Insurance

History of Insurance

 Before 1956 - The life insurance sector was made up of 154 domestic life insurers, 16 foreign
life insurers and 75 provident funds.
 1956–72 - All life insurance companies were nationalized to form LIC in 1956 to increase
penetration and protect policy holders from Mismanagement
 The non-life insurance business was nationalized to form GIC in 1972
 After 1991, LPG adopted, many private and foreign firms were entered
Meaning

Insurance is an arrangement by which a company undertakes to

provide a guarantee of compensation for specified loss, damage,
illness, or death in return for payment of a specified premium.
Contribution to economy

 Generate long term savings

 Generates Long term funds for infrastructure
 Employment generation
 Obligation to Rural and Social Sector
 Reducing Burden on Govt. Exchequer
 Generates financial resources
 Promotes economic growth
 Source of collection of funds
Why insurance?

To Provide Security

Old age Pensions
As an investment/ Saving Mechanism
Tax benefit
 Ministry of Finance
(Government of India)

Insurance Regulatory and

Development Authority (IRDA)

Life insurance (24) Non-life insurance (28)

Private (1) Public (6)

Public (23) Private (22)

 Insurance Market Share

LIC
1% 8%
2%
ICICI
2% 2% HDFC
5%
SBI
5%
Bajaj Allianz
5%
Max Life
70%
Birla Sun life
Reliance life
Source: IBEF
Others
 Types of Insurance

Life Insurance General Insurance

1. Term Policy
2. Whole Life Policy 1. Fire
3. Endowment 2. Marine
4. Annuities 3. Motor/ Accident
5. Unit linked Policy 4. Health/ Medical
6. With/ With out Profit Policy 5. Liability
 Life insurance – Term insurance

 Term Insurance – Provides protection without covering element of saving, Sum is paid only
insured dies in specified period. Nothing is made as payment if insured does not dies in
specified period. (Future premium can change?, Can smoking habit after few years of
purchasing the policy affects it?, What about pre-smoking? Which death covers?,
Which death doesn’t covered?, When you dies in foreign country can you get benefit?,
How companies investigating death?, Are NRI’s allowed to buy Term Insurance?)
 Level term insurance – Premium and benefit remain same throughout the term
 Decreasing term insurance – Premium remains constant but benefit decreases over a
period of years, the payable amount depends on the timing of death
 Increasing term insurance – Premium increases periodically, Benefit can increase by a fixed
percentage or as per the agreed index
 Life insurance – Term insurance

 Renewable term insurance – Insurance can be renewed without submitting fresh

evidence of health. But with increase in the age of insured, new premium will be higher.
(In 2015, life expectancy at birth was 68.3 years in India which breaks down to
66.9 years for men and 69.9 for women, as per the WHO's World Statistics Report
2016)
 Convertible term insurance – Policy can be converted into permanent (Endowment).
Such policy is for people who can afford low premium initially but can pay higher
premium later on in life.
 Term Insurance with return of premium – Premiums collected and refunded if the
insured survives the term. Policy remain active on the basis of interest.
 Life insurance – Endowment insurance

 Endowment Insurance – It covers the life insured for a specific period of time. If the
policy holder survives till the end of that specified period (Maturity period), he will be
paid lump sum assured along with bonus (if any) by the insurance company. If the policy
holder does with in the maturity period the insurance company will pay the sum assured
to the beneficiary.
 Unit linked endowment: The insurance holder chooses to use their fund for investment.
 Low cost endowment: The premium is on lower side
 Full endowment: A policy in which the sum assured is equivalent to the death benefit
from the beginning and the final payout.
 How it is different from term insurance?, Benefit covered - Critical Illness, Partial
Disability, Accident Death.
 Life insurance – Whole life insurance

 Whole life Insurance – Insurance policy which guarantees a death benefit cover throughout
the life. Assured sum is paid on death of insured. Premium need to be paid throughout the life
or for short duration (depend on company)
 Non-Participating Whole Life Insurance – certain level of premium
 Participating Whole Life Insurance - pays bonus
 Limited Payment Whole Life Insurance – for specific period
 Single Premium Whole Life Insurance - with one relatively large premium payment due at
issue
 How differ from term insurance?, How does the Policy Work? What happen in case of
withdraw of policy or surrender of policy or policy holder lives till the maturity of the policy?
 Life Insurance – ULIP

 ULIP is an insurance policy which depends upon the performance of the investment portfolio.
Premium can be split in two parts, one provide the insurance coverage and second is invested in
mutual funds. The types of ULIP are as below.
 Equity Funds: High risk, high reward.
 Income, fixed-interest and bond funds: funds are invested in government securities, fixed-
income securities, corporate bonds, and the like, which offer a medium risk and medium reward.
 Cash Funds: Investment in money market funds, cash and bank deposits, Low risk (almost no
risk) and low reward.
 Balanced Funds: Investment in both equity and debt, Medium risk and reward
 Life Insurance – ULIP

