1)

INTRODUCTION OF INSURANCE

The business of insurance is related to the protection of economic values of assets. Insurance is a mechanism that helps to reduce the effect of perils such as fire, floods, breakdowns, lightening, earthquakes etc. The business of insurance started with marine business traders in the Lloyds offee !ouse in London. The first Indian insurance company was the "ombay #utual $ssurance %ociety Ltd, formed in &'(). Life insurance business was nationali*ed in India with the setting up of the Life Insurance orporation of India +LI , on %eptember &, &-./. 0eople who are e1posed to the same risk come together and agree that if one of them suffers a loss, the others will share the loss and make good to the person who has lost. That is why Insurance is the business of 2sharing. 3or insurance to remain a fair arrangement, the peril should occur in an accidental manner. $ human being is an income4generating asset. Living too long can be as much a problem as dying too young. Insurance takes care of both risks. Insurance e1tends beyond the coverage of tangible assets. 3or e.g. the voice of a singer or the legs of a dancer may be insured. 0ersonal accident and sickness insurance is classified as non4life in India. The premium is based on e1pectations of losses. The insurer is in the position of a trustee, managing the common fund for and on behalf of the community. $ life insurance company is a ma5or instrument for mobili*ation of savings of people, particularly from the lower4 and middle4income groups. The vast amount of funds by way of premiums represents 2pooling of risks. Insurance provides ta1 benefits, both in income ta1 and in capital gains. $ life insurance policy is a property and can be transferred or mortgaged. Loans can be raised against the policy. Insurance is meant to ompensate for losses from specified events

Insurance compensates losses 6nly to the e1tent of insured amount Insurance is necessary because $ssets may be damaged by e1ternal causes Insurance helps to 7educe the consequences of adverse situations Insurance benefits replace The monetary losses, but only to some e1tent The amount of insurance depends on "oth the peril and the risk

 The amount payable under a life insurance policy depends on The amount of the sum assured Life insurance improves standards of living. $n insured person can not afford to Ignore safety precautions, be less serious on the packaging of goods and "e lenient on controls in warehouses Insurance works on the principle of %haring, probabilities and Large numbers Insurance works on the principle of Trust, %haring and 7andomness Insurance works on the principle of #utual help. Insurance works on the principle of 0roportional contributions #icro insurance can be transacted by "oth life and non4life insurers. 7isk, if certain, cannot be insured. 7isk refers to the loss that happens $ human being is an economic asset, is an income earning asset and Is a perishable asset $ human beings value is measured by the income that he generates. The asset, which is a human being, perishes when !e dies, !e becomes disabled to work and !e retires from work The insurer, being a trustee, has to ensure that ,The claim paid is genuine, The premium charged is fair and reasonable and a suspicious claim is not paid $n insurer, as a trustee, has to ensure that The life fund is safe and The life fund earns the ma1imum interest $n insurer, as a trustee, is responsible to the the policyholders $n insurer, as a trustee, has to give priority to policyholders, as a class The probability of .)8 for an event happening means that the event 9ill become closer to .)8 as the attempts increase. The 2probability of an event is mentioned :ither as a percentage or as a ratio. Insurance is legitimate 9hen an adverse happening is likely. Insurance covers situations 9hen the consequences are harmful Life insurance is arranged because %ome one may die or %ome one may live In a life insurance contract, the beneficiary may be the te policyholder, The life insured and The dependents of the life insured The principle of indemnity does not apply in the case of a life insurance contract Insurance benefits individual, country and society.

 Insurance reduces the burden on te society, Individual families and business houses The business of insurance has social implications, Impact on economic development of the country and Impact on the economic well being of families. The business of insurance affects $vailability of capital for business There is no competition for the business of life insurance from ;on4life insurance, %mall savings and !ouse property The competition for the life insurance agent comes from those who canvass for %mall savings, #utual funds and !ouse property Life insurance is better than other avenues of savings in respect of #arketability, Liquidity and Transferability Life insurance is better than other avenues of savings in respect of <sefulness in emergency . Insurance is related to probable loss. 0remium is based on e1pectation of losses Living too long is a risk Insurance can not prevents the risk Insures compensates losses but not too fully. 7einsurance is the name given to $n insurer placing insurance with another insurer. 0erils are not avoidable. 0robabilities of death and of survival are mutually e1clusive There are no substitutes for life insurance
2)

PRINCIPLE OF ASSURANCE

$ life insurance policy is a contract, in terms of the Indian ontract $ct, &'(=. $part from the usual essentials of a valid contract, insurance is sub5ect to two additional principles > 0rinciple of <tmost ?ood 3aith +<berrimae 3ides, @ 0rinciple of Insurable Interest. ommercial contracts are sub5ect to the principle of aveat :mptor i.e. let the buyer beware. 9hen a proposer puts an insurer and the community of policyholders at a disadvantage, there is what is called 2adverse selection. It is the duty of the proposer to make full disclosure. In the event of failure to disclose material facts, the contract can be held to be void ab initio. The duty of disclosure in life insurance operates till the risk commences. The breach of the 0rinciple of <tmost ?ood 3aith may arise due to misrepresentation or non4disclosure.

 #isrepresentation or non4disclosure should beA o %ubstantially false and known to the proposer as false o ;ot known to the second party o oncerned with facts which are material to the acceptance or assessment of risk or material to the benefits obtained by the proposer o alculated to induce the other party to enter into contract on its own terms %ection B. of the Indian Insurance $ct, &-C', stipulates that a policy cannot be called into question after = years, on the grounds of inaccurate or false statements unless it is proved to be material or fraudulent. The insured must have an insurable interest in the sub5ect of insurance. Insurance assumes that the event insured against +peril, is not sub5ect to the control of the insured. $ husband has insurable interest in the life of his wife and vice4versa. $ company has an insurable interest in the life of a key valuable employee. Insurable interest must e1ist at the inception of a life insurance policy. Insurance is meant to compensate losses. "y implication, the mechanism of insurance cannot be used to make a profit. This is the 0rinciple of Indemnity. In life insurance, the insurable interest is assumed to be unlimited, hence the 0rinciple of Indemnity does not apply. %ickness and accident risks, including disability, are insurable as supplementary benefits under life insurance policies. 9hile selling life insurance, it is necessary to be aware of the needs of the people. ;eeds of individuals may be classified as follows o 0rotection of the standard of living of the family which is at risk on early death o 3uture e1penses on account of childrens education, marriage o ontinuance of business o %ubstitute income when earning capacity ceases $ life insurance policy is a contract, enforceable in a court of law The principle of utmost good faith is meant to protect the interests of The community of policyholders The principle of utmost good faith is important to ensure That the premium charged is correct, That no one gets an undue advantage and That there is no adverse selection The responsibility to comply with the principle of utmost good faith rests with The proposer

 The principle of utmost good faith does not apply to facts of common knowledge, 3acts of law and 3acts which are not material for underwriting apacity to contract applies to both parties. onsent to the contract can b e implicit 3acts which happen after the policy has commenced, need not be reported $ life insurance policy becomes invalid if The statements in the proposal are found to be substantially wrong The principle of utmost good faith will operate in an e1isting policy If the policy has lapsed and it has to be revived If the life to be insured falls sick, that fact has to be informed to the insurer If it happens before the first premium receipt is issued The e1istence of insurable interest is decided by The interest which the proposer has in the asset being insured, The relationship between the proposer and the ob5ect of insurance and The legal decisions on these matters :conomic risks are insurableD Insurable interest is ;ot defined in any written law In the case of life insurance, insurable interest should e1ist $t the inception of the policy In the case of life insurance, the principle of insurable interest operates Eifferently than in other forms of insurances The principle of indemnity does not apply to life insurance policies Eeclaration at the end of the proposal is a warranty "ecause of the principle of indemnity, There would be difficulties in settling claims in general insurance, There are frequent disputes at the time of settling claims and There may be attempts to e1aggerate the claims The claim payable will depend on the %um $ssured $n insurance contract is valid because It is not a wagering contract 7etention of risk may be done conveniently by Large corporations In the case of life insurance, the risks an be avoided It is difficult to accurately value a human life. It is possible to reasonably estimate the value of a human life. The needs of people are different The needs of people vary according to life styles The needs of people depend on their upbringing

 $ person who has 5ust taken up his first 5ob needs life insurance 9hen you are about to get married, %oon after you have got married and Fust when you are 5oined a new 5ob $ll the three 2times are right time to taking life insurance. Life insurance helps when one wants to take a loan for a house Life insurance helps one to retire a comfortable retired life Life insurance policy come in handy 9hen you want to set up an independent business or 9hen you want to buy a new house. 0eople hesitate to buy life insurance because they are not aware of their needs 0eople hesitate to buy life insurance because they prefer to en5oy the present 0roviding for family in the event of sudden death, To lead a comfortable life in ones old age and ompleting ones investment plans G all these needs can be met though life insuranceD Life insurance helps people to get loans for car or house Life insurance helps policyholders to save income ta1 0eople do not see the need for life insurance as top priority 0eople are unwilling to set aside immediate pleasures to secure life insurance 7etention of risk is an alternative to insurance Insurable interest e1ists between partners
3)

PREMIUMS AND BONUSES

0remium is the consideration that the policyholder has to pay in order to secure the benefits offered by the insurance policy. It is the price of the insurance policy. 0remium may be a one4time payment or it be paid regularly over a period of time. If premium is not paid then the policy will be treated as lapsed. The cost to meet the risk of death for one year at a particular age is called the risk premium. The risk premium would be adequate to pay the claims, if all the policies were term assurance policies for one year. In the case of :ndowment policies, claims have to be paid on survival after some years. In case of endowment policies the actual premium collected would have to be more than the risk premium, to the e1tent of being able to pay the survival benefits, whenever falling due. The premiums collected by insurers are not utili*ed every year for payment of claims. %ome portion of the premium is meant to meet survival benefits.

 The balance premium remaining with the insurer will be invested and will earn some interest. The premium worked out after taking into the account the interest, is called the net premium or pure premium. $dditions in the form of administrative e1penses and une1pected contingencies to the pure premium are called 2loadings. Loadings plus pure premium is the 6ffice 0remium. "onus has to be given to participating policyholders. "onus is declared out of the surpluses determined after actuarial valuations. Insurers spread the risk premium on a uniform basis, throughout the term of the policy. %uch uniform premium is called Level 0remium. :1tra premiums may be charged on any particular policy if the insurer grants some benefit in addition to the basic benefits under the plan, like accident benefit or premium waiver benefit. 7iders provide additional or supplementary benefits. :1tra premium may become chargeable because of underwriting decisions also. The premium to be charged will vary according to the age of the life assured. 0remium rates for each plan of assurance are calculated for each age. $ge has to be determined as on the date of commencement of the policy. Three different methods are followed by insurers like age ne1t, age last or age nearest birthday. The principles of prudent life insurance management require that all the income from the life insurance business be kept aside in a life fund earmarked e1clusively to meet the liabilities under the life insurance policies. The life fund represents the 7eserve for life insurance policies. 0remium is calculated taking into account likely future e1perience in respect of mortality, interest and e1penses. $ctuarial Haluation is he process by which all prudent insurers check the validity of the assumptions to make sure that the business is on sound lines. The Insurance $ct in India requires that actuarial valuations be done every year. The insurer is required to maintain separate funds in respect of non4participating policies and in respect of participating policies. If the valuation shows that the fund is more than the estimated liabilities, the insurer is said to have a surplus, which can be distributed in ways in which profit is distributed by companies. The laws stipulate that in respect of the surplus in the fund for participating policies, not more than &)8 of the surplus can be distributed to the shareholders. The rest will have to be distributed to the policyholders as bonus. "onus declared can be either simple reversionary bonus or compound reversionary. 2Interim "onuses is payable on such polices which become claims between two valuations.

