IRDAI Point of Sales Person

Training Module
 Index
Module 1 : Introduction to Insurance
Module 2 : Indian Insurance Market
Module 3 : Principles of Insurance
Module 4 : Classification of Insurance
Module 5 : Life Insurance Products
Module 6 : Non- life (General Insurance)
Module 7 : Health Insurance & PA Insurance
Module 8 : Insurance Documents
Module 9 : Premium
Module 10 : Concepts of Benefits & Deductibles
Module 11 : Claims Life Insurance Process & Documents
Module 12 : Claims Non- life Process & Documents
Module 13 : Claims Health Insurance
Module 14 : Policyholders Protection Regulations
Module 15 : Grievance Redressal Procedure available to Policyholders
Module 16 : Role of TPAs in Health Insurance
Module 17 : Legal aspects of Insurance relevant to VLE
Module 18 : Insurance Customer
Module 19 : The Selling of Insurance Products
Module 20 : Insurance Terminology
Introduction to Insurance

What is Insurance?
Insurance may be defined as sharing of the losses of a unfortunate few
amongst those exposed to similar uncertain events/situations.

How Insurance Works?

Persons exposed to the same risk come together and agree that if
anyone of them suffers a loss the others will share the same. Different
type of risks can be identified and a sufficiently large group of similar
risks can be formed. A fund can be created out of contributions the
members of this group.

The amount an insurance company collect as expected contribution

from the insured in advance to create the fund is called Premium.
Introduction to Insurance
What is the need for insurance ?
The Purpose of insurance is to create a system through which a fund is
created. This fund is based on the pooling principle. The Fund is utilised for
providing compensation to few who suffer losses.
What is Risk?
Risk is defined as the chance of loss. Risk refers to the likely loss or damage
that can arise on account of happening of an event.
What is Peril?
The event, whose occurrence actually leads to the loss, is known as Peril. It is
the cause of loss. The Examples of perils are fire, floods, lightening, burglary,
snakebite etc.
What is Hazard?
Hazard is a condition that influences the risk. It generally indicates conditions
that increase the risk. Hazards increase probability of loss, for example
smoking increases chances of cancer.
Indian Insurance Market
Insurers
The insurance company should be an Indian Company, and should have minimum
Rs.100 Crore paid up capital. A Co. can carry either life or non-life insurance not both.
There are total 24 Life insurance cos. & 27 General insurance cos.

General Insurance Corporation of India doing exclusively reinsurance business.

Life Insurance Company is the Only Public Sector life insurance co.
There are 4 PSUs in General Insurance namely :
The New India Assurance Co. Ltd
National insurance Co. Ltd
Oriental Insurance Co. Ltd
United India Insurance Co. Ltd

Specialised Non- life insurance Co

Agriculture Insurance Co. of India - Specialised in Crop Insurance
Export Credit & Guarantee Corporation of India Specialised in Export Credit
Indian Insurance Market
Intermediaries
An intermediary is a person or an agency who acts as a link between
the insurance company and the policyholders. Following intermediaries
are operating in Indian Insurance Market :

Agents Maximum one life, one non-life & one health insurance co.
The agent represents the insurance co. before the customer. On
customer query, agent can disclose the commission.

Corporate Agents Is a corporate body which acts as a agent of

one life, one non-life & one health insurance co.
Bancassurance banks can become corporate agents. Maximum
one life, one non-life & one health insurance co.
Indian Insurance Market
Brokers
1. Direct Broker Deals with all insurance cos. They represent the client
before insurance cos.
2. Re-insurance Broker Acts as an intermediary between insurance co & re-
insurance cos.
3. Composite Broker Direct Insurance as well as Reinsurance.

Micro Insurance agents Allowed to do only micro insurance business both in

life & non-life insurance.

