuring or underwriting a large number of persons. If there is expectation of more loss. fire in fire insurance and other certain events in general insurance.. Like all cooperative devices. The loss arising nom these events if insured are shared by all the insured in the form of premium. payment is made. Similarly. higher premium may be charged. in Pure 8 . 3. payment is made only when death of the assured occurs within the specified term. herein called. in term-insurance then. will certainly occur. An insurer would be unable to compensate all the losses from his own capital. etc.

the property owners could at best practice only some form of self-insurance. From a family and business point of view all lives possess an economic value which may at any time be snuffed out by death. So. 7. Therefore. Amount of Payment The amount of payment depends upon the value of loss occurred due to the particular insured risk provided insurance is there up to that amount. Large Number of Insured Persons To spread the loss immediately. which may not give him absolute certainty. it may be unmarketable. In the absence of insurance. In order to function successfully. The insurer promises to pay a fixed sum on the happening of an event. like property insurance. to make the insurance cheaper. The cost of insurance to each member may be higher. It is immaterial in life insurance what was the amount of loss at the time of contingency. smoothly and cheaply. 5. the dependents will not be required to prove the occurring of loss and the amount of loss. it is essential to insure large number of persons or property because the lesser would be cost of insurance and so. In life insurance. the insurance should be joined by a large number of persons. If the event or the contingency takes place. 9 . tariff associations or mutual fire insurance associations were found to share the loss at cheaper rate. and it is as reasonable to ensure against the loss of this value as it is to protect oneself against the loss of property. The co-operation of a small number of persons may also be insurance but it will be limited to smaller area. But in the property and general insurances. the payment does fall due if the policy is valid and in force at the time of the event.Endowment payment is made only at the survival of the insured at the expiry of the period. large number of persons should be insured. In past years. the amount of loss as well as the happening of loss. the lower would be premium. the purpose is not to make good the financial loss suffered. are required to be proved. Insurance is not a gambling The insurance serves indirectly to increase the productivity of the community by eliminating worry and increasing initiative. The uncertainty is changed into certainty by insuring property and life because the insurer promises to pay a definite sum at damage or death. 6.

in the insurance. but death may occur at any time and the property. 9. 8. From the company's point of view. the family is protected against losses on death and damage with the help of insurance. the life insurance is essentially nonspeculative. Insurance is not Charity: Charity is given without consideration but insurance is not possible without premium. In fact. insurance is also the antithesis of gambling. Cash withdrawals and loans Many universal and whole life policies allow you to withdraw or borrow money. no other business operates with greater certainties. It provides security and safety to an individual and to the society although it is a kind of business because in consideration of premium it guarantees the payment of loss. In fact. the insurance is just the opposite of gambling. In gambling. 10. Thus. It is a profession because it provides adequate sources at the time of disasters only by charging a nominal premium for the service. if he does not get his property or life insured he is gambling with his life on property. saving requires time. and will suffer loss if he is not insured. You must pay back the loan or your beneficiaries will receive a reduced death benefit. From the insured point of view. in fact. Interest rates tend to be relatively low. Accelerated death benefit This feature allows you to receive cash advances against the death benefit of your policy if you're diagnosed with a terminal illness. 10 . using the cash value of the policy as collateral. in absence of life insurance. and family may remain unprotected. By getting insured his life and property. too. Many people with this benefit use the money to help pay for treatment and other expenses when they have only a short time to live. by bidding the person exposes himself to risk of losing. Nothing is more uncertain than life and life insurance offers the only sure method of changing that uncertainty into certainty. the insured is always opposed to risk.Similarly. You can also use the cash value of your life policy to pay your premiums if you need or want to stop paying premiums for a period of time. Failure of insurance amounts gambling because the uncertainty of loss is always looming. he protects himself against the risk of loss.