 The premium is the price paid by the policyholder to secure insurance The amount of premium varies according to the insurance plan The premium under a life insurance policy may be paid monthly The premium under a life insurance policy may be paid annually The annual premium may be less than twelve times the monthly premium The annual premium for a long term policy is less than for a short term policy The premium increases as age of the insured person increases The premium depends on the age of the policyholder The premium depend upon $ge of the person to be insured, 3amily history of the person to be insured and #edical history of the person to be insured The premium actually paid by the policyholder depends upon The level of risk as assessed by the insurer premium depend upon The decision of the underwriter The rate of premium can be more than the tabular rates I The premium collected in the early years is more than what is required I The pure premium will be Less than the office premium The net premium will be Less than the risk premium 9hen interest rates fall, the premium charged by an insurer are likely to Increase The premium is loaded because of e1penses The policyholder is concerned with the 6ffice premium The premium rates printed in the promotional literature are 6ffice premiums The premium printed on the schedule of the policy is worked out from 6ffice premiums The reason for charging level premiums is 7isk increases as age increases, It is convenient to the policyholder and It is convenient to the insurer The practice of charging level premiums #akes it convenient to the policyholder, 7educes the likelihood of lapses and $dds to the reserves of the insurer The practice of charging level premiums has the benefit of #aking it easy for the policyholder to maintain the insurance cover $d5ustments are made to the tabular premiums because of The health of the person insured, The frequency of premium payment and The occupation of the person insured 0remium rates are determined by the actuaries of insurers

 The premium calculated on mortality alone is called risk premium Insurers collect premium in advance In life insurance, profit is determined by The actuary who makes a valuation In the business of life insurance, valuation means $n actuarial e1ercise to determine adequacy of funds The addition to the life fund in a year represents The moneys set aside by the insurer for the policyholders The addition to the life fund arises because of the The practice of charging level premiums $ valuation is done by a life insurer because It is a statutory requirement, It is necessary to be able to declare dividends to shareholders and It tells the insurer how well it is managing the business The surplus disclosed in a valuation means That the interests of the policyholders are safe, That the funds of the insurer are adequate to meet its liabilities and That the business is being managed well The life fund belongs to the policyholders In a valuation, the actuary calculates the fund that the insurer must have In a valuation, the actuary calculates what the liability of the insurer is "onus is declared out of the surplus declared by the actuary "onus may vary between plans I

The minimum percentage of the surplus to be set aside for policyholders is ;inety Interim bonus valid Till the ne1t declaration of bonus "onus is paid when the money back policy matures I $ bonus becomes possible because $ctual e1perience is better than e1pectations , The assumptions made in constructing the premium were conservative and There is a loading for bonus in the premium 07:#I<# $L <L$TI6; =) T!: 36LL69I;? ILL<%T7$TI6;% $7: "$%:E 6; :7T$I; $%%<#0TI6;% 9IT! 7:?$7E T6 07$ TI :% 63 I;%<7:7%. T!:%: $%%<#0TI6;% $7: %0: I3I:E $T T!: $007607I$T: 0L$ :%. 9!IL: #$JI;? $L <L$TI6;% 367 $;K 06LI K, T!: 07$ TI :% 63 T!$T I;%<7:7 #<%T ": 6;367#:E T6. %T:0 &A 3I;E 6<T T$"<L$7 07:#I<# I.:. 07:#I<# L<6T:E I; 0<"LI%!:E 07:#I<# 7$T:%, 367 ?IH:; $?: +;:$7:7, ;:MT 67 L$%T "I7T!E$K $% T!: $%: #$K ":, 367 T!: 7:L:H$;T 0L$; $;E T:7#. T!I% 07:#I<# I% <%<$LLK %T$T:E $% 7%. 0:7 T!6<%$;E %$. $%%<#: T!$T T!: 3I?<7: I% 7%. B../) %T:0 = A E:E< T $EF<%T#:;T 367 L$7?: %<# $%%<7:E, I3 $00LI $"L:. $%%<#I;? T!$T T!: I;%<7:7 $LL69% 7:"$T:% $% 36LL69%

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;oteA I3 T!: $EF<%T#:;T 63 &8 367 #6E: I% #$E: ":367: T!: $EF<%T#:;T 367 %$, T!: E:E< TI6; 96<LE !$H: "::; ).B/, I;%T:$E 63 ).BB. T!: EI33:7:; : $; ": %I?;I3I $;T, I3 T!: I;%<7$; : I% 367 $ L$7?: %$. I;%<7:7% 96<LE L$7I3K !69 T!:K 9$;T IT T6 ": E6;: =& T!: $"6H: $L <L$TI6; 9$% #$E: 367 K:$7LK #6E: 63 07:#I<#. T!:7:367:, T!: 3I?<7: 63 C.C( I% T!: 07:#I<# T6 ": !$7?:E. I3 !69:H:7, T!: #6E: 9$% L<$7T:7LK, T!:; T!: $;;<$L 07:#I<# 967J:E 6<T "K T!: $"6H: #:T!6E, 9IT!6<T T!: 7:"$T: 63 &8 367 K:$7LK #6E:, 9ILL !$H: T6 ": EIHIE:E "K B T6 E:T:7#I;: T!: L<$7T:7LK I;%T$L#:;T 07:#I<#. I; T!: $L <L$TI6; %!69; I; T!: :$7LI:7 0$7$?7$0!, T!: 3I;$L 3I?<7: $77IH:E $T !$% ;6 0$I%:. I3 T!:7: $7: 0$I%: I; T!: 3I;$L 3I?<7:, T!:K #$K ": +I, I?;67:E 67 +II, 76<;E:E 633 T6 T!: ;:MT !I?!:7 I;T:?:7, 67 +III, 76<;E:E 633 T6 T!: ;:$7:%T I;T:?:7 67 +IH, 76<;E:E 633 T6 T!: ;:$7:%T .) 0$I%: 67 $;K 6T!:7 $EF<%T#:;T, $% T!: I;%<7:7 #$K 07$ TI :. ;6T: A E$" %T$;E% 367 E6<"L: $ IE:;T ":;:3IT $;E :0E" %T$;E% 367 :MT:;E:E 0:7#$;:;T EI%$"ILITK ":;:3IT. #6%T I;%<7:7% 6#"I;: T!:%: T96 ":;:3IT% T6?:T!:7

4)

LIFE INSURANCE PRODUCT

Life insurance plans have two basic elements > Eeath cover and %urvival "enefit. 0lans of insurance that provide only death cover are called Term $ssurance. 0lans that provide only survival benefits are called 0ure :ndowment plans. $ Term $ssurance plan with an unspecified period is called a 29hole Life 0olicy, under which the sum assured is paid on death, whenever it may occur. $ Term $ssurance plan along with a 0ure :ndowment plan when offered as a single product is called an :ndowment $ssurance plan. %urvival benefits may be paid at intervals during the term without affecting the %$ payable on death, in case of a #oney "ack or $nticipated :ndowment plan. The sum assured can be payable in one lump sum or in installments. The sum assured can increase because of participation in surpluses and bonus additions or because of guaranteed increases in %$. The sum assured can reduce if the plan is to meet reducing liabilities under a mortgage. %upplementary benefits may be provided by way of 7iders, in addition to basic covers. The cheapest form of assurance is the Term $ssurance plan. In Limited 0remium policies, premium can be made payable for a shorter period. onvertible plans of assurance are plans that can be changed to another plan after, or within a certain period after commencement. $ 5oint4life declaration is necessary to create a 5oint interest in the policy. In a 5oint life policy, each life will be underwritten separately. In a 5oint life policy, bonuses accrue on the single basic %$ only. In hildrens policies, the time gap between the date of commencement of the policy and the commencement of the risk is called 2Eeferment 0eriod. hildrens policies have conditions whereby the title will automatically pass on to the insured child, on his attaining the age of maturity. This process is called vesting. In case of a unit4linked insurance plan, a small part of the contribution is utili*ed for providing life cover and the balance is invested in units. Industrial assurance plans are designed for workers with low incomes. <nit4linked plans are called 2unbundled plans. In a salary savings scheme +%%%, plan, the insurer arranges with the employer to deduct the premium from the salary bill of the worker policyholder and remit the same to the insurers office every month.

 $ rider is a clause or condition that is added on to a basic policy providing an additional benefit, at the choice of the proposer. $s per I7E$ regulations, the premium on all the riders relating to health or critical illnesses shall not e1ceed &))8 of the basic premium of the main policy and the premium on all the other riders put together should not e1ceed C)8 of the basic premium. $nnuities are called the 2reverse of life insurance. ;o underwriting is done in annuities. $n annuity made payable during the lifetime of an annuitant is called 2life annuity. $n annuity can be made payable for a fi1ed number of years. This is called 2annuity certain. The purchaser of an immediate annuity pays the purchase price in a lump sum. In a 2Eeferred $nnuity, the annuity payment will start after the lapse of a specific period called the deferment period. 0hysically handicapped persons are insured, but e1tras are charged. 0artially handicapped persons are mostly accepted without e1tra premiums. $ plan of insurance is said to be different from another if The conditions when the sum assured becomes payable are different :very plan of insurance is a combination of two basic plans $ whole life plan is basically a term insurance plan $ childrens deferred insurance policy is taken on the life of ones child $ term insurance plan can be for a long period The sum assured under some policies increase every year The sum assured under some policies reduce every year The %$ payable on death can be more than the %$ payable on maturity The %$ payable on maturity can be more than the %$ payable on death The %$ payable on death may be paid long after the death of the insured $ 9hole Life plan is a term assurance plan with an indefinite term In a limited payment policy, premium paying term is limited. In a limited payment policy, the premium stops before the end of the term I 3or the same age and %$, the premium under an ordinary 9hole Life policy 9ill be less than in a limited payment 9hole Life policy 3or the same age, %$ and term, the premium under an :ndowment policy will be less than in a limited payment :ndowment policy

 3or the same age and benefits, the premium under a limited payment policy 9ill be more than in a non4 limited plan Limited payment plan policies may be preferred by persons 9hose careers are likely to be short Limited payment plan policies may be preferred by persons 9ho do not e1pect to be in active employment for long The educational annuity policy is not an annuity policy 6nly participating policies are entitled to the benefit of bonus In a convertible plan, the conversion is done on the request of the policyholder onvertible plans allow whole life plans to be altered to endowment plans If the option of conversion is not e1ercised, the policy will continue as before $ conversion becomes effective when the policyholder e1ercises the option #oney back policies are not convertible plan policies $ 5oint life policy may cover a married couple under one policy $ 5oint life policy may cover partners in business under one policy $ 5oint life policy may cover a married couple under one policy The bonus on a 5oint life policy is calculated on single %$ In 5oint life policies the premium will be less than the cost for insuring the two persons separately hildrens policies insure minor children In hildrens policies 7isk cover begins on deferred date The insured child becomes the owner of the policy on vesting date The deferred date is a policy anniversary The vesting date is a policy anniversary In hildrens policies, The policy vests at age &' last birthday In hildrens policies, 7isk will commence on deferred date automatically In hildrens policies, 6n the deferred date, the insured child need not be a ma5or In hildrens policies, assignment can not be done before vesting date. In hildrens policies, The ownership of the policy changes on the vesting date $ money back type of policy and convertible policy are not a variable insurance policy $ variable insurance plan combines an insurance plan with an investment plan

 $ variable insurance plan is good when investment conditions are favorable $ variable insurance plan is good when the stock market is booming Industrial assurance is meant for people with low incomes $ salary savings scheme policy can be taken for a %$ of 7s.&) lakh In industrial assurance the lapse rates tend to be high. In salary savings scheme plans, the premium is deducted from the pay roll The policyholder, the insurer and the agent are benefited if a policy is under the salary savings scheme The premium under a %%% policy is paid monthly The premium under a %%% policy is one twelfth the annual premium In a %%% policy, the policyholder has to ensure that premium is paid In life insurance, the word 2rider refers to additional clauses $ rider supplements or adds to an e1isting condition in the policy 7iders provide supplementary benefits to the basic plan $ premium waiver option is allowed as a rider The premium on riders cannot e1ceed specified limits of the basic premium There is no death risk cover in an annuity Though called an annuity, the payments may be paid every month $n annuity policy guarantees a pension <nder a deferred annuity policy, the annuity commences after deferment period. $n annuity can be taken on a single or a 5oint life $nnuities purchased during different years may all commence on the same date 0hysically handicapped persons may be given annuities at ordinary rates The amount of annuity depends on the age at which the annuity commences In group insurance, a single policy is issued covering many persons In group insurance, there is only one proposal to insure many In group insurance, there is only one policy covering many In group insurance, the proposal is made by the employer ?roup insurance covers a large numbers of persons in one policy