Village Level Entrepreneur It is an individual registered & authorised to

operate the Common Service Center (CSC), who is in charge of running the
daily operations of the CSC under the Act started by the Department of
Electronics & Information Technology (DEITY).
Indian Insurance Market
Specialist Intermediaries
Insurance Surveyors The work of a surveyor is to asses losses of
the policyholder for non life insurance claims. They are licensed
by IRDAI. Their fees is paid by the insurance cos.

Claims Investigators They are employed by insurance cos. to

investigate claims relating to crimes like theft, burglary,
misappropriation of insureds money.

Medical Examiners Medical experts are employed by life insurers

to examine the health condition of a prospective life to be insured
and decide about the acceptance, premium etc.

Regulatory Bodies
Insurance Regulatory & Development authority of India established in
2000
Insurance Councils established in 2001
Indian Insurance Market
Educational & Training Institutions
Insurance institute of India established in 1955
College of Insurance established in 1966
National insurance academy established in 1982
Institute of Actuaries of India established in 1979
Institute of Insurance and Risk Management established in 2002

Third Party Administrators (TPA)

TPA are intermediaries licensed by IRDAI and are responsible for the
processing of claims under Health Insurance. Their main work to :
To process medical insurance claims
Tie ups with Hospitals for Providing Cashless Claims
Advising insurers on Underwriting of proposals
Advice insurers on devising new medical covers
Maintaining Data on various health insurance schemes & providing them to
insurers
Principle of Insurance
Offer & Acceptance
Proposal [Offer] is an application for taking an insurance. Generally a person
who needs insurance makes the proposal.
When an insured approaches insurance company to insure his life or his
property he is required to fill up a form called Proposal form.
If the insurer accept the proposal as it is, it is called accepted as proposed.
Consideration (Premium)
Premium is the consideration, which is to be paid by the proposer to the insurer,
at the beginning of the period for which the Insurance is being provided.
No Consideration, No Contract

Life Insurance Policy has a cooling off period of 15 days after the date of
intimation of underwriters acceptance.
Principle of Insurance
Insurable Interest
Insurable interest is said to exist when the insured stands in
such a relationship to the subject matter of insurance that
he or she stands to benefit from its existence and suffers
financial loss in the event of its damage or destruction.

Elements of Insurable Interest

1. There must be property, right, interest, life
2. Such property must be the subject matter of Insurance
3. Legal Relationship
Principle of Insurance
Material Facts
Material Fact is a fact which influences a prudent underwriters decision to
accept the risk or not. If he decides to accept the risk, at what rates, terms and
conditions.

Utmost good faith and duty of disclosure

The principle of Utmost Good Faith is a concept which is unique to insurance
contracts. This relates to duty of disclosure of material facts by the proposer. If
material facts are not disclosed or incompletely disclosed, the insurance
company can cancel the policy and/or reject the claim on this ground. This duty
of disclosure of material fact lies on the proposer.

Indemnity
In insurance, to indemnify, means to make good the loss suffered by the
insured. If the insured suffers loss, due to a loss event, he can recover only the
amount of loss suffered by him and not more. He is not allowed to make any
profit out of loss. Principle of Indemnity not applicable in life insurance.
Principle of Insurance
Subrogation & Contribution
If insured has any other source of recovery for insured loss, the insurer pays for
the loss. The Insurer acquires the rights of recovery from a third party. This
principle is known as Subrogation. The insured is not allowed to make profit
out of a loss, and the insurance company is able to minimize losses.
The principle of Contribution arise when the insured has taken many policies for
the same property.

Proximate Cause
Many Insurance contracts provide indemnity only if losses are caused, by
perils, mentioned in the policy. The concept of proximate cause is used to
determine, whether the cause of loss is an insured peril or an excluded peril. If
there are two or more causes for the loss, whether operating simultaneously or
in sequence, the cause which is most effectual in contribution to the loss is the
Proximate Cause.
Note that the proximate cause need not always be the immediate cause of the
loss.
Classification Of Insurance

Life Insurance
Life Insurance business means the business of effecting contracts
of insurance dependent upon human life. This includes contracts
whereby the payment of money is assured on death [except death by
accident only].
Life insurance business includes Term Insurance policies, endowment
policies, whole life policies, money back policies, unit linked insurance
policies [ULIP], Annuity policies etc.

