LIFE INSURANCE

IIPM-4.Life ins.

NEED FOR LIFE INSURANCE

Family depends on income of breadwinner Income is lost or reduced due to -Death -Retirement -Disability -Disease
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NEED FOR LIFE INS.

Life insurance provides risk cover plus savings Risk cover is against loss of income due to contingency Life insurance is seen as an instrument of wealth accumulation and tax savings
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LIFE INSURANCE BUSINESS OPERATES ON

ACTUARIAL PRINCIPLES that provide the mathematical and statistical basis LEGAL PRINCIPLES that govern the relationship between Insured and Insurer REGULATORY LAW that regulates the conduct of business
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LIFE INSURANCE PRODUCTS

Different Products are designed to satisfy different insurance needs Sum Assured(S.A.) Amt. payable by Insurer is fixed and guaranteed
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CLASSIFICATION OF LIFE PRODUCTS

Group Linked Without profit Assurance
IIPM-4.Life ins.

Individual Non-linked With profit Annuity

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INDIVIDUAL >< GROUP

Individual Insurance An individual enters into a contract for insurance on his own life Group Insurance Under one contract a number of individuals are insured, & a master policy issued;could have additions & deletions e.g. A Corporate enters into a contract for insurance of individuals under its employment.
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LINKED >< NON-LINKED

Linked The quantum of benefits payable by insurer under the policy is linked to Market Value of underlying investments Non-linked The quantum of benefits payable under the policy is guaranteed

IIPM-4.Life ins.

WITHOUT PROFITS><WITH PROFITS

Without Profits Insurer would pay only the guaranteed amount (S.A.) on claim arising. (Nonparticipating) With Profits - Profit made by the Insurer is distributed to With Profit Policies, year by year. On claim arising, the Insurer pays the guaranteed amount PLUS Bonus so far added.(Participating) i.e.the Policy participates in the profits of the Insurer
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ASSURANCE >< ANNUITY

Assurance Type of Policies provide DEATH Benefits

Annuity Type of Policies provide Lifelong Survival Benefit ( Pension )

IIPM-4.Life ins.

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LIFE INSURANCE BENEFITS

The entire Life Insurance Business is concerned with only Four Benefits, payable by Insurer: Survival Benefit - Payment if the Life Assured is alive on a fixed future date. Death Benefit - Payment on death of the Life Assured. Accident/Disability Benefit - Payment on the Life Assured being involved in Accident Critical Illness Benefit - Payment if the Life Assured is afflicted by a serious disease.
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 Term Assurance-Only death benefit  with/without return of premium  Decreasing term assurance  Whole life assurance Pure Endowment-Only survival benefit Combinations:  Endowment Assurance-combines both  Anticipated Endowment-death benefit unaffected,survival benefits received earlier; popularly known as MONEY BACK POLICIES
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BASIC PRODUCTS (NON-LINKED)

LIFE ANNUITY
Annuity means installments paid by Insurer may be annual,half-yearly, quarterly or monthly Life annuity means installments are payable so long as the person is alive Objective Guaranteed income during old age
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LIFE ANNUITY OPTIONS

Return of Corpus on Death-Lump Sum by annuitant is returned to nominee but the annuity installment is lesser. Pure Annuity-Nothing is payable on death but the annuity installment is higher Immediate life annuity Deferred life annuity
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LINKED LIFE INSURANCE

Unit linked insurance -Assured death benefit -Market linked survival benefit Flexibility Transparency Options for investment types
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UNIT LINKED INSURANCE(ULI)

Unit Linked Life Insurance combines Insurance and Investment Insurance Insurer pays a guaranteed amount on happening of the contingency i.e.Death,Accident/Disability,Disease Investment Similar to Mutual Fund Unbundled the two aspects are shown distinctly separate
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HOW ULI OPERATES..

Policyholder pays premium Certain charges are deducted from premium Balance goes to investment pool Policyholder`s share is reckoned in units Value of units NAV based
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HOW ULI OPERATES..

Value of units not guaranteed by insurer Investment risk passed on to policyholder Charges may be reviewed and revised Transparency of charges NAV published daily
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OPTIONS TO POLICYHOLDER
Term of policy With Life Cover for specified Sum Assured OR With Option to convert into Life Annuity ( Pension ) Types of investment Partial / full withdrawal
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CHARGES
Allocation Charge First Year / Subsequent Years Mortality charges Rider Premium Charge Policy Administration Charge Fund management charges Switching Charge Partial Withdrawal Charge Surrender Charge
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RIDERS
Main Policy provides -Death Benefit -Survival Benefit Riders are add-ons providing additional cover for -Accident -Critical Illness etc. Optional - added subject to additional premium
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LIFE INSURANCE CONTRACT

General principles of contract -Commercial -Indian Contracts Act Additional principles -Utmost good faith -Insurable interest -Proximate cause
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LIFE INSURANCE CONTRACT

Prospectus Proposal Underwriting Acceptance
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LIFE INSURANCE CONTRACT

Policy document Conditions regarding premium payment Days of grace Lapse and revival Non-forfeiture Claim death/maturity Nomination Assignment
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IIPM-4.Life ins.

DISTRIBUTION OF LIFE PRODUCTS

Primarily through insurance agents Personal contacts Life ins. is sold, seldom bought
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