 ?roup insurance is relatively cheaper than individual insurances %alary savings schemes policies are not a group insurance policies In group insurance the premium changes every year The members of a housing society can negotiate for a group insurance policy $ sports club can get a group policy for its members $ bank can take out a group policy for its account holders $ finance company can take out a group policy for those taking loans from it The amount of cover for each member is fi1ed by the terms of the policy $ master policy is issued in a group insurance policy In group policy, The amount of the cover is determined by the scheme. ?roup insurance business is growing faster than individual business ?roup business is socially very relevant $ trade union can take out a group insurance policy for its members The cover for an employee can be equal to his age multiplied by a fi1ed number $ group insurance contract is between the insurer and the body represent the group. The members covered by a group insurance policy changes every year The amount of insurance for any member may change from year to year 0remiums under some group policies are paid by governments ?roup insurance differ from salary savings schemes in respect of The person who pays the premium, 7esponsibility to pay the premium and Eecision to take the policy. ?roup insurance differ from salary savings schemes in respect of ;umber of persons insured under a policy, 7esponsibility of employer and Issue of premium receipts. ?roup insurance differ from salary savings schemes in respect of 6wnership of the policy, payment of premium and 0arties to the contract #embers of a toddy tappers association can teke out group insurance policy. In group policies, the chance of adverse selection is low In group policies, personal histories are not e1amined :ntry into and e1it from group cover, is controlled by the terms of the policy The e1tent of cover is not decided by the life to be insured #ode of

 $ group insurance cover is given only if there is a certain minimum number $ group policy is not granted if the group has been formed only to avail of cover The cover in a group policy could depend on the ages of the lives insured The cover could be a uniform flat rate for all employees of a certain category $mount of annual income, Level in the hierarchy and age of the person are the basis of the cover in a group policy In the group policy, the premium can be paid by the insured persons or by "oth the insured persons and policyholder 5ointly ;o option to choose quantum of insurance cover help to avoid adverse selection in group policies ;o option to choose entry or e1it help to avoid adverse selection in group policies ?roup superannuation polices provide pensions to retiring employees ?roup gratuity policies require that trustees be appointed ?roup superannuation policies require that trustees be appointed Trustees need not to be appointed in all group policies :mployers have different options to fund their pension liabilities ?roup policies help employers to avoid fluctuations in gratuity outgoes :mployees have less an1iety if employers have taken group policies ?roup policies give employees benefits better than legally required ?roup insurance policies can be tailor made to suit specific needs #embers of a group will get certificates showing details of cover 0rofit sharing, in group insurance, is worked on actuarial bases
5)

UNDERWRITING

$ proposal is an application for an insurance cover. The process of verifying the level of risk in each new entrant is called 2selection or 2underwriting. If the underwriter finds that the life proposed to be insured has no adverse features affecting mortality, it is considered as a normal or standard or first class life. The factors affecting risks on the life of an individual are called ha*ards. !a*ards may be +i, physical +ii, occupational or +iii, moral. 6ne of the indicators of moral ha*ard is the si*e of the insurance proposed compared to the income.

 The e1tent of insurable interest of a person in his own life is unlimited. Thumb rules like 2Insurance not more than &) years income are guidelines, but may not do 5ustice in all cases. In the case of large %$s, the underwriter may ask for additional medical reports +special e1aminations, or from senior officials +for moral ha*ard,, as a matter of routine. The underwriter need not be an actuary, but would be capable of interpreting data in the proposal papers, in terms of risk. Insurers, normally, have doctors, called medical referees, on their panels. ;umerical rating %ystem is a method by which insurers have developed guidelines on how to identify and interpret data, which is significant to risk. $ccept with a lien means that the life is not assessed as standard, but the risk is e1pected to wear off and does not 5ustify an increase in premium. $ccept as proposed at 6rdinary 7ates means that the life is assessed as %tandard and the tabular rates can be offered. $ccept with modified terms means that the insurance would not be given for the plan and term proposed. 0ostpone for a specified period, mean that the proposal will be reconsidered after the specified period is over with a fresh medical report. Eecline means that the risk is too heavy to be insured. The 7egulations issued by the I7E$ require that the decision on a proposal must be conveyed to the proposer with in &. days. ;on4medical underwriting is limited to younger ages, less than B. years old. 9orking women and educated women are treated on par with men. Insurers have also begun to take note of habits that affect health like smoking and drinking. $ proposal is "oth a request and an offer to enter an insurance contract %election is the same as underwriting The underwriter assesses the risk ;o policy can be issued without the underwriters decision The underwriter determines the premium to be charged The underwriter is an employee of the insurer $n underwriter acts in the interests of the policyholders as a whole $n underwriter acts in the interests of the insurance company $n underwriter charges e1tra premium for physical ha*ards

 $ physical ha*ard affects the probability of death "ody measurements may indicate physical ha*ards 3inancial underwriting is done to evaluate The possibility of moral ha*ard The underwriters assessment will include The genuineness of the need for insurance and The intentions of the proposer in applying for insurance #oral ha*ard may be suspected in cases where The life to be insured is old or The insurance is for a very large amount $n underwriter uses financial and medical data The medical referee only sees the reports received by the insurer The medical referee usually sees only cases for large %$ $ medical referee is not an employee of the insurer $ medical referee is not an underwriter In some cases, the underwriter consults the reinsurers before deciding If the underwriter feels that the risk is more, he may impose a lien $ 2lien may be imposed by the underwriter if the additional risk is e1pected to wear off in course of time $ 2clause restricts the benefits under the policy $ 2lien operates for a specific period $ 2clause e1cludes specific risks The system of non > medical underwriting is introduced because #edical e1aminers are not available in all areas and #ost of the cases are found to be standard lives acceptable at 67 <nder the system of non4medical underwriting There is restriction on both the %$ and age 9orking women are treated on par with men :ducated women are treated on par with men <nderwriters are more cautious while considering cases on female lives The agent is e1pected to make his report commenting on the risk factors The agents report is important for the underwriter "y writing a truthful report, the agent is helping the insurer "y writing a truthful report, the agent is helping the life to be insured %moking is a ha*ard inviting additional premium

 Erinking is a ha*ard inviting additional premium <nderwriting standards are changing <nderwriting is the process of verifying the level of risk of each new entrant %tandard life, normal life, average life, all mean the same thing $ 2clause restricts the benefits under the policy $ lien operates for a specific period In the case of a lien, the amount payable on death will vary from year to year
6)

INSURANCE DAUCMENTS

The life insurance contract s a long4term one. The first document in an insurance file is the proposal or application for insurance. The proposal form contains a declaration at the end stating that all the statements therein are true in every respect and that if any untrue averment be contained therein, the insurer will be entitled to declare the contract as null and void and forfeit the moneys already paid. This declaration makes the principle of utmost good faith operational. If the policy is to be issued under the #arried 9omens 0roperty $ct, then the relevant forms have to be filled up, stating the beneficiaries and the trustees. 0roof of age is usually called for along with the proposal. $ personal statement is to be completed along with the proposal. $ccording to I7E$ regulations, a copy of the proposal is to be supplied to the policyholder within C) days of the completion of the contract. I7E$ regulations require that the decision on the proposal should be made by the insurer within &. days. The 3irst 0remium 7eceipt is the evidence that the insurance contract has begun. If a claim arises before the policy is issued, but after the 307 is issued, the insurer is liable. The issue of 307 signifies the conclusion of the contract and it is binding on both the parties. I7E$ regulations provide that the policyholder has the option to withdraw from the contract within &. days of the issue of the policy. 9hen the policyholder pays the subsequent premiums due under the policy, renewal premium receipts +707, are issued. 7enewal receipts are not issued in respect of policies under %%%. The policy document is the evidence of the contract.

 The policy document is to be signed by the competent authority and stamped, according to the Indian %tamp $ct. :ndorsements indicate changes in the policy conditions e.g. age, plan or term, mode of premium payments etc. ;ominationsN$ssignments made subsequent to the issue of the policy are to be made on the back of the policy itself as endorsements. The proposal is the basis of the insurance contract The proposal must be signed by a witness The proposal can be signed in any language The declaration in the proposal must be signed by the proposer The declaration in the proposal makes the principle of good faith operational The information in the proposal form is used for underwriting 9rong information in the proposal form can nullify the insurance contract If the proposal form is filled up in a language not known to the proposer, The person who filled up the form has to sign a declaration %ome of the particulars in the proposal form have no bearing on underwriting The personal statement need not be witnessed by the agent 0ersonal statements are required in all cases $ copy of the proposal has to be given to the proposer $ copy of the personal statement is to be given to the proposer $ copy of the proposal has to be given to the proposer The proposer will not be shown the agents report to the insurer The proposer will not be shown the medical e1aminers report #edical report, the agents confidential report and the medical referees advice are confidential and will not be given to the proposer The proposal form and personal statement contain information relevant to determine the Level of risk, #oral ha*ard and Insurable interest 307 is the evidence that insurance contract has begun. The medical e1aminer depends upon the statements in the personal statement The 307 is proof of commencement of risk The 307 is issued when The first premium is ad5usted in the office

 The date of issue of the 307 indicates the date when the risk effectively begins The date of commencement of the policy annot be earlier than the date of issue of the 307

The 307 is important Till the policy is issued 0olicies can be back dated to any date within the financial year The second quarterly premium after commencement is called renewal premium If a policyholder applies for cancellation of policy soon after he receives the 307, The full premium after some small deductions, will be refunded If a policyholder has doubts about the policy he has applied for, he can $sk for cancellation within fifteen days of issue of the policy It is not enough to preserve only the latest renewal premium receipt In the case of %%% policies, 307s are issued In the event of a dispute, the policy document will be referred to $ policy is specific and relevant only to a particular contract $n endorsement may be placed on the policy at the very beginning The nomination may be made later by an endorsement The change in terms will be made by endorsements The schedule of a policy is not altered after the policy is issued hanges in the terms of the policy are made through endorsements 9hen a policy is converted, an endorsement is made on the policy I7E$ has not to prescribe proposal forms for all insurers 7enewal premium can be paid without the renewal notice :very endorsement must be typed on or attached to policy :ndorsements on a policy form part of the insurance contract The family history appears in the personal statement

7)

POLICY CONDITIONS

The policy states the obligations and rights of the policyholder, as well as the terms and conditions of the policy. The 0olicy conditions provide that, if the age of the life assured is found to be higher than the age as stated in the proposal, premium at the higher rate will have to be paid from the commencement, with interest. The 0olicy stipulates that the premium has to be paid in the insurers office on the dates specified therein. These dates are called 2due dates. Insurers however allow a 2grace period for payment of premium. 0ayment within the grace period is considered to be payment on time. The grace period would be one month, but not less than C) days for yearly, half4yearly or quarterly modes of premium and &. days for monthly modes of premium. In the case of %%%, the delay is usually condoned. If the premium is not paid within the days of grace, it is considered a default and the policy is said to lapse. %trictly, the premium is deemed to have been paid only when the cash is received in the insurers office. The obligation of the insurer to pay the %$ as stated therein is sub5ect to the premium being paid on the due dates. The Insurance $ct does not allow forfeiture of all premiums paid in case of a default. The policy conditions provide various safeguards to policyholders, when there is a premium default. These provisions are called ;on4forfeiture provisions. In case of premium default, the insurer gives back an amount that represents the reserve. This amount is called the 2%urrender Halue or 2 ash value. The Insurance $ct +%ection &&C, requires that every policy shall have a guaranteed surrender value, if at least three years premiums have been paid. The other non4forfeiture options are o making the policy paid4up o keeping policy in force through premiums advanced from the surrender value and o providing term insurance cover from the surrender value. 6 <nder paid up option, the %$ is reduced to a sum which bears the same ratio to the full sum assured as the number of premiums actually paid bears to the total number originally stipulated in the policy. $ paid4up policy will not participate in bonuses. The requirement of proof of good health varies according to the duration of lapse and also according to the %$.