General Insurance

"General Insurance [Non life] business means fire, marine or

miscellaneous insurance business, whether carried singly or in
combination with one or more of such businesses.
Classification Of Insurance
Fire Insurance
The business of effecting contracts of insurance against loss by or
incidental to fire.

Marine Insurance
1. Marine Hull The business of effecting contracts of insurance
upon all types of vessels.
2. Marine Cargo Insurance of goods during transit, by land or water

. Miscellaneous Insurance Business

The business of effecting contracts of insurance on all kind of risk other
than life, fire & marine policies.
Classification Of Insurance

Type of Insurance in todays market

1. Aviation
The insurance of airplanes and the airlines liability to others due to accidents is
covered under Aviation insurance.

2. Engineering
Buildings and projects during erection/ construction, working machinery and
equipment, operational risks etc. come under this type of insurance.
3. Fire
The business of effecting contracts of insurance against loss by or incidental to
fire . Fire insurance covers physical loss of or damage to property due to
various causes like fire, lightning, flood, earthquake etc.

4. Health
Costs of treatment on account of illness or accident are under this type of
insurance. It is provided by both life & general insurers.
Classification Of Insurance
5. Liability
When a person is affected by the action or inaction of another person, he can ask for
compensation for the loss suffered. Paying the compensation to the affected person is
the liability of the person who caused the loss

6. Marine Hull
Marine Hull which means the business of effecting contracts of insurance upon all types
of vessels [ships, boats, etc.].

7. Marine Cargo
Marine Cargo which means insurance of goods during transit, by land or water and during
incidental warehousing.

8. Motor own Damage

Accidental damage to a vehicle can cause financial loss to the owner of the vehicle. Such
losses can happen to private cars, two wheelers, passenger carrying or goods carrying
commercial vehicles or other vehicles. All these are insured by Motor OD Policies.
Classification Of Insurance

9. Motor Third Party Liability

Motor accidents can cause loss damage of someone elses property. Motor
accidents can cause loss of life or injury to other people as well. It is the liability
of the owner of the vehicle to pay compensation to persons affected by
accidents caused by him. Such liability to other people [third parties] is insured
through Motor TP Insurance.

10. Personal Accident

Personal Accident Insurance pays financial benefits to those affected by such
accidents. This cover death, disability (permanent/ temporary)

11. Others
- Cattle Insurance
- Crop Insurance
- Travel Insurance
Life Insurance Products
1. Term Insurance
Term insurance is a life insurance policy suitable for providing cover against premature
death. Under this plan, the sum assured is payable to the beneficiaries on the death of
the insured during the period specified.
The sum assured under the policy remains constant.
The benefit is payable only if the insured dies during the specified term and the policy is
in force at that time.

There is no savings or cash value element during accruing to the insured.

2. Endowment Plans
This type of life insurance policy combines features of a Term Life Insurance and those of
a long-term savings account. An Endowment Insurance policy has fixed maturity date. It
provides stable returns and grows in value over time. In addition, in the event of the death
of the insured, during the period of the policy, the sum assured is paid to the
beneficiaries. This kind of life insurance is a form of savings for any purpose.
The policies may be participating [with profit], in which case bonus is also paid along with
sum-assured or non-participating [without profit], in which case only sum assured is paid.
Life Insurance Products

3. Money Back Policies

It is an Endowment plan with the provision for return of a part of the sum
assured in periodic installments during the term and balance of sum
assured at the end of the term.
A Money Back policy for 20 years may provide for 20% of the sum assured
to be paid as a survival benefit at the end of 5, 10 and 15 years and the
balance 40% to be paid at the end of the full term of 20 years.