You can meet your goals. you have to pay a fixed amount at a defined periodicity. offer in-built guarantees and defined maturity benefits through variety of product options such as Money Back. Safe and profitable long-term investment Life Insurance is a highly regulated sector. IRDA. The money saved during the earning life span is utilized to provide a steady source of income during the retired phase of life. Protection against rising health expenses Life Insurers through riders or stand-alone health insurance plans offer the benefits of protection against critical diseases and hospitalization expenses. in this scenario Life Insurance ensures that your loved ones continue to enjoy a good quality of life against any unforeseen event. be it your children's education. Life Insurance being a longterm savings instrument. traditional endowment plans. Guaranteed Cash Values. Guaranteed Maturity Values. according to your life stage and risk appetite.Benefits of Life Insurance Risk Cover Life today is full of uncertainties. their marriage. This benefit has assumed critical importance given the increasing incidence of lifestyle diseases and escalating medical costs. building your dream home or planning a relaxed retired life.e. This builds the habit of long-term savings. 11 . through various rules and regulations ensures that the safety of the policyholder's money is the primary responsibility of all stakeholders. also ensures that the life insurers focus on returns over a long-term and do not take risky investment decisions for short term gains. the regulatory body. Planning for life stage needs Life Insurance not only provides for financial support in the event of untimely death but also acts as a long term investment. Builds the habit of thrift Life Insurance is a long-term contract whereas policyholder. Traditional life insurance policies i. Assured income through annuities Life Insurance is one of the best instruments for retirement planning. Regular savings over a long period ensures that a decent corpus is built to meet financial needs at various life stages.

Protection plus savings over a long term Since traditional policies are viewed both by the distributors as well as the customers as a long term commitment. Tax Benefits Insurance plans provide attractive tax-benefits for both at the time of entry and exit under most of the plans. Growth through dividends Traditional policies offer an opportunity to participate in the economic growth without taking the investment risk. This helps you meet your unplanned life stage needs without adversely affecting the benefits of the policy they have bought. Facility of loans without affecting the policy benefits Policyholders have the option of taking loan against the policy. Mortgage Redemption Insurance acts as an effective tool to cover mortgages and loans taken by the policyholders so that. the burden of repayment does not fall on the bereaved family. 12 . in case of any unforeseen event. these policies help the policyholders meet the dual need of protection and long term wealth creation efficiently. The investment income is distributed among the policyholders through annual announcement of dividends/bonus.

The cost of such a policy is slightly higher but worth its value. the sum assured will be given to 13 . etc. In addition to the basic policy. one can choose their Life Insurance Scheme. Whole Life Policy As the name itself says. For example. The occasions may be marriage. So. policy holder receives huge amount while completing the tenure. insurers offer various benefits such as double endowment and marriage/ education endowment plans.500000 for 20 years. etc. a person who takes term policy of Rs. The intention of this policy is to protect the policy holder‟s family in case of death. If the policy holder dies during the policy time. Money will be paid back to the policy holder with the specified duration. The advantage of this policy is if the policy holder survives after the completion of policy tenure. This policy doesn‟t address any other needs of the policy holder. Because of these reasons this kind of policy is not very popular or insurance company not suggesting to take this policy. the policy holder has to pay the premium for whole life till his death. etc. If the policy holder dies before the policy term. It is the reason why term policies are very low cost. If he survive after 20 years then he will not get any amount from the insurance company. education. he receives assured amount plus additional benefits like Bonus. Money Back Policy Money Back Policy is to provide money on the occasions when the policy holder needs for his personal life. from the insurance company. Term Insurance Policy This policy is pure risk cover with the insured amount will be paid only if the policy hold dies in the period of policy time. he will get the assured amount. Even if he survives he will receive the assured amount.Types of Life Insurance As we know that Life Insurance is important for everyone to protect their family in case of their demise the insured money will save their family for educating their children and marriage of daughter. This policy combines risk cover with the savings and investment. In this kind of policy. According to your needs. Endowment Policy It is the most popular Life Insurance Plans among other types of policies. if he dies before 20 years then his family will get the insured amount. this type of policy is not suitable for savings or investment.