 $ revival is effectively a decision to underwrite a risk, the risk being equal to the original %$ under the policy less the paid up value +not including vested bonus, on the date of lapse. $ life insurance policy is property. It represents rights. $ life insurance policy forms part of the estate of the assured and can be sold, mortgaged, charged, gifted or bequeathed. %ections &C) and &C& of the Transfer of 0roperty $ct detail the procedures for transfer of the interests in the policy. $n assignment transfers the rights, title and interest of the assignor to the assignee. The assignment can be done by an endorsement on the policy or by a separate deed. $ssignments are of two kinds, absolute, and conditional. ;omination is a simple way to ensure easy payment of policy moneys in the case of a death claim. 9hen a policy is assigned, the e1isting nomination is automatically cancelled. $ nomination gives the nominee only the right to receive the policy moneys in the event of death of the life assured. $ surrender is a voluntary termination of the contract, by the policyholder. Loans are given up to ')8 or -)8 of the %urrender Halue of the policy in question. Interest is charged on the loans. %ection B. of the Insurance $ct, &-C' states, a policy which has been in force for two years, cannot be disputed on the ground of incorrect or false statements in the proposal and other documents, unless it is shown to be on a material matter and was fraudulently made. If the age proof submitted along with proposal is later found to be false, the insurer #ay declare the policy null and void ab initio or #ay revise the premium on the basis of the actual age from the commencement or #ay revise the premium and other terms of the contract $ge is material information and may affect the terms of underwriting. $ge is material for underwriting because it affects The amount of premium and The decision to call for medical e1aminations and tests The plan that can be offered $ge is important for the underwriter to consider the need for medical tests $ge is material to decide on the plan that can be offered The days of grace depends on the frequency of premium payment The number of days of grace may be C) or C& If premium is paid within the days of grace, there is no penalty If premium is not paid within the days of grace, the policy lapses

 If the premium was due on &.th Fuly and &/th $ugust is a %unday The grace period will end on &(th $ugust +#onday,. If the monthly premium was due on =Bth 3ebruary in a leap year +Tuesday, The grace period will end on &)th #arch +9ednesday,. If death occurs in grace period, the premium of the current year will be deducted from claim amount. 0remiums have to be paid by cash or cheque 0remium can be paid electronically 9hen a policy lapses, the contract comes to an end. $ premium paid within the grace period is a payment made on the due date $ policy is not considered to have lapsed during the days of grace 9hen a policy lapses, some benefits are protected. If the insured dies during the days of grace, the claim will be admitted. The non4forfeiture clauses are relevant only when the premium is not paid. ;on4forfeiture provisions e1ist because It is not fair to the policyholders to deny everything to the policyholder and also The Insurance $ct does allows it and there is an accumulated reserve under the policy. ?race period is not a non4forfeiture optionD %urrender value factor increases with the duration elapsed. The reserve accumulates under a policy because of level premiums. 0aid up option is effective from date of first unpaid premium. $ paid up policy is not entitled to further bonuses $ policy is made paid up only if the paid up value is of a minimum amount If the paid up value is not up to a level, the cash value is paid 9hen premium is advanced from surrender value, the policy does not lapse The premium advanced under the non4forfeiture option, remains a debt In cases of automatic advance of premium, policies are entitled to bonus. In cases of automatic advance of premium, the surrender value increases In cases of paid up polices, the surrender value increases automatic premium advance is same as e1tended term assurance In amount of %$ payable on death.

 automatic advance of premium differ from e1tended term assurance In the duration for which the policy will remain in force. In automatic premium advance option, the full instalment premium is advanced. policyholders interests are common to the three non4forfeiture options. the three non4forfeiture options differ to The e1tent of insurance cover and The amount of debt on the policy and the amount payable on maturity. $ lapse is effectively a case of adverse selection $ lapse should make the agent reflect on the correctness of the sale $ lapse may happen because of temporary financial difficulties. $ revival is the opposite of a lapse. $ revival is as important as a new proposal for insurance. 7evivals are in the interest of the policyholders 7evivals are in the interest of the insurers The requirement of medical e1amination varies according to the duration of lapse The requirement of medical e1amination depends on the %$ 9hen only balance premiums are required, the revival is automatic 9hen evidence of good health is required, the underwriter decides on revival 6n revival, the relevant %$ for revival is the original %$ less paid up value. $ revived policy effectively, is a new contract. Euty to disclose all material facts, revives on revival :rrors in the statements made at the time of revival can nullify the policy. 6n revival, the original terms of the policy may be changed. $n assignment changes the title to the policy $ nomination does not change the title to the policy The assignee immediately becomes the policyholder $n assignee is the absolute owner of the policy $n assignment can not be cancelled at any time by the assignor $ nomination can be cancelled at any time by the life insured $n absolute assignment holds good even after maturity

 $ nomination holds good only till maturity In an assignment, property is transferred The assignment can be made on a separate paper The nomination can not be made on a separate paper $n assignment is effective as soon as it made $ nomination is effective when it is registered by the insurer $n assignment is not need to be notified to the insurer in order to become effective $ nomination is to be notified to the insurer to become effective. $ policy which has been assigned, will revert to the assignor 9hen the conditions specified in a conditional assignment happen $ policy which has been assigned absolutely, will revert to the assignor 9hen the assignee reassigns the policy $ policy which has been assigned, will revert back to the assignor 9hen the policy is assigned back by the assignee. The nomination becomes invalid when the policy is assigned 6n maturity, the nomination is automatically ineffective $ childrens deferred policy can be assigned any time $ nomination can be made under a childrens deferred policy after vesting date The nomination is intended to make claim settlements easier The nomination can be in favour of more than one person In the case of many nominees, the claim will be paid to them 5ointly $ nomination can be made even before the policy commences $ nomination can be made only by the insured himself $ssignee is not free from the assignors obligations under the policy $ nomination is not automatically cancelled when a loan is taken under the policy $ person to whom one owns moneys can be made a nominee $ nomination can be made in favour of an institution If the nominee is a minor, the claim can be paid to appointee not to the guardian If the assignee is dead, the claim can be paid to the assignees heirs. $n assignee can assign the policy further to another person

 The assignee can take a loan under the policy The claim amount belongs to the heirs of the deceased. $n assignee becomes the policyholder. $ nomination can be made in 5oint life policies $ 5oint life policy can be assigned The policy has to be given to the insurer at the time of surrender The policy has to be given to the insurer at the time of taking a loan 9hen a loan is taken, the policy is assigned not surrendered Loans are given even if on policies that are not in full force Loans are available on paid up policies. 3oreclosure action is taken when loan plus interest equals surrender value. Loans are not granted under term assurance policies. $ loan will be paid only when the policy is assigned to the insurer The rates of interest on loans are fi1ed by the insurer 6utstanding amounts of loans are deducted from the claim amount. 3oreclosure action cannot be taken till a notice is served on the policyholder $ policy which is foreclosed can be reinstated. 3oreclosure can be done only after informing the policyholder. 9hen a policy is foreclosed, the insurer will 0ay balance surrender after ad5ustment of all outstanding dues. 9hen a policy is foreclosed, it benefits ;either the policyholder nor the insurer. ;o alteration can be made without the request of the policyholder %ome kind of alterations do not require the consent of the insurer $lterations are generally allowed if they do not affect the risk $lterations are generally allowed if they do not increase the risk $ change of nomination and change of mode of premium do not require insurers consent The Insurance $ct does not protect those who try to cheat the insurer %ection B. does not apply if the policy had been revived within a year Loans are not granted under #90 $ct policies.

 <nder a #90 $ct policy, the beneficiaries #ust be specified at the commencement of the policy. If a policy is under the #90 $ct, It can be made paid up. If a policy is under the #90 $ct, the policyholder is the trustee. The beneficiaries under the #90 $ct can be a wife, son or daughter only. $ policy can not be taken under the ##90 $ct for the benefit of parents "rothers and sisters cannot be beneficiaries under the #90 $ct. The beneficiaries permitted under the #90 $ct depend also on religion. $ #90 $ct policy cannot be surrendered.
8)

CLAIMS

$ claim is a demand that the insurer should redeem the promise made in the contract. The insurer has then to perform his part of the contract i.e. settle the claim, after satisfying himself that all the conditions and requirements for settlement of claim have been complied with. The date on which the term is complete, is the date of maturity and the settlement of the %$ on that date, is the maturity claim. If the loss of an original policy seems to be genuine, it is possible to settle the claim on the basis of an indemnity and also an advertisement in the newspapers. <nder #90 $ct policies, the proceeds of the policy will be paid to the trustees. %ome maturity claims may be payable not on the date of maturity, but laterG not as a lump sum but in installments. The death claim action begins with an intimation being received in the insurerPs office. The following will be necessary before a death claim can be settled o 0olicy document o Eeeds of assignments N reassignments o 0roof of age, if age is not already admitted o ertificate of death o Legal evidence of title, if the policy is not assigned or nominated o 3orm of discharge e1ecuted and witnessed If the death claim has occurred within C years from the commencement of policy, or from a revival, additional requirements may be called for in order to verify the possibility of suppression of material facts at the time of proposal.

 In case there is no valid nomination or assignment, the claimant would have to prove his title through legal procedures like probate of will, succession certificates etc. The Indian :vidence $ct provides for presumption of death in cases where a person has been reported missing and has not been heard of for seven years. 0ayment of claim amounts to non4residents is governed by the fore1 control regulations. If a policy is financed through funds of a !indu <ndivided 3amily +!<3,, the policy belongs to the !<3 and the policy moneys would be payable to the Jarta of the !<3. The I7E$ 7egulations stipulate thatA the insurer should ask for all the requirements in the case of a death claim at one time and not piecemeal the decision to admit or to repudiate should be made within C) days of receipt of papers if an investigation is necessary, it should be completed within / months interest at =8 over the bank rate, will be payable for delays in sending the death claims interest at the %avings "ank rate will be paid if the insurer is ready to pay but the claimants are not ready to collect. $ demand to fulfill the insurers obligations is called claim. laim arise under an insurance policy when the insured events happens. $ request for a loan a5nd surrender is not a claim The insurer makes enquiries to check facts stated in the proposal. The insurer makes enquiries only in the case of death claims. The insurer makes enquiries only in the case of early claims. $ death claim within two years of commencement is treated as an early claim $ death claim within two years of revival is treated as an early claim The insurer takes action in a death claim case after a demand is made on it. #aturity claims are paid to policyholders. #aturity claims are paid to assignees. #aturity claim cheques are paid to the trustees in a mwp act case. #aturity proceeds are paid to the heirs, if the policyholder dies earlier. laim can be paid even without the original policy, if it is lost. laims may be paid on the basis of indemnity, if title is not established

 laims may be paid on the basis of indemnity, if original policy is lost Insurer need not wait for formal death intimation. "efore paying a claim, insurer have to be verified premiums paid till date, balance of loan, if any and title of claimant. "efore paying a death claim, insurer have to be verified proof of death of life insured, receipts of all premiums paid from commencement and entitlement for accident benefits If a person is missing for seven years, the claim is called a death claim. $ claim can be admitted if the life insured is not heard of for seven years. In the case of a missing person, premiums have to be paid till court 5udgment. $ction is initiated by the insurer well before the date of maturity The rightful claimant in the case of maturities is the policyholder or assignee. $ death claim, after admission, may be paid years latera survival benefit is settled like a maturity claim. %urvival benefits have to be endorsed on the policy. If original policy is lost, duplicate policy is necessary for survival benefits. $ policy reported to be lost, may actually have been assigned. In the death claim cases,Nthe ma1imum documents asked for In the death claim cases help of the agent be most usefulD In a death claim within a two years the claimant likely to feel most an1iousD :nquiries made in the case of early claim because to ensure that there is no misstatement of facts, to protect the interests of the community of policyholders and to protect the interests of the insurers. The insurer can initiate action even before a death claim intimation is received $ death claim intimation does not establish that the life insured has actually died 3rauds are more likely in death claim cases than in maturity cases If the life insured had died one month before maturity date, it is a death claim.