4. Whole Life Insurance

Whole life insurance offers to pay the sum assured, when the life assured
dies, no matter when the death occurs. There is no fixed term for cover of
death. The premiums can be paid throughout ones life or for a specified
limited period.
Life Insurance Products
5. Unit Linked Insurance Plan (ULIP)
The benefits under these policies are wholly or partially determined by the value of units credited
to the policyholders account on the date when payment is due.
The value of these units is fixed with reference to some pre-determined index of performance. This
value is defined by a rule or formula, which is declared in advance. The value of the units is given
by the Net asset Value, which reflects the market value of assets in which the fund is invested .

Features
Premium is utilised for risk cover, investment and scheme maintenance charges
Sum Assured is 5 times or more of total premiums paid
Withdrawal of Units is allowed. Waiting Period is 3 years
No annual Bonus

6. Universal Life Insurance Plan

Universal Life Insurance is a variant of a Whole Life Policy which offers flexible premium, flexible
face amount and death benefit amounts. The pricing factors namely the risk, interest and expense
are provided separately.
Universal Life Insurance allows the policy holder to decide the amount of premium; she wants to
pay for the coverage
Life Insurance Products
7. Variable Life Insurance Policies
Variable life insurance is a kind of Whole Life policy where the death benefit
and cash value of the policy varies according to the investment performance of
a special investment account into which premiums are credited. The policy thus
provides no guarantees with respect to either the interest rate or minimum cash
value.

8. Children Plans
Policy can be taken covering minor with parent or guardian as proposer. The
risk of life assured begins when he attains a particular age. The difference
between the date of commencement of risk and commencement of policy is
called Deferment Period.
There is no cover during deferment period and cover starts from deferred date.
If in between the child dies premium paid is returned.
Life Insurance Products

9. Joint Life Policies

Two or more lives can be covered under one policy. Such policies usually cover
married couples or partners. Sum insured is paid on death of any of the person
or at the end of the policy term.
10. Policies Covering Physically Challenged
Under these policies physically challenged persons are insured. There may be
extra premium charges. Generally partially handicapped persons are insured
without any extra premium.

11. Group Insurances

The group insurance policy covers large number of people under one policy
called Master Policy
Such policies are generally taken by the employers covering employees, trade
associations covering their members or even banks and financial institutions
covering the persons to whom they have given the loans.
Non- Life (General Insurance)

Livestock Insurance
1. Cattle Insurance - Cattle refers to:
a) Milch cows and buffaloes (2 to 12 years)
b) Calves / Heifers
c) Stud Bulls
d) Bullocks [castrated bulls] and castrated male buffaloes, whether
indigenous, exotic or cross-bred

Cover death due to:

a) Accident (Inclusive of fire, lightning, flood, inundation, storm, hurricane,
earthquake, cyclone, tornado, tempest and famine).
b) Diseases contracted or occurring during the period of this policy.
c) Surgical operations.
d) Riot and strike.
e) Permanent Disability can be added by paying extra premium
Non- Life (General Insurance)
Exclusions -
Neglect, overloading or use other than mentioned in proposal form
Accidents/ disease before insurance commenced
Theft/ secret sale of animal
Transport By sea and air
Death Claim in 15 days of policy inception
Claims is not payable if ear tags are not submitted to insurance co.

Claim Procedure
Claim Form & ear tags
Death Certificate
Post Mortem report
Non- Life (General Insurance)
2. Sheep & Goats
Insurance for these animals are similar to Cattle except cover is only for death and
not permanent total disablement. Identification may be by ear tagging or tattooing

3. Poultry Insurance
Poultry means birds like chicken, hen etc. They are categorized as a) layers b)
broilers c) parent stock(hatchery)
The insurance is on flock/lot basis and not single bird basis. No identification of
individual birds is required. An excess of 5% per flock is deducted at the time of
claim settlement

Agricultural Pump Set

The insurance is for centrifugal pump sets of up to 25HP (electrical or diesel) of
approved makes used for agricultural purpose.
The policy covers loss due to unforeseen and sudden physical damage by the
perils of: fire, lightning, riot strike, malicious damage, terrorism, mechanical or
electrical breakdown, burglary
Non- Life (General Insurance)

Agriculture Insurance based on emerging new technologies

1. Weather Index Based Method

In this method one standard index of weather is taken as a base.
Maximum sum insured per hectare is decided in advance.
Any deviation is noted and if the deviation reaches certain percentage
say 20% then the claim comes within sum insured is paid.