A portion of the sum assured is payable at regular intervals.his family. In this case if the insured expires by accident. LIC gives handsome bonus to its policyholders by way of profits. Convertible Whole Life Policy In the beginning. Group Insurance Policy Group insurance policy can be taken on the lives of the members of a family or of the employees of a business concern. the share in the profits is not given but the rate of premium is less in case of without profit policies. the insured amount becomes payable to the relatives of the employees. The period is usually 5 years. Joint stock companies prefer such type of policies for their employees. In case of such policies the premium rate is higher but the extent of protection against risk is also more. the survivor gets double amount of the policy. a whole life policy is taken but a provision is made in the policy itself to convert the same into an endowment policy after a fixed period. Such policy can be taken for any amount. It is like pension payment arrangement through life insurance. In case of without profit policy. On survival the remainder of the sum assured is payable. Double Accident Policy This policy gives special protection in case of death of a policyholder due to accident. It is useful for both partners and gives them safety and security. Annuity Policy Under this policy the amount of policy is paid in the form of annuities for a specified number of years or till the death of the assured. People who travel extensively may prefer this policy. The amount becomes payable to the survivor after the death of the other party. They are relieved from botheration of keeping money safely. Such policy is useful to those who prefer regular income in their old age. With or Without Profit Policy Under the with profit policy the policyholder is paid the sum assured plus a share in the profits earned by the insurance company every year. Joint life policy is suitable when both partners are employed and have the capacity to pay premium regularly. 14 . The companies pay premium .If any insured employee dies while in service. Joint Life Policy This Policy is taken on the life of two persons.

Later on when the salary increases the policy can be converted into endowment policy 15 . This policy is beneficial to newly employed people as in the beginning they can take a whole life policy as their salary is less.For a while life policy the rate of premium is much less but it increases when it is converted into an endowment policy.

pan card and the life insurance form are EXACTLY the same. be careful. G and H. every column in the life insurance form is crucial – that is the reason why they are there in the form. There are many companies in India selling life insurance and almost all of them have a Term cover available. So in order to protect their commission (and to please you) will take short cuts. Just say. pan card etc. Or you could call up and ask for an agent. Let us call them companies A to M. Why you don‟t like Term Insurance and why you are wrong ! Inquire about insurance cost Now let us say you like to deal only with A. one photograph. you could fill up the form online – and a person will get in touch for the formalities. Make sure that the name in your passport. All details should be accurately filled. On an average the agent will not be very well qualified – but most of them will try to dissuade you from buying a term insurance. The life insurance form. Visit these companies‟ websites and find out how much a term insurance for you costs. if you think you will be earning till the age of 65 years. D. If you are 35 – look for a policy that will protect YOUR INCOME till the age of say 55 years (choosing age 65 will increase the premium) if your retirement age is 55. „give me a term insurance form‟. you need not even look at them. If you do not TRUST say five of those companies – or you do not believe that you wish to deal with them. To the authorities K Balakrishnan is not the same as 16 . Formalities to fulfill If you are savvy and patient enough. Filling the form Next is the process of filling the form.Process of Taking Life Insurance Process Choose company that suits you The first step in buying Term insurance is to shortlist the company from where you wish to buy the product. Fill details accurately Every word. choose a 30-year plan. the medical insurance form and the form when you are landing in the US or Israel should always be filled by you personally! You know about embarkation yourself – not the agent whom you have just met. Many of them are worried that you will not be eligible to be insured. F. There will be other documentation like income proof (3 years IT return). However. This is one crucial thing that people are normally too lazy to do – so they delegate it to the agent.