9)

LINKED LIFE INSURANCE PRODUCTS

<lips provide for fle1ibility.

 In ulips, the premium payable is not based on the insurers table of rates and in ulips, navs are decided by the insurers themselves. In ulips, the premium payable may be the same every year and In ulips the death benefit is a guaranteed figure. In ulips the entire premium minus insurance cost minus e1pense N charges paid is invested in the chosen fund. In ulips the insurance cover must be a minimum multiple of the premium. <lips cannot be issued as participating policies but it is a linked with market of unit. Loans are not given under ulips becaurse partial withdrawl after C years. In ulips the premium is invested in a fund not decided by the insurer but decided by the policyholder The navs of the growth funds of all insurers will not be the same but vary. In ulips, the premium will be invested as per the offer price. In ulips, the offer bid spread is the difference between the two prices and in ulips, the offer bid spread, will in some cases be *ero. In ulips, a policyholder can switch between funds at any time and in ulips, the premium to be invested in the fund can be increased in any year. In ulips, the best benefits can not be come from growth funds or the balanced funds In ulips, money can be withdrawn after C years In ulips, the amount payable on death is not a fi1ed amount and the nav of a fund can be less than purchase price In ulips, the sa must not be less than &.=. times single premium and in ulips, the sa must not be less than . times instalment premium. In ulips, only the allocated premium is invested in the funds. In ulips, the insurer is not responsible for the benefits under then policy but the policyholder is responsible for the benefits under the policy. In ulips, the navs are not known only to the insurers but are published regularly. In ulips, one can pay additional premium in any year for investment but in ulips, the lock in period will apply, if additional premium is paid any year In ulips, if the policy is terminated earlier, a chargesNadministrative charges have to be paid In ulips, riders can be availed of but the riders will be based on the basic sa and not navs In ulips, the death benefit may be 2integrated and the death benefit will be the basic sa or market value of unit.

 In ulips, loans not are available but partial withdrawals are permitted periodically after completion of C years of policy.
10)

INSURANCE AGENCY

$n agent is one who acts on behalf of principal. In the insurance industry, the term PagentP is ordinarily applied to a person engaged by the insurer to procure new business. The Insurance $ct defines an insurance agent as one who is licensed under %ection B= of that $ct and is paid by way of commission. There is a legal ma1im Pqui facit alium, facit perseP, which means that he who acts through others, acts to himself, and therefore, principal is bound by what the agent does. $ny person who is a ma5or and who is of sound mind, can employ an agent. <nlike other contracts, no consideration is necessary to create an agency contract. I7E$ was constituted by I7E$ $ct of &---. I7E$ regulations =))) deal with the issue of licenses under %ection B= of the Insurance $ct, &-C' and other matters relating to agents. ;ew I7E$ regulations =))= +licensing of corporate agents, were issued for corporate agents. $ license will not be given if the person is $ minor, 3ound to be of unsound mind 3ound guilty of criminal misappropriation or criminal breach of trust or cheating or forgery or an abetment of or attempt of commit any such offence 3ound guilty of or knowingly participating in or conniving at any fraud, dishonesty or misrepresentation against an insurer or an insured ;ot possessing the requisite qualifications and specified training ;ot passed such e1aminations as are specified by the 7egulations 3ound violating the code of conduct as specified by the 7egulations. ollectives like companies, firms, banks, cooperative societies, etc., can also become agents. These collectives will designate one or more persons as 2 orporate Insurance :1ecutives, who will be required to obtain licences. 2%pecified persons also works for corporate agents and they will be required to obtain certificates. $ broker usually does business with more than one insurance company.

 "rokers arrange to place the business of their clients with insurers on terms that are standard or negotiated. 2 omposite "rokers, are authori*ed to deal with direct business as well as reinsurance business. %ection B) $ +&, of the Insurance $ct stipulates that the ma1imum amount which can be paid to a life insurance agent, by way of commission or remuneration. The insurance agent is bound by the terms of appointment of the insurer. $gent is not prevented form pursuing any other interest or vocation. 6nce licensed and appointed, agent is an independent professional. $ life insurance agent, while dealing with the prospect, should be thinking of his interests and requirements and the best financial arrangements that would be appropriate in his situation. Life insurance agent is called the primary underwriter. $gents have the dual responsibility of being true to the interests of both the parties in the transaction. ;o agent is allowed to work for more than one life insurer or more than one general insurer. omposite insurance agents can sell life as well as general insurance. The insurance act, the contract act and the income ta1 act laws affect the working of an insurance agent. $ person is an insurance agent because of the nature of his duties. %ome people will not be allowed to become insurance agents. $n agent must look after the interests of the insurer and the proposer both. The functions of an agent differ according to the insurer he is working for. $ licence for insurance agency will not be given unless the person has passed an e1amination prescribed by the irda and has undergone training $ licence for insurance agency will not be given unless the person is recommended by an insurer. Licences for working as insurance agents are given to individual, companies and co4operative societies. $ person with a criminal record will not be given a license to work as an insurance agent. $n insurance agent works according to his schedule. $n insurance agent is not an employee of an insurer. $ life insurance agent can represent a mutual fund, can sell small savings schemes and can be a share broker. ommissions may continue to be paid to the heirs, after the death of the agent. $ life insurance agent should advise the prospect about the best financial arrangement for his situation.

 $ life insurance agent should be aware of the plus and minus points of all financial instruments, know the benefits of all life insurance plans and understand how the income ta1 laws apply to a prospect. $n agent should be an e1pert only with regard to life insurance. If a person does not have an insurance agents licence, he cannot be paid commission on the premium under policies procured by him. Life insurance agents 5ob is not over as long as the policyholder or any member of his family is alive. 9hen a policy lapses, it can be inferred that the agent has not been in touch with the policyholder, the agent had not e1plained the benefits of insurance properly and the agent had failed in his duties. $ good life insurance agent must have knowledge of the benefits under the various plans of insurance, knowledge of the other schemes where the prospect can put his moneys and knowledge of the office procedures. Jnowledge of a plan of insurance includes details about the benefits available under that plan, availability of similar plans from competitors and implications of the relevant ta1 laws. $n agents 5ob is to assist in claim settlement. $n agent has to ensure that nominations are changed whenever necessary and an agent is the agent of the proposer N policyholder $n agent cannot know everything that the proposer wants to know. :thical behavior leads to improved business and earnings and ethical behavior is automatic when the policyholders interests are kept in mind. :thical behavior is prescribed in the I7E$s code of conduct and ethical behavior is automatic when the policyholders interest are kept in mind The agent is responsible if there has been suppression of material facts in a case and unethical behavior affects the reputation of the agent and the insurer <nethical behavior can affect the settlement of the claim, if it is early. 9hen a claim is repudiated, the agents trustworthiness is affected. It is wrong to terminate an e1isting policy and take out a fresh one if it is done with a view to collect the higher first years commission.

11)

LAWS AND REGULATIONS

The Insurance $ct &-C', which came into effect from &st Fuly &-C-, and was amended in &-.) and later in &---, is the principal enactment relating to the business of insurance in India.

 The $ct contains provisions regarding licensing of agents and their remunerations, prohibition of rebates, and protection of policyholderPs interests. It also has provisions placing limits on the e1penses of insurers, use of funds and patterns of investments, maintaining solvency levels, and constitution of Insurance $ssociations and Insurance ouncils and the Tariff $dvisory ommittee for general insurance. The Insurance $ct, passed in Eecember &---, provided for the establishment of the I7E$ to protect the interests of holders of insurance policies, to regulate, promote and ensure orderly growth of insurance industry and for matters connected therewith or incidental thereto. It also sought to amend the Insurance $ct, &-C', the Life Insurance orporation $ct, &-./ and the ?eneral Insurance "usiness +;ationali*ation, $ct, &-(=. The I7E$ is a corporate body. The I7E$ is advised by an Insurance $dvisory ommittee consisting of not more than =. members. The movement to safeguard the interests of the customer is known as consumerism The following four consumer rights have been accepted as basicA o The right to safety, o The right to be informed. 6 The right to choose. 6 The right to be heard +redress,. The consumer dispute redressal forums at the Eistrict level will hear complaints up to the value of 7s .,)),))). The consumer dispute redressal forums at the %tate level will hear complaints up to the value of 7s =),)),))). 0olicyholders have the right to seek redress against unfair practices or unsatisfactory service from insurers and from agents. The ma5ority of disputes relating to insurance arise out of repudiation and delays in claims. 6mbudsmen are appointed by the ?overning body of the Insurance ouncil. The function of the 6mbudsman is to resolve complaints in respect of disputes between policyholders and insurers in cost effective, efficient and impartial manner. The 6mbudsman is not a 5udicial authority. It has no right to summon witnesses. Jnowledge of ta1 provisions is essential for an agent as it affects the benefits under a policy. $ny sum received under a life insurance policy, including the bonus additions is e1empt from income ta1. Eeductions +from ta1able income, to the e1tent of 7s. &),))) are allowed to an individual in respect of amounts paid or deposited in an annuity plan. The amount of income ta1 payable on the total ta1able income, is reduced by a percentage of the aggregate amount paid towards insurance premiums +on life of self, spouse or children,, contribution to 0rovident 3und or approved %uperannuation 3und, ;ational %avings ertificates, etc.

 Insurance premiums paid under partnership or keyman insurances are allowed as e1penses $n ideal investment scheme should answer favourably to the following testsA %afety, Liquidity +easily encashable,, $ high rate of interest yield, apital growth, "eneficial to save ta1. <nit trust and mutual funds are based on the principle that a large number of individuals pool their moneys collectively in a single fund. 9hile comparing two different insurance plans of the same insurer, it would be wrong to compare only the premiums payable under the plans. The choice of plan must depend firstly on the requirement of the prospects. :very insurer in india has to comply with the insurance act and I7E$ provisions. The insurance act deals with registration of insurers, investments of insurance funds and licensing of agents. The insurance association is constituted by the insurance act. It is an offence if an agent or company gives a rebate $ policyholder having a dispute with an insurer, can approach irda, ombudsman or consumer redressel forum. The ombudsman is not a 5udicial authority. The ombudsman will not hear matters already before other courts. The ombudsmans recommendations are not binding on the complainant but insurers have to comply, if the complainant accepts what the ombudsman says. The ombudsman cannot modify the terms of acceptance of the proposal. Eispute on the amount offered by the insurer to settle a claim can be referred to the ombudsman. The following matters can be referred to the ombudsman +a, dispute on whether a premium had been paid in time or not+b, dispute on whether the policy should be treated lapsed or not +c, complaint that the enquiries being made are un5ustified and delaying the claim. The following complaints would be heard by the ombudsman that the insurer is delaying the claim on the grounds of investigation, that the premium was paid on time but accounted by the insurer late, that the policy should not be treated as lapsed. Life insurance policies provide savings in ta1es. The surrender value and claim amount is not treated as an income. The ta1 benefits may be changed at any time through legislation. $ consumers forum is applicable for insurance matters and there can be appeal against the decision of the consumer forum also. The consumer forum can summon witnesses but ombudsman can not.