2. Weather Based crop insurance schemes

Cover for Excessive heat
Un seasonal rainfall
Low Temperature
Non- Life (General Insurance)
Crop Insurance
The insurance provides for loss of average yield of the selected crops due to
operation of the following perils: Fire, lighting, storm, Hailstorm, cyclone, flood
inundation landslide, drought, dry spells, pests/disease,
Crops that can be insured are
Food crops: cereals, millets and pulses
Oilseeds like groundnut, sunflower
Annual commercial/horticultural crops like sugarcane, potato, ginger,
turmeric.
Weather
The insurance covers damage to crops due to weather triggers i.e the quality of
the crop suffers due to adverse rains, unseasonal rains, adverse or unseasonal
dry conditions harming the crop yield
The insurance covers the crops for deficit or excess rainfall during Kharif
sowing and frost, heat, relative humidity and unseasonal rain during Rabi
season
Non- Life (General Insurance)
Motor Insurance
Motor insurance provides for payments to the vehicle owner, in case of accident,
(i) damages to vehicle [O. D.]
(ii) Third Party [T.P.] Liability, due to injury to his [TP] life or property, determined as per
law against the owner of the vehicle.

Farmers Package
Fire and allied perils
Burglary
Agricultural pump set
Animal drawn carts/tangas/coaches
Livestock, cattle/ sheep/goats/camel/horses etc
Agricultural Tractor(comprehensive only)
TV set
Pedal cycle
Baggage
Janta/ Gramin Personal Accident
Jan Arogya Bima
Non- Life (General Insurance)
Package Policies for House/ Hut
Rural houses and huts are insured against the risk of fire, lightning, riot & strikes,
malicious damage, flood storm cyclone or inundation and earthquake.
The Sum Insured is a maximum of Rs. 6000/- (5000 for the hut and 1000 for contents)

Package Policies for shopkeeper

Fire for building and/or contents

Burglary
Money: in transit.
Pedal cycle
Fixed plate glass
Neon sign/glow sign
Baggage
Personal Accident
Fidelity insurance of employees
Public Liability
Employees compensation Liability
Health Insurance & Personal Accident Insurance

Mediclaim Policy
The policy provides for reimbursements of medical expenses incurred at a
hospital as an in-Patient for treatment of sickness, diseases or accident. The
expenses are for specific heads:-
a) Room boarding and nursing charges
b) Doctors, Consultants, Specialists fees
c) Operation Theatre, Blood, Oxygen and implants and materials
d) Diagnostic charges
e) Medicines and drugs
f) In addition an ambulance charge for a maximum specified amount is also
allowed.
g) Cost of Health Check up can also be added paying additional premium
The Period of Hospitalisation must be 24 hours.
A hospital should be having a minimum 10 beds or 15 beds (metro cities)
Cashless Facility
Health Insurance & Personal Accident Insurance