What happen if i can't continue ULIP after 5 years?, What Benefits payable on the
maturity of the policy?, Can one get refund of premiums if not satisfied with the
policy, after purchasing it?, Does ULIP offers guaranteed returns?, One can switch the
investment fund after taking a ULIP policy?, Can a partial encashment/withdrawal be
made? What is the method of arriving at NAV for surrenders, maturity claim, switch
etc.? Is it possible to invest additional contribution above the regular premium?
With profit or without profit policies

 Policy has additional amounts added to the assured sum or paid separately as
cash bonus as a result of surplus/profit made on the investment of the fund
by the insurance company is called a ‘ with profit policy.’
 Policies that are not entitled to bonus are ‘ without profit policy.’
Life insurance – Annuities

 Annuity is a form of pension which consist of series of periodic payments to

a person
 2 types of annuity
1) Immediate Annity – Purchased with a single premium at specifies period of
time.
2) Deferred annuity plan – Payment starts at some specified time, it can be
started with single payment or series of payment
Who should take such types of plan? Decided minimum and max. age
 General insurance -Fire Insurance

Fire Insurance is designed to provide for financial loss to property due to fire and other related
hazards. Property such as Building, Material, Machinery, Furniture, Electrical installation of building,
goods etc. are covered.
Fire Hazards includes damage caused to the property, Aircraft damage, lightening, Missile testing
operations, Overflowing of water tanks and pipes, Storm, earthquake, cyclone, landslide caused damage,
Riots, strikes or terrorism damage (in form of fire only, if any).
Eligibility criteria to avail Fire Insurance policy? Start date of my insurance policy, property valuation
for Fire insurance, Claim settlement in a Fire insurance policy with two different companies, Increase or
reduce the Sum Insured after inception of policy, What about the Fire insurance policy if the insured
house is sold, Will the company pay for debris removal during the reconstruction of the property post
loss? If yes how much?
 Health insurance

 Covers mainly 2 benefits – 1. Reimbursement of medical expenses related to specific diseases and 2.
Hospitalisation
 Individual mediclaim policy – Policy covers hospitalization for diseases, domiciliary hospitalization
and for injuries caused during the accident.
 Reimbursement is permitted when the treatment is taken in hospital or that meets criteria specified in
policy.
 If patient cannot be moved to the hospital and treatment need to be carried out at home, benefit does
not covers the pre and post-hospitalization expenses. Policy covers all treatment covering a period of
3 days to till 45 days.
 Individual mediclaim policy – Exclusions

 Existence of diseases before policy

 Any disease occurs with in 30 days of the policy
 Vaccination of any kind
 Cosmetic surgery
 Cost of contact lenses, Hearing aids
 Dental treatment does not need hospitalization
 Self injury or drug reactions
 Expenses on vitamins and tonics
 Treatment arising from childbirth
 Naturopathy treatment
 Individual Mediclaim Policy – Conditions

 Age between 5 to 80, child below 5 years covered only one of the parent is covered
 10% discount if all the family members gets policy
 Sum can be increase by 5% subject to policy period of 10 years
 Once in four year health check up can be done, payment of such expenses up to 1% of coverage
 Coverage in Nepal and Bhutan
 Intimation to the insurance company with in 7 days of hospitalization
 Final claim should be process with in 30 days of completion of treatment
 Sum is available in range of 15000 to 500000, 20% only in case of domiciliary hospitalization
 Premium gives tax benefit u/s 80D
 Health insurance – Bhavishya Arogya policy

 Can be taken at any age between 25 to 55 years

 Retirement age can be selected between 55 to 60 years
 Does not cover pre and post- hospitalization expenses
 Mediclaim rules such as - 30 days process, pre-existing conditions, Pregnancy, First year
exclusions, does not apply to this policy
 The amount can be increase by the insured
 No previous medical examination is necessary
 In case of pre mature death, up to 75% of the total premium paid, can be refunded
Jan Arogya Bima Policy Cancer Insurance

 2 group polices – One by Indian cancer

society (ICS) and another by cancer patients
aid association (CPAA)
 Same as Mediclaim but
 Need to be member
- Does not offer Medical check up benefit
 Policy is limited to Rs. 50000 and Rs.
- Premium tends to be low 200000 in case of ICS and CPAA,
respectively
 Both need cancer check up
 Covers treatment cost and selected costs
 Health insurance – Group Mediclaim policy