 The ta1 provisions are not the same for all kinds of savings and the ta1 provisions are not included in the constitution. $ rural area is defined in the irda regulations. $ny agent can do business from the rural areas. The insurance act has stipulated that insurers must do minimum business in the rural areas and the irda has stipulated the minimum business that is to be done in rural areas. The requirement of business from the rural areas increases every year and the minimum requirement is in terms of number of policies. The social sector is an unorganised sector including backward classes. The social sector is in the rural areas as well as in urban area also. #icro insurance is meant for the benefit of small families. Life micro insurance policy cannot e1ceed rs. .)))) sa. !ealth insurance covers can be provided under micro insurance. %pecial agents are appointed to sell micro insurance but commission for selling micro insurance is less than ordinary insurance. The term for life micro insurance policies is limited. $ person aged B. can be given a life micro insurance policy.

MATHMATICAL EXAMPLES
07:#I<#% &,. ?iven the following data

Tabular premium 7s... ;o rebate for mode. 7ebate for %$ above 7s..)))) 7s.=.)) per thousand. E$" Q 7s. &..) per thousand. E$" granted up to 7s. ', )),))) only. 6ccupation e1tra 7s. =..) per thousand what would be the half yearly premium for 7s.&,.),))).

+a, B)=. +b, B&(.

+c, B=(. I +d, BC.)

.. T$"<L$7 07:#I<# 4= 7:"$T: 367 !I?! %$

R&.. E$" R=.. 6 .( .( 1 &.),))) S '..) &))) '..) is the yearly premium. %o the half yearly premium would be, '..) S B=(. =,. 6n the basis of the following data %$ 7s. &,)),)))N4 Tabular premium 7s.CC.&) 7ebate 7s.=N4 per thousand for yearly mode. 7s.&N4 for half yearly none for quarterly. 7ebate 7s.CN4 per thousand for 7s. &,)),))) and above. E$" 7s.&N4 per thousand 6ccupation e1tra 7s.BN4 per thousand alculation the yearly premium for 7s.& lakh %$ +a, ='&) +b, C&&) +c, CC&) I +d, CC/) CC.&) 4C 4= R& RB CC.&) T$"<L$7 07:#I<# 7:"$T: 367 !I?! %$ 7:"$T: 367 K:$7LK #6E: E$" 6 <0$TI6;$L :MT7$ <0$TI6;$L :MT7$

CC.&) 1 &,)),))) S CC&) &))) CC&) is the yearly premium. C,. alculate quarterly premium +rounded off to the ne1t higher rupee, on the basis of the following data %$ 7s..),)))N4, Eate of maturity 7s.=B.&=.=)C/., Term C) years Eate of birth > ='.)/.&-(-., mode rebate yly 7s. &..) per thousand, !ly 7s. &.)), quarterly nil and monthly .8 e1tra %$ rebate 7s. &..) per thousand for 7s..),)))N4 and above Tabular premium for age nearer birthday =( 7s. =(.)' =' 7s. ='.&. +a, C&= +b, C=) I +c, CC& +d, CCE6# T:7# =B E6" =' =/ L$%T "E ;:MT "E S =( S =' &= )/ ). =B &= =)C/ C) =))/ +E6 , &-(=( +:M$ T $?:, =/ 7s. =/.B/

;:$7:7 "E S =( =(.)' T$"<L$7 07:#I<# 4 &.. 4) R) R) =...' =...' 1 .),))) S &=(&))) &=(- is the yearly premium. %o the half yearly premium would be, 7:"$T: 367 !I?! %$ 7:"$T: 367 #6E: E$" 6 <0$TI6;$L :MT7$

&=(- S C=) B,. alculate half yearly premium on the basis of the following data Eate of birth ='.)/.&-('. Eate of maturity =B.&=.=)B&, %$ :s. &,)),)))N4, Term C. years. Tabular premium for age ne1t birthday > age =( 7s. =(.B/, for age =' 7s. =(.'C and for age =- 7s. ='.C(. 7ebate .8 e1tra for monthly, less 7s. &N4 for hly 7s. &..) for yearly, %$ 7s. &..) for %$ 7s..),)))N4 and above. +a, &=//..) +b, &=/( +c, &=-C..) I +d, &=-B E6# T:7# =B E6" =' =/ L$%T "E ;:MT "E S =' S =&= )/ ). =B &= =)B& C. =))/ +E6 , &-(' =' +:M$ T $?:,

;:$7:7 "E S =' ='.C( T$"<L$7 07:#I<# 4 &.. 4 &.) R) R) =..'( =..'( 1 &,)),))) S =.'( &))) =.'( is the yearly premium. %o the half yearly premium would be, =.'( S &=-C..) .,. alculate monthly premium +rounded off to the ne1t higher rupee, %.$ 7s./),)))N4, :ndowment > C- years, Eate of maturity ='.)-.=)B., Large sum assured rebate 7s. &..) for 7s..),))) and above. Eate of birth > =/.&=.&-(/ 0remium per thousand %$ 3or age ne1t birthday =C) 7s. ='.'C 7s. =(.B/ 7:"$T: 367 !I?! %$ 7:"$T: 367 #6E: E$" 6 <0$TI6;$L :MT7$

C& +a, &C( I +b, &B) +c, &B& +d, &B= E6# T:7# =' E6" =/ = L$%T "E ;:MT "E S =S C) )&= =' )=)B. C=))/ +E6 , &-(/

7s. =-.C(

=- +:M$ T $?:,

;:$7:7 "E S C) ='.'C T$"<L$7 07:#I<# 4 &.. 4) R) R) =(.CC 7:"$T: 367 !I?! %$ 7:"$T: 367 #6E: E$" 6 <0$TI6;$L :MT7$

=(.CC 1 /),))) S &/C-.' &))) &/C-.' is the yearly premium. %o the half yearly premium would be, &/C-.' S &C/./. S &C(. /. alculate monthly premium +rounded off to the ne1t higher fifty paise, %.$ 7s.C),)))N4 with E$" for 7s.&N4 per thousand and occupational e1tra of 7s. &.(. per thousand. Eate of "irth =&.&).&-') .8 e1tra for monthly mode of payment. Tabular premium 7s. C=.'& +a, -C.)) I +b, -C..) +c, -B.)) +d, -B..) C=.'& 4) R&./B). T$"<L$7 07:#I<# 7:"$T: 367 !I?! %$ 7:"$T: 367 #6E:

R& R&.(. C(.=)

E$" 6 <0$TI6;$L :MT7$

7:"$T: 367 #6;T!LK #6E: I% .8 :MT7$. T6 $L <L$T: T!: #6E$L 7:"$T: I; 7s 9: !$H: T6 #<LTI0LK IT 9IT! T!: T$"<L$7 07:#I<# i.e., C=.'& 1 . S &./B). &)) $L%6 %I; : IT I% :MT7$ 9: !$H: T6 $EE IT I;%T:$E 63 %<"%T7$ TI;? IT $% 9: <%<$LLK E6 C(.=) 1 C),))) S &&&/ &))) &&&/ is the yearly premium. %o the half yearly premium would be, &&&/ S -C &= (,. $ proposal for %$ of 7s. &) lakhs with E$" for monthly mode under %%%. 0roposer had a previous policy of 7s. . lakhs with E$". 0roposal was accepted with health e1tra of 7s. =.(. per thousand %$ premium for E$" 7s. &N4 per thousand .8 e1tra for monthly mode large %$ rebate of 7s. =N4 per thousand for & lakh and above. Tabular premium 7s. B'.=) ma1imum total %$ on which E$" is allowed is 7s. &)N4 lakhs. 3ind monthly premium, rounded off to the ne1t higher rupee +a, B&)= +b, B&=& I +c, B&'C +d, B&-. B'.=) T$"<L$7 07:#I<# 4= R) R).. 7:"$T: 367 !I?! %$ 7:"$T: 367 #6E: E$" <0$TI6;$L :MT7$

R=.(. 6 B-.B.

7:"$T: 367 #6;T!LK #6E: I% .8 :MT7$. "<T IT I% #:;TI6;:E $% 07:#I<# E:E< TI6; 376# %$L$7K. %6 T!: 06LI K I% <;E:7 %$L$7K %$HI;? % !:#: +%%%, 9!:7: #6E$L :MT7$ !$7?: $7: ;6T L:IH:E. !:; : 7:"$T: 367 #6E: I% O:76. IT I% #:;TI6;:E T!$T T!: 0:7%6; I% $L7:$EK !$HI;? $ 07:HI6<% 06LI K 63 %$ . L$ % 9IT! E$". $L%6 #:;TI6;:E I% T!$T #$M E$" $LL69:E I% &) L$ %. %6 T!: ;:9

07606%$L 96<LE ": $ :0T:E 9IT! $ %$ 63 &) L$ % $;E E$" 63 6;LK . L$ %. %6 ;69 T!: E$" !$7?:% 63 7s & 96<LE ": 7:E< :E T6 !$L3 i.e.).. B-.B. 1 &,)),))) S B-B.) &))) B-B.) is the yearly premium. %o the half yearly premium would be, B-B.) S B&=& ',. $ policy for 7s.&= lakhs taken on &B.(.=))( under endowment plan for =) years with E$". Eate of "irth is &=.&&.&-'). 0roposal is accepted with E$"Q 7s. &..) per thousand +ma1imum 7s.&) lakhs , and occupational e1tra of 7s. =.(. per thousand. ;o rebate for high %$ !owever for yearly mode a rebate of 7s. =N4 is given. alculate yearly premium Tabular premium for age nearer birthday, as follows A $ge =. $ge =/ $ge =( $ge =' 4 4 4 4 7s.B'.=) 7s.B'.B) 7s.B-.&) 7s.B-.')

+a, /)B') +b, /)-') +c, /&C=) I +d, /&C') E6 E6" &B &= = )( && ' =))( &-') =/ +:M$ T $?:,

0%. E6 I% EI7: TLK #:;TI6;:E, ;::E ;6T ": $L <L$T:E. L$%T "E ;:MT "E S =/ S =(

;:$7:7 "E S =( B-.&) T$"<L$7 07:#I<# 4) 4= 7:"$T: 367 !I?! %$ 7:"$T: 367 #6E:

R&.=. E$" R=.(. .&.&) 6 <0$TI6;$L :MT7$

IT I% #:;TI6;:E T!$T #$M E$" $LL69:E I% &) L$ %. %6 T!: ;:9 07606%$L 96<LE ": $ :0T:E 9IT! $ %$ 63 &= L$ % $;E E$" 63 6;LK &) L$ %. %6 ;69 T!: E$" !$7?:% 63 7s &..) 96<LE ": $L <L$T:E $%G &..) 1 &) S &.=. &= .&.&) 1 &=,)),))) S /&C=) &))) -,. ?iven the following information, indicate which of the four options given below would be the correct half4 yearly premium for an endowment policy for 7s.& lakh, on the life of a person born on ='./.&-(B. Term C. years Eate of maturity =B.&=.=)C( Tabular premium for age nearest birthday =( 4 7s.=(.B/ per thousand Tabular premium for age nearest birthday =' 4 7s.=(.'C per thousand Tabular premium for age nearest birthday =- 4 7s.='.C( per thousand 0remium ad5ustment > .8 e1tra for monthly mode, 7s.& less for half yearly mode and 7s.&..) less for yearly mode %.$. rebate 7s.&..) less for 7s..),))) and above 6ptions E6# T:7# =B E6" =/ L$%T "E ;:MT "E S =' S =&= =' ). &=//..) I &=B/..) &=-C..) ;one of the above =B &= =)C( C. =))= +E6 , )/ &-(B =' +:M$ T $?:,

;:$7:7 "E S =' =(.'C T$"<L$7 07:#I<# 4 &.. 4 &.) R) R) =..CC =..CC 1 &)),))) S =.CC &))) =.CC is the yearly premium. %o the half yearly premium would be, =.CC S &=//..) &= &),. ?iven the following information, indicate which of the four options given below would be the correct premium to be deducted from the salary of a person born on ='./.&-(B, who has taken an endowment policy on his life. %um assured 7s.B)))) Term C. years Eate of maturity =B.&=.=)C( Tabular premium for age nearest birthday =( 4 7s.=(.B/ per thousand Tabular premium for age nearest birthday =' 4 7s.=(.'C per thousand Tabular premium for age nearest birthday =- 4 7s.='.C( per thousand 0remium ad5ustment > .8 e1tra for monthly mode, 7s.& less for half yearly mode and 7s.&..) less for yearly mode %.$. rebate 7s.&..) less for 7s..),))) and above 6ptions '(.(( '-..( -=.') I -(.B& 7:"$T: 367 !I?! %$ 7:"$T: 367 #6E: E$" 6 <0$TI6;$L :MT7$

E6# T:7#

=B

&=

=)C( C.