Exclusions :
Pre-existing Disease for a period of 4 years
Illness within 30 days of insurance
Illness of specific disease in the first 2 years
Plastic Surgery
Cost of spectacles, contact lens, hearing aid
Dental Treatment
Convalescence, run down, rest cure
AIDS Related
Vitamins & Tonics
Pregnancy & Childbirth
Health Insurance of Life Insurers
A benefit policy fixed charge for hospitalisation
whether in ordinary or ICU is paid as a fixed
charge per day
A lumpsum compensation is also paid
Policy is for a minimum of 3 years
Policy may also have a life insurance cover as a
benefit
Overseas Mediclaim
The policy is available to persons travelling overseas. The minimum period
of cover is 7 days and maximum 180 days of overseas visit.
The cover is for emergency medical treatment that may be needed when on
the tour
Persons between the ages of 5 years to 70 years can be covered. Children
from 3 years onward can be covered, if accompanying parents.
Premium is payable in Rupees but cover is in US$. Age and duration of trip
are factor deciding premium.
Sum Insured can be selected from 2 sets of options and two choices
depending on countries being visited. i.e. worldwide excluding USA &
Canada or including USA & Canada.
The journey must commence within 14 days of the date of commencement
of policy.
Existing health conditions are not covered. Travel against medical advice is
also not covered.
Overseas Mediclaim
The coverage under the policy are as follows:-
a. Medical expense and Repatriation. An excess of US$ 100 is applicable for
each and every claim
b. Personal Accident US$ 50000 for children restricted to $2000. Only death
and permanent total disability are cover.
c. Loss of checked Baggage. Excess is applicable for the claim
d. Delay of checked baggage. Delay should exceed 12 hours from scheduled
date of arrival at final overseas destination. [not applicable to return journey
home].
e. Loss of passport limited amount and subject to an excess for the claim
f. Personal Liability
Health Insurance & Personal Accident Insurance

Critical Illness Benefit

This policy is also a benefit policy. A policy holder who contract one of the
major disease listed in the policy will receive the Sum Insured as lump sum
compensation. The major illnesses like Heart Attack, Bypass surgery, Cancer,
Paralysis, Transplant or organs are covered.

The claim is paid if the insured contracts any of the listed disease after 90
days of the commencement of the policy.

The insured must survive 30 days after diagnosis to claim under the policy.
Re-existing diseases are not covered. In some policies, the waiting period is
90 days.

Death/ Permanent total disability, permanent partial dieses must occur within
12 months of accident. Any change in business or occupation must be
informed to insurer. The policy is 24 x 7 and covers accident any where in the
world i.e. worldwide cover.
Health Insurance & Personal Accident Insurance

Personal Accident
This Policy provides compensation if an accident results in Death, Permanent
Total Disablement, Permanent Partial Disablement, temporary total
disablement.

Janta Personal Accidents

The policy is similar to PA above with the following differences
i) The sum insured is maximum Rs.1,00,000.
ii) Education fund and medical expenses are not covered.
iii) Cumulative bonus is not available.
iv)The policy can be taken for a maximum of 5 years at a time

Gramin Personal Accidents

The policy is similar to JPA but Sum Insured is restricted to 10000 only
Insurance Documents

Prospectus
Prospectus is a document that describes the main features of an insurance
policy. It is given to prospective buyers, who are interested in purchasing
policy of an insurance company.
The details of coverage, exclusions, all the terms and conditions of the
policy are provided in the prospectus. These may give benefits available
under the policy and examples of calculations of benefits.

Proposal Form
Proposal form is an application for insurance. Normally, it is a standardized
printed form. This is to be completed by the proposer and to be signed by him.
It contains personal details of the proposer, property to be insured, Sum
Insured, Add on & riders opted, History of previous insurance, History of
Previous losses, Nomination, signature of the proposer.
Insurance Documents
Premium Receipt
In non- life insurance, on receipt of the premium the insurers issue Premium
Receipt. This commences insurers risk under the policy. If premium is paid by
cheque it is subject to realization of the same.
In life insurance receipt for the first premium is called First Premium Receipt. If
the proposal is accepted at ordinary rates, the risk will commence immediately
provided full premium has been paid.

Cover Note
Cover note is a temporary document which is issued pending issuance of final
policy. It is issued only in non life insurance. It is valid for a maximum of 60
days

Certificate of Insurance
Certificate gives details of the insured, vehicle details like, type, make, model
etc. place of registration of vehicle, period of insurance , geographical area of