Social Security Schemes Industrial Assurance Plans Salary Savings Scheme Policies Riders Plans Covering handicapped Key-man Insurance

Social Security Schemes 

Social Security ± a major concern in all the countries  Most of the social welfare measures are administered by the Govt 

Govts find it difficult to administer these schemes  Insurers take over these functions  Social welfare schemes ± elementary level in India  In India, few social security schemes are available for poorer sections 


Industrial Assurance Plans Designed for workers with low incomes Policies are issued for small Sum Assureds With weekly premiums Agents meet the policy holders every week to collect the premium

Disadvantage ± High administrative costs Agents have to be remunerated differently Janata Policies ± Industrial Assurance plans introduced in India in the early days of LIC In India, Janata policies did not become popular

Salary Savings Scheme (SSS) Policies  Also called Payroll insurance  To cater to the needs of working classes  Insurer arranges with the employer to deduct premium from the salary of the workers

Beneficial for the policyholder: as the
premium is deducted making the premium payment easy

Beneficial for the insurer : he is assured
of the premium, less administrative costs

Beneficial for the agent : as the chances
of lapses are less and he gets regular renewal commission


Clause or condition that is added on to a basic policy providing an additional benefit  Riders add variety and attractiveness to the nature of the policy 

Riders are added at the choice of the proposer  Riders allow lot of flexibility  Riders enable customization of the product

Some of the riders offered by insurers in India are; 

Increased Death benefit  Accident Disability Benefit Rider: if the death is due to accident  Permanent Disability benefits  Premium waiver in child plans in case of parents death  Dreaded disease or critical illness cover 

Major Surgical Assistance Benefit Rider : Cover to meet major surgical expenses  Cover to continue beyond maturity age for same or higher SA  Option to increase cover  Option to cover spouse without medical examination

IRDA Regulations on Riders

The premium on all the riders relating to health or critical illnesses, in the case of term or group products shall not exceed 100% of the premium of the mail policy

The premium on all the other riders put together should not exceed 30% of the premium on the main policy The benefits arising under each of the riders shall not exceed the SA under the basic product

Plans covering handicapped: 

To insure physically handicapped persons  Extras are charged in some cases  Partially handicapped persons are mostly accepted without extra premium

Key Man Insurance: 

Insurance taken by a company on the life of important employee ± key man ± of the company against financial loss that may occur from the employee¶s premature death

The Key-man can be; 


an Expert a Technocrat a Director a Shareholder a Executive

A key man may be defined as an employee whose death would result in a financial loss to the company, including replacement There can be more than one key man in a company

Features of Key Man Insurance 

Company will be the proposer  Term allowed is usually 10 ± 15 years subject to retirement age or service contract  Restricted to 10 times of Key Man¶s Annual Compensation package  Riders are usually not allowed

Advantages of Key-man Insurance 
Company is protected against financial loss in the event of key man¶s death  Gives substantial income tax savings to the company  An asset for the company in the form of premiums paid and added bonus  Generates confidence, sense of security and loyalty in the minds of key-men

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