=B E6" =/

&= =' ).

=))= +E6 , )/ &-(B =' +:M$ T $?:,

L$%T "E ;:MT "E

S =' S =-

;:$7:7 "E S =' =(.'C T$"<L$7 07:#I<# 4) 4) R) R) =(.'C 7:"$T: 367 !I?! %$ I% 7s.&..) 367 %$ 63 .),))) @ $"6H: "<T T!: %$ I; T!I% 06LI K I% B),))). %6, 7:"$T: 367 !I?! %$ I% O:76. 7:"$T: 367 #6;T!LK #6E: I% .8 :MT7$. "<T IT I% #:;TI6;:E $% 07:#I<# E:E< TI6; 376# %$L$7K. %6, T!: 06LI K I% <;E:7 %$L$7K %$HI;? % !:#: +%%%, 9!:7: #6E$L :MT7$ !$7?:% $7: ;6T L:IH:E. !:; : 7:"$T: 367 #6E: I% O:76. =(.'C 1 B),))) S &&&C.=) &))) &&&C.=) is the yearly premium. %o the monthly premium would be, &&&C.=) S -=.') &= &&,. ?iven the following information, indicate which of the four options given below would be the correct annual premium +rounded off to the nearest rupee, for an endowment policy on the life of a person born on ='./.&-(B. %um assured 7s..)))) 0olicy taken on Crd #arch =))C, to be back dated by three months 7:"$T: 367 !I?! %$ 7:"$T: 367 #6E: E$" 6 <0$TI6;$L :MT7$

Tabular premium for age nearest birthday =( 4 7s.=(.B/ per thousand Tabular premium for age nearest birthday =' 4 7s.=(.'C per thousand Tabular premium for age nearest birthday =- 4 7s.='.C( per thousand 0remium ad5ustment > .8 e1tra for monthly mode, 7s.& less for half yearly mode and 7s.&..) less for yearly mode %.$. rebate 7s.&..) less for 7s..),))) and above 6ptions E6 E6" . &=B&.)) &=B&..) &=B=.)) I ;one of the above C &= =' ). =))= )/ &-(B =' +:M$ T $?:,

IT I% #:;TI6;:E T!$T T!: 06LI K I% T$J:; 6; C7E #$7 ! =))C, T6 ": "$ J E$T:E "K T!7:: #6;T!%. %6, T!: E$T: 63 6##:; :#:;T 96<LE ": C7E E: =))=. L$%T "E ;:MT "E S =' S =-

;:$7:7 "E S =' =(.'C T$"<L$7 07:#I<# 4 &.. 4 &.. R) R) =B.'C =B.'C 1 .),))) S &=B&..) &))) "<T IT I% #:;TI6;:E T!$T 07:#I<# !$% T6 ": 76<;E:E 633 T6 ;:$7:%T 7<0::. %6, T!: $;%9:7 I% &=B=. 7:"$T: 367 !I?! %$ 7:"$T: 367 #6E: E$" 6 <0$TI6;$L :MT7$

&=,. ?iven the following information, indicate which of the four options given below show the monthly premium +rounded off to the nearest rupee, to be paid by a person born on ='./.&-(B, who has taken an endowment policy on his life. %um assured 7s.B)))) Term C. years Eate of maturity =B.&=.=)C( Tabular premium for age nearest birthday =( 4 7s.=(.B/ per thousand Tabular premium for age nearest birthday =' 4 7s.=(.'C per thousand Tabular premium for age nearest birthday =- 4 7s.='.C( per thousand 0remium ad5ustment > .8 e1tra for monthly mode, 7s.& less for half yearly mode and 7s.&..) less for yearly mode %.$. rebate 7s.&..) less for 7s..),))) and above 6ptions E6# T:7# =B E6" =/ L$%T "E ;:MT "E S =' S =&= =' ). -(.)) I -(.B) -(..) ;one of the above =B &= =)C( C. =))= +E6 , )/ &-(B =' +:M$ T $?:,

;:$7:7 "E S =' =(.'C 4) 4 &.C-&. R) E$" T$"<L$7 07:#I<# 7:"$T: 367 !I?! %$ 7:"$T: 367 #6E:

R) =-.==&.

<0$TI6;$L :MT7$

7:"$T: 367 !I?! %$ I% 7s.&..) 367 %$ 63 .),))) @ $"6H:. "<T T!: %$ I; T!I% 06LI K I% B),))). %6, 7:"$T: 367 !I?! %$ I% O:76. 7:"$T: 367 #6;T!LK #6E: I% .8 :MT7$. T6 $L <L$T: T!: #6E$L 7:"$T: I; 7s 9: !$H: T6 #<LTI0LK IT 9IT! T!: T$"<L$7 07:#I<# i.e. =(.'C 1 . S &.C-&. &)) $L%6 %I; : IT I% :MT7$ 9: !$H: T6 $EE IT I;%T:$E 63 %<"%T7$ TI;? IT $% 9: <%<$LLK E6. =-.==&. 1 B),))) S &&/'.'/ &))) &&/'.'/ is the yearly premium. %o the monthly premium would be,

&&/'.'/ S -(.B). &= "<T IT I% #:;TI6;:E T!$T 07:#I<# !$% T6 ": 76<;E:E 633 T6 ;:$7:%T 7<0::. %6, T!: $;%9:7 I% -(. %<77:;E:7 &,. 3ind out surrender value, on the basis of following data, +the answer to be rounded off to the ne1t lower rupee,. E6 > &C.(.=))&, :ndowment without profit > =. years Eue date of last premium paid &C.)(.=))/ A Kearly mode %$ 7s..),)))N4 surrender value quotation required on )&.)-.=))( %H factor . yrs =C.-&8, / yrs =B./C8, ( yrs =/.B'8 +a, ='/- +b, =-.. I +c, C&(( +d, ;one of these L00 S L$%T 07:#I<# 0$IE E$T: <00 S <;0$IE 07:#I<# E$T: +L00R&, E6 S E$T: 63 6##:; :#:;T 63 06LI K ;00 S ;<#":7 63 07:#I<# 0$IE

$L9$K% 3I;E <00. L00 <00 E6 &C &C &C ) ;00 S / 0$IE <0 H$L<: S ;<#":7 63 07:#I<# 0$IE 1 %$ )( )( )( ) =))/ =))( =))& /

T6T$L 07:#I<#% 0$K$"L: S / 1 .)))) S =. %<77:;E:7 H$L<: S 0$IE <0 H$L<: 1 %H3 S =-.../) &=)))

S &=))) 1 =B./C &))

IT I% #:;TI6;:E T!: $;%9:7 I% T6 ": 76<;E:E 633 T6 T!: ;:MT L69:7 7<0::. %6, T!: $;%9:7 I% =-... =,. 3ind out loan available at -)8 of surrender value, on the basis of following data, +the answer to be rounded off to the ne1t lower rupee,. E6 > &C.(.=))&, :ndowment without profit > =. years Eue date of last premium paid &C.)(.=))/ A Kearly mode %$ 7s..),)))N4 surrender value quotation required on )&.)-.=))( %H factor . yrs =C.-&8, / yrs =B./C8, ( yrs =/.B'8 +a, =/'= +b, =//) I +c, ='B) +d, ;one of these L00 <00 E6 &C &C &C ) ;00 S / 0$IE <0 H$L<: S ;<#":7 63 07:#I<# 0$IE 1 %$ )( )( )( ) =))/ =))( =))& /

T6T$L 07:#I<#% 0$K$"L:

/ 1 .)))) S =.

&=)))

%<77:;E:7 H$L<:

S 0$IE <0 H$L<: 1 %H3 S =-.../)

S &=))) 1 =B./C &)) L6$; S %<77:;E:7 H$L<: 1 -)8 S =-.../) 1 -) S =//) &))

C,. 3ind out surrender value, on the basis of following data, +the answer to be rounded off to the ne1t lower rupee,. E6 > &../.&--=, :ndowment without profit > C) years %$ 7s.C),)))N4 mode half yearly Eue date of last premium paid &..)/.=))( $ccrued bonus 7s.(.)N4 per thousand %$, %H factor =C8 +a, C/() +b, C(/. +c, '(B) I +d, ;one of these L00 <00 E6 &. &. &. ) )/ &= )/ / =))( =))( &--= &.

;00 S +&. 1 =, R & SC&. !$L3 K:$7LK #6E:. T00 S C) 1 = S /) 0$IE <0 H$L<: S ;<#":7 63 07:#I<# 0$IE 1 %$

T6T$L 07:#I<#% 0$K$"L: S C& 1 C)))) S /) "6;<% S (.) 1 C)))) S ==.)) &))) %<77:;E:7 H$L<: S T6T$L 0$IE <0 H$L<: 1 %H3 &..))

S +&..)) R ==.)), 1 =C &))

S '(B)

B,. 3ind out loan available at -)8 of surrender value, on the basis of following data, +the answer to be rounded off to the ne1t lower rupee,. E6 > &../.&--=, :ndowment without profit > C) years %$ 7s.C),)))N4 mode half yearly Eue date of last premium paid &..)/.=))( $ccrued bonus 7s.(.)N4 per thousand %$, %H factor =C8 +a, CC)C +b, CC'' +c, ('// I +d, ;one of these L00 <00 E6 &. &. &. ) )/ &= )/ / =))( =))( &--= &.

;00 S +&. 1 =, R & SC&. !$L3 K:$7LK #6E:. T00 S C) 1 = S /) 0$IE <0 H$L<: S ;<#":7 63 07:#I<# 0$IE 1 %$

T6T$L 07:#I<#% 0$K$"L: S C& 1 C)))) S /) "6;<% S (.) 1 C)))) S ==.)) &))) %<77:;E:7 H$L<: S T6T$L 0$IE <0 H$L<: 1 %H3 S '(B) &..))

S +&..)) R ==.)), 1 =C &)) L6$; S %<77:;E:7 H$L<: 1 -)8 S '(B) 1 -) S ('// &))

.,. 3ind out surrender value, on the basis of following data, +the answer to be rounded off to the ne1t higher rupee,.

E6 > =).)=.&--C, :ndowment without profit > =) years %$ 7s./),)))N4 mode quarterly Eue date of last premium paid =)4).4=))( $ccrued bonus 7s.&)-.N4 per thousand %$, %H factor /)8 +a, =CB-) +b, =/&)) +c, /..=) I +d, ;one of these L00 <00 E6 =) =) =) ) ). )' )= / =))( =))( &--C &B

;00 S +&B 1 B, R = S.'. L<$7T:7LK #6E:. T00 S =) 1 B S ') 0$IE <0 H$L<: S ;<#":7 63 07:#I<# 0$IE 1 %$

T6T$L 07:#I<#% 0$K$"L: S .' 1 /)))) S ') "6;<% S &)-. 1 /)))) S /.()) &))) %<77:;E:7 H$L<: S T6T$L 0$IE <0 H$L<: 1 %H3 S /..=) BC.))