 Available to group
 One can join and leave group at any time
 Health check up expenses are not payable
 Group discount is available
 Insurance can be renewed
 Bonus premium can be available at 5% if claim is less than 60% and 40% if claim is less than
25% (Available in case of Renewal only)
 Extra premium can be applicable in case of overclaim
 Health insurance – Overseas Medical insurance

 For payment of medical expenses for illness suffered or accident injuries in case of Indian
traveling abroad on work or for holiday
 Eligibility
1. Indian residents taking trips for either business or holiday purpose
2. Accompanying Spouse and children going abroad
3. Foreign nationals who work in india and earn remuneration in INR covering their official trips
abroad
4. Available up to 70 years, beyond that age premium increases, for child above 6 months coverage
is available
 Health insurance – Overseas Medical insurance

 Covered Expenses
1. Expenses incurred in 90 days of illness or injury
2. Expenses for medical services, hospitalization, physician’s services and medical transportation
3. Up to $225 for dental treatment for immediate relief only
4. Expenses for physician ordered, transportation and necessary medical care in route when the
insured is critically injured and no local medical assistance is available
5. If insured dies outside india, the expense of air transport for the repatriation to india or for
local burial or cremation
 Health insurance – Overseas Medical insurance

 No claim can be made

1. Cosmetic surgery
2. Routine physical examination
3. Expenses for treatment that requires reasonable delay
 Health insurance

 What is cashless facility?

 What are the factors that affect Health Insurance premium?
 Is there any Waiting Period for claims under a policy?
 Can I transfer my policy from one insurance company to another without losing the renewal benefits?
 What happens to the policy coverage after a claim is filed?
 What is 'Any one illness’?
 What is the maximum number of claims allowed over a year?
 General insurance -Motor/Accident Insurance

Motor/Accident Insurance – Statutorily mandate, Motor Vehicle act requires compulsory insurance to
take care of those who may get injured in an accident.
Types of vehicle – Private cars, motor cycles/ scooters, commercial vehicles such as goods carrying
vehicle, passenger carrying vehicle, Miscellaneous (such as ambulance, mobile utility vans)
Types of Policies – 2 types, 1) Third party liability policy, 2) Own damage policy
Duration and renew, No Claim Bonus, Will the No Claim Bonus be migrated if the policy holder want
to change insurance company? Procedure for recording any changes in the policy, Someone using the
car in a particular city, Fitting of CNG or LPG kit in vehicle, One can transfer the insurance to the
purchaser of their vehicle, In case of loss of the insurance policy, can one get a duplicate one?
 General insurance - Marine insurance

 Marine insurance has two broad components –

 Hull insurance – Concern with the insurance of the carrier of the goods and is purchased by
the owner of the Vehicles.
 Cargo Insurance provides coverage for loss/ damage that could occur to goods in transit on
sea, rail, road and air way. It can cover 1) Shipment of inland ships, steamers, boats and crafts. 2)
Coastal shipment by ships, steamers, boats and crafts, 3) Export/Import Shipment, 4)
Consignment shipment
 Who can take the insurance? What is not covered in claim?
 Liability insurance

 Liability insurance concern itself with workplace and issues arising out of working
conditions/ death/ accident at work
 Types of Liabilities
1. Employee Liability – Limited to industrial risk
2. Employee state insurance liability – Injury to any employee at work
3. Non-Industrial Risks – Not pertaining to industry but related to commercial places
4. Professional liabilities - Liability that can arise from particular profession
5. Product Liabilities – Liabilities arising from use of product
IRDA Regulation
Registration of Insurance Companies

 Registration IRDA Act, 1999

 Name of company must be identical
 Min. Capital - 100 crores
 FDI limit - As per the GOI rules, at present 49%
 First need to apply for licensing, After licensing only insurance work can be carried out
Renewal

 Renewal every year before 31st December

 Fees Rs. 50000 Per class or 0.20% of total gross premium of financial year on Rs. 5
crore whichever is less
Suspension and Cancelation of Registration

 If working prejudicial to the policy

holders
 Failure to give information
 Deposit not made on time
 Non Co-operation in inquiries
 Transfer of business
 Manipulations
 Direction of central govt.
 Not following IRDA Rules
 Involve in any illegal activities
 Advertisement regulations

 Marketing tool to encourage sell

 Enhance the Public image
 Should not be Such that -
 Fails to identify product correctly
 High claims
 Describes benefits not matching to policy
 Hides Risk factors
 Misleading information
 Wrong Illustrations
 Comparison of incomparable
 Cont…

 Focuses on customer education

 Award of fake call 1, 2, 3
 Disclosure
Thank you for your attention