but they have a right to cancel the contract. When the company issues a policy. If for example. especially if the nominee is more than one person. a person dies in a road accident – and what has been hidden was say blood pressure – Insurance companies have said „his blood pressure may have caused him some inconvenience while crossing the road…‟ Think about your nominee One very important thing which most life insurance buyers forget is that by lying on the proposal form they are telling a lie to their nominee. As per the contract. Besides. you are proposing and giving all your details that are asked for in the form. your smoking and alcohol consumption habits. Non-disclosure or a partialdisclosure makes such agreements voidable – the insurance company can choose to ignore it. This includes your age. spouse‟s occupation and children‟s names. It may sound trivial. weight (I have seen some agents argue with the doctor to show a few kilograms less and some doctors oblige!). Here the company literally looks at the application with a fine comb and anything that has not been correctly stated will be used against the claimant. Life insurance business is based on utmost good faith. spouse‟s name. Cross-check copy of application form Apart from the critical questions. Faith binds customer. there is almost a 100 per cent chance that the claim will be investigated. but let me assure you your nominee will not find it amusing. not to the life insurance company! If on death the claim amount is not paid (IMMEDIATELY). The Latin word for utmost good faith is Uberrimae Fidei – which means you (the applicant) is under a basic duty to disclose all material facts and surrounding circumstances that could influence the decision of the other party (the insurance company) to enter the agreement. parents illnesses before they were 65. If a person has taken a policy just say 8 months before the claim happens. they are 17 . The second perhaps the more important reason is when you are not truthful and you were to die. the amount of alcohol you drink.Balakrishnan Kumar. weight. your nominee will not get any money. number of cigarettes you smoke. height. insurer Let us start from the very beginning. The Life insurance form that you are filling in is called a „Proposal form‟ – which means you are proposing that you want a life insurance cover. check your height. there are some other questions like caste. and also your own medical history. it is almost like the policy did not exist. Be Truthful You should be truthful because of two reasons – one it is necessary to be truthful.

On you the liability is to pay the premium regularly. units will be allotted to you. As the case involved an employee of the company – the critical illness claim was paid without a murmur. Everything that you say in the form – your job. the asset management company is making an „Offer‟ to you. they will issue you a policy. Understand the contract There is a big difference between a mutual fund „investment‟ and a „lifeinsurance‟ contract. In case of an insurance contract. It is quite all right for a person to spend some more time while taking a policy but any delay at the time of claim settlement is bound to unnerve the dependents.bound to send you a copy of the application form – please check whether it is the same form which you had filled. In case of a mutual fund. If your cheque goes through. you are „Proposing‟ saying that you want life insurance. This means if you issue a valid cheque. If they are satisfied that your life is a normal life. They are making the offer. income. they may ask you to go through some more tests before they issue a policy. the sum assured is normally a critical amount and your dependents are waiting for that cheque to carry on their lives. Once a policy is issued by the company it means you have a contract that is binding. and on them is a duty that in case of death. This is critical and a very important contract which you should understand reasonably well. A while ago I heard of a case where the agent had changed the form – and removed the illness clauses before submitting the application to the company. and you are accepting. past illnesses are all critical to the whole process of underwriting of your policy. then the life insurance company calls you for a financial and a medical underwriting process. What helped was the fact that the client had kept a copy of the application! Take your time Please remember even if you are paying a small premium (term premiums are not large). 18 . they should pay the sum assured amount to the nominee. The life insurance company also collects data – if it finds that a certain occupation is prone to a particular type of illness.

Conclusion We hereby conclude that the observation and finding of the Life Insurance gave us knowledge about the History of Life Insurance. 19 . Features of Life Insurance. Types of Life Insurance policies and Process of Life Insurance. Benefits of Life Insurance.

html http://en.com/2012040529917/8-important-characteristicsof-insurance.com/life_insurance_center.com/Life+Insurance Bibliography Innovations in Banking and Insurance – Romeo S.dialabank.asp#axzz2JotUm5xw http://www.References Webliography http://www.com/article.org/wiki/List_of_insurance_companies_in_India http://www.com/news-releases/10-commonly-overlooked-featuresof-life-insurance-policies-134032523.jagoinvestor.cfm/articleid/4898/meaning-life-insurance http://financial-dictionary.com/2010/10/step-by-step-process-of-buying-lifeinsurance-2.html http://www.wikipedia.financial-shopper-network.com/terms/l/lifeinsurance.org/consumers/advantages-of-insurance http://www.investopedia. 20 .htm http://www.html http://www. Mascarenhas.preservearticles.lifeinscouncil.prnewswire.thefreedictionary.

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