S +BC.)) R /.()), 1 /) &))

/,. 3ind out loan payable at -)8 of surrender value, on the basis of following data, +the answer to be rounded off to the ne1t higher rupee,. E6 > =).)=.&--C, :ndowment without profit > =) years %$ 7s./),)))N4 mode quarterly Eue date of last premium paid =)4).4=))( $ccrued bonus 7s.&)-.N4 per thousand %$, %H factor /)8 +a, =CB-) +b, .'-/' I L00 =) ). +c, /..=) +d, ;one of these =))(

<00 E6

=) =) )

)' )= /

=))( &--C &B

;00 S +&B 1 B, R = S.'. L<$7T:7LK #6E:. T00 S =) 1 B S ') 0$IE <0 H$L<: S ;<#":7 63 07:#I<# 0$IE 1 %$

T6T$L 07:#I<#% 0$K$"L: S .' 1 /)))) S ') "6;<% S &)-. 1 /)))) S /.()) &))) %<77:;E:7 H$L<: S T6T$L 0$IE <0 H$L<: 1 %H3 S /..=) BC.))

S +BC.)) R /.()), 1 /) &)) L6$; S %<77:;E:7 H$L<: 1 -)8 S /..=) 1 -) S .'-/' &))

(,. 3ind out loan payable at -)8 of surrender value, on the basis of following data, +the answer to be rounded off to the ne1t higher rupee,. E6 > &-.)=.=))=, :ndowment without profit > =) years %$ 7s..),)))N4 mode yearly Eue date of last premium paid &-4)=4=))/ "onus declared 7s./) per thousand %$ every year since =))& %H factor C=8 +a, ='') I +b, '('B +c, -(/) +d, ;one of these

0.%. <00 I% ?IH:; @ ;::E ;6T ": $L <L$T:E. <00 E6 &&) )= )= / =))/ =))= B

;00 S B. K:$7LK #6E:. T00 S =) 0$IE <0 H$L<: S ;<#":7 63 07:#I<# 0$IE 1 %$

T6T$L 07:#I<#% 0$K$"L: S B 1 .)))) S &)))) =)

;6 "6;<% 9ILL ": ?IH:; $% T!: 06LI K !$% ;6T 6#0L:T:E . K:$7%. %<77:;E:7 H$L<: S T6T$L 0$IE <0 H$L<: 1 %H3 S C=))

S &)))) 1 C= &)) L6$; S %<77:;E:7 H$L<: 1 -)8 S C=)) 1 -) S ='') &))

',. 3ind out loan payable at -)8 of surrender value, on the basis of following data, +the answer to be rounded off to the ne1t higher rupee,. E6 > &B.&&.=))&, :ndowment without profit > =) years %$ 7s.&,)),)))N4 mode half yearly Eue date of last premium paid &B4.4=))(, %H factor C&8 +a, (((C +b, 'C() I L00 <00 E6 &B &B &B ) +c, -)/' +d, ;one of these ). && && / =))( =))( =))& /

;00 S +/ 1 =, S&=. !$L3 T:$7LK #6E:. T00 S =) 1 = S B) 0$IE <0 H$L<: S ;<#":7 63 07:#I<# 0$IE 1 %$

T6T$L 07:#I<#% 0$K$"L: S &= 1 &))))) S B) C))))

%<77:;E:7 H$L<:

S T6T$L 0$IE <0 H$L<: 1 %H3 S -C))

S C)))) 1 C& &)) L6$; S %<77:;E:7 H$L<: 1 -)8 S -C)) 1 -) S 'C() &))

-. 3ind out loan payable at -)8 of surrender value, on the basis of following data, +the answer to be rounded off to the ne1t higher rupee,. E6 > &C.(.&--), :ndowment without profit > =. years %$ 7s..),)))N4 mode quarterly Eue date of last premium paid &C4)B4=))( 0remium amount 7s.B.)N4 %H factor ./8 "onus is 7s.-/)N4 per thousand. Interim bonus rate was 7s.(.N4. +a, C.)'- +b, BC'&. +c, B(&=B +d, ;one of these I

0.%. <00 I% ?IH:; @ ;::E ;6T ": $L <L$T:E. <00 E6 &C &C ) )B )( =))( &--) &/

;00 S +&/ 1 B, R C S /(. L<$7T:7LK #6E:. T00 S =. 1 B S &)) 0$IE <0 H$L<: S ;<#":7 63 07:#I<# 0$IE 1 %$

T6T$L 07:#I<#% 0$K$"L: S /( 1 .)))) S ') "6;<% S -/) 1 .)))) S B'))) &))) I;T:7I# "6;<% S (. 1 .)))) S C(.) &))) CC.))

%<77:;E:7 H$L<:

S T6T$L 0$IE <0 H$L<: 1 %H3 S B((B)

S +CC.)) R B')) R C(.), 1 ./ &)) L6$; S %<77:;E:7 H$L<: 1 -)8 S B((B) 1 -) S B=-// &)) $;%9:7 I% T ;6;: 63 T!: $"6H: U.

&),. 3ind out loan payable at -)8 of surrender value, on the basis of following data, +the answer to be rounded off to the ne1t higher rupee,. E6 > &..-.&--&, :ndowment without profit > C& years %$ 7s.B),)))N4 Eue date of last quarterly premium paid &.4&=4=))/ "onus vested 7s.CB,)))N4, %H required on )..)B.=))( %H factor duration &B yrs ==8, &. yrs =.8, &/ yrs C)8 +a, 'C=. +b, &=&.) I L00 <00 E6 &. &. &. ) +c, &B.') +d, ;one of these &= )C )/ =))/ =))( &--& &.

;00 S +&. 1 B, R= S/=. L<$7T:7LK #6E:. T00 S C& 1 B S &=B 0$IE <0 H$L<: S ;<#":7 63 07:#I<# 0$IE 1 %$

T6T$L 07:#I<#% 0$K$"L: S /= 1 B)))) S &=B "6;<% S CB))) %<77:;E:7 H$L<: S T6T$L 0$IE <0 H$L<: 1 %H3 S &C.)) =))))

S +=)))) R CB))), 1 =. &))

L6$; S %<77:;E:7 H$L<: 1 -)8 S &C.)) 1 -) S &=&.) &))

L$I#% &,. $ money back policy for %$ of 7s..),)))N4, #atured after =. years. %urvival benefits of &.8 each had been paid at the end of .th , &)th , &.th and =)th years. "onus had accrued at 7s.-/.N4 per 7s.&)))N4 %$. Interim bonus Q 7s.=.N4 per thousand %$ is payable. 9hat is the maturity claim amountD +a, /'=.) +b, /-.)) I +c, -'=.) +d, --.)) %<7HIH$L ":;:3IT $L7:$EK 0$IE 6<T S /)8 +&.8 :$ ! K:$7, "$L$; : %<7HIH$L ":;:3IT S B)8 63 .),))) S =),))) "6;<% S -/. 1 .),))) S B'=.) &))) I;T:7I# "6;<% S =. 1 .),))) S &=.) &))) #$T<7ITK L$I# S =)))) R B'=.) R &=.) S /-.)) =,. alculate death claim amount on the basis if data given below if life assured dies in the =.th year of the policy. #oney back policy %$ 7s..)))) Term =. years %urvival benefits of &.8 each paid at the end of .th, &)th, &.th and =)th years. $ccrued bonus 7s.-/. per thousand %$ Interim bonus 7s.=. per thousand %$ +a, /'=.) +b, /-.)) +c, -'=.) +d, --.)) I %<# $%%<7:E S .),))) "6;<% S -/. 1 .),))) S B'=.) &))) I;T:7I# "6;<% S =. 1 .),))) S &=.) &))) E:$T! L$I# S .)))) R B'=.) R &=.) S --.))

C,. The life assured under an endowment without profits policy for =) years for 7s.&,)),)))N4 %$ with E$" rider died on C)th Fune =))( committing suicide. The policy was taken on =&st #arch, =))( and was backdated to &st $pril, =))/. Eetermine the amount of claim payable The policy was taken on =&st march, =))(. %ince suicide happened within one year no claim is payable. +0.%. "ackdating does not apply in suicide case, +a, nothing I +b, & lakh +c, = lakhs +d, return of premium B,. The life assured under an endowment without profits policy for =) years for 7s.&,)),)))N4 %$ with E$" rider died on =.th #arch =))' committing suicide. The policy was taken on =&st #arch, =))( and was backdated to &st $pril, =))/. Eetermine the amount of claim payable +a, nothing +b, &,)),))) I +c, =,)),))) +d, return of premium

L$I# S %$ S&,)),))). %ince suicide happened after one year. .,. 6n the basis of the data given below, alculate the claim amount payable Eate of commencement &/.)/.=))=, %$ 7s..),)))N4 with E$". :ndowment =) years. $nnual premium 7s.C))). Last premium paid, due &/.)/.=))/. Eate of death )'.)(.=))( due to road accident. +a, &)))) +b, =)))) +c, -())) I +d, &))))) L$%T 07:#I<# 0$IE S &/.)/.=))/ <;0$IE 07:#I<# S C))) + &/.)/.=))( , %$ S .)))) %$ +E$", S .)))) +since death is by accident, E:$T! L$I# S %$ R %$ +E$", > <;0$IE 07:#I<#

S .)))) R .)))) > C))) S -())). +0.%. since one premium is pending we have to deduct it from claim, /,. ?iven the following data, state which of the following is the correct amount of the claim payable under the policy. 0lan and Term :ndowment C' years

%um $ssured 7s..))))N4 Eate of commencement =)...&-'Eate of death of life assured &'.'.=))= Luarterly premium 7s.C=) due in $ugust =))= paid on /th $ugust =))= "onus vested 7s.C/))). Interim bonus declared after valuation on C&.C.=))&. 7s./' per thousand

7s.'.C/) 7s.''(/) I 7s.'/C=) 7s.'-(=)

%<# $%%<7:E S .),))) "6;<% S C/))) I;T:7I# "6;<% S /' 1 .),))) S CB)) &))) ;e1t policy anniversary is =)N).N=))C %o, no. of premium balance S = +;ov @ 3eb, <npaid premium amount S C=) 1 = S /B) E:$T! L$I# S .)))) R C/))) R CB)) > /B) S ''(/). (,. ?iven the following data, state which of the following is the correct amount of the claim payable under the policy. 0lan and Term :ndowment =. years

%um $ssured 7s.B))))N4 Eate of commencement =).(.&-'Eate of death of life assured &'.=.=))= Luarterly premium 7s.C=) due in $ugust =))= not paid "onus vested 7s.C)))). Interim bonus declared after valuation on C&.C.=))&. 7s.() per thousand 7s..)))) 7s..=')) 7s./-C/) 7s.(=&/) I

%<# $%%<7:E S B),))) "6;<% S C)))) I;T:7I# "6;<% S () 1 B),))) S ='))

&))) ;e1t policy anniversary is =)N)(N=))= %o, no. of premium balance S = +Fan @ $pr, <npaid premium amount S C=) 1 = S /B) 0.%. :ven though death happens in 3eb he has make premium payments for the entire policy year. E:$T! L$I# S B)))) R C)))) R =')) > /B) S (=&/). ',. ?iven the following data, state which of the following is the correct amount of the claim payable under the policy. 0lan and Term :ndowment B) years

%um $ssured 7s..))))N4 Eate of commencement =).=.&-'Eate of death of life assured &'.=.=))= Luarterly premium 7s.C)) due in 3ebruary =))= paid on /th 3ebruary =))= "onus vested 7s.C/))). Interim bonus declared after valuation on C&.C.=))&. 7s./' per thousand 7s.'/))) 7s.'-B)) 7s.'/C)) 7s.'-()) I

%<# $%%<7:E S .),))) "6;<% S C/))) I;T:7I# "6;<% S /' 1 .),))) S CB)) &))) ;e1t policy anniversary is =)N)=N=))= %o, premium of 3eb, for ne1t policy year, paid in advance. :1cess premium amount S C)) 0.%. when e1cess premium amount for the ne1t policy year is paid and death happens, the premium amount has to be returned in the claim. E:$T! L$I# S .)))) R C/))) R CB)) R C)) S '-()).