Introduction

to
INSURANCE
 History…
Kautilya’s Arthashastra (300 BC)
1818 – India - Oriental Life Insurance Company - Calcutta.
19th January, 1956 - nationalising the Life Insurance sector
1956 - Life Insurance Corporation
1994 - Malhotra Committee under the chairmanship of RN
Malhotra (former Governor of RBI)
Current situation – India
 Current situation – India

57 insurance companies

24 are in life insurance business
33 are non-life insurers.
PLAYERS
 Current situation – World wide

LIFE NON-LIFE
WORLD INDIA WORLD INDIA
3.47% 2.72% 2.81% 0.77%
Current growth-15-20%
 India’s current insurance penetration rate - 3.42%
Global current insurance penetration rate - 6.2%

India’s current insurance penetration rate stands at 3.42%, far below the global average of 6.2%, says an industry
report. “A 1% rise in insurance penetration translates into 13% reduction in uninsured losses-an increased
investment equivalent of 2% of national GDP and a 22% reduction in taxpayers contribution,” stated the report
‘Transformative Agenda for The Indian Insurance Industry and its Policy Framework’, jointly authored by H Ansari,
former member (non-life), Irdai, and leading insurance expert Arun Agarwal. The report also said the existing
regulatory framework of the insurance industry is insufficient to promote insurance penetration and density
significantly despite the government’s objectives to have a country with full insurance and pension penetration.
The report, which is provided to the insurance regulator and finance ministry, focuses on key areas that need to
be addressed from a policy, regulatory and market development perspective. “The regulatory framework and
support tends to over-regulate, predictably the cost of compliance is high. Besides the regulatory policy is less
development oriented,” said Arun Agarwal during the press conference.
With 17% of the worlds population, the Indian insurance market accounts for less than 1.5% of the worlds total
insurance premium as India is both under-penetrated and inadequately penetrated. General insurance
companies had seen gross direct premium at Rs 1.27 lakh crore a growth of 32% in financial year 2016-17.
Sharp growth in the non-life sector was largely due to the growth in health and motor insurance along with new
crop insurance scheme, says market participants. While life insurance industry saw its new business premium at
Rs 1,75,021.89 crore as on March 2017 as compared to Rs 1,387,60.47 crore in March 2016 a growth of 26.13%.
 INSURANCE

LIFE NON-LIFE
 Life insurance

Term life insurance or term assurance

Endowment policy
Whole life insurance, or whole of life assurance
An endowment policy is a life insurance contract
designed to pay a lump sum after a specific term
(on its 'maturity') or on death. Typical maturities
are ten, fifteen or twenty years up to a certain age
limit. Some policies also pay out in the case of
critical illness.
Term life insurance or term assurance is life insurance that
provides coverage at a fixed rate of payments for a limited
period of time, the relevant term. After that period expires,
coverage at the previous rate of premiums is no longer
guaranteed and the client must either forgo coverage or
potentially obtain further coverage with different payments or
conditions. If the life insured dies during the term, the death
benefit will be paid to the beneficiary. Term insurance is
typically the least expensive way to purchase a substantial
death benefit on a coverage amount per premium dollar basis
over a specific period of time.
Whole life insurance, or whole of life assurance (in the Commonwealth
of Nations), sometimes called "straight life" or "ordinary life," is a life
insurance policy which is guaranteed to remain in force for the insured's
entire lifetime, provided required premiums are paid, or to the maturity
date.[1] As a life insurance policy it represents a contract between the
insured and insurer that as long as the contract terms are met, the
insurer will pay the death benefit of the policy to the
policy's beneficiaries when the insured dies. Because whole life policies
are guaranteed to remain in force as long as the required premiums are
paid, the premiums are typically much higher than those of term life
insurance where the premium is fixed only for a limited term. Whole life
premiums are fixed, based on the age of issue, and usually do not
increase with age.
 Third-Party Insurance
Third-party insurance is an insurance policy purchased for protection against the
claims of another. One of the most common types is third-party insurance is
automobile insurance. Third-party offers coverage against claims of damages and
losses incurred by a driver who is not the insured, the principal, and is therefore not
covered under the insurance policy.

Third-party insurance significance

As required by law, drivers must carry at least a minimal amount of bodily injury liability and
property damage liability coverage. A few states have requirements that do not require both
or have other limitations. Each state sets its minimum requirement for each type of coverage.
Even in “no-fault” states, liability coverage is all but essential. No-fault laws were established
to reduce or eliminate ordinary injury lawsuits affixed with low-dollar price tags and an
overwhelming number of claims for pain and suffering. Still, no-fault laws do not protect the
insured from million-dollar injury lawsuits stemming from seriously injured third parties. Both
types of third-party insurance are important, specifically for individuals, such as homeowners,
with substantial assets to protect.
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Insurance Institute of India
 Exams to try your hand at…

LICENTIATE

ASSOCIATESHIP

FELLOWSHIP
 Under section 80C
premium paid for a life insurance policy

Deductions:
Section 80C:
There are many investments that can help you save on tax under Section 80C, the most popular and beneficial of
which is investing in a good life insurance policy.
• This deduction is available for individuals and Hindu Undivided Families (HUF).
• The maximum amount that can be exempted from taxation under Section 80C, 80CC and 80CCE is
Rs.1,50,000.
• Deductions are only allowed for Premiums up to 20% of the Sum Assured, if the amount of Premium paid
in a particular financial year for a policy is in excess of 20% of the actual Sum Assured. This is relevant
only to policies that were issued before 31 March 2012.

Generally, life insurance proceeds you receive as a beneficiary due to

the death of the insured person, aren't includable in
gross income and you don't have to report them. However, any
interest you receive is taxable and you should report it as
interest received.
THANK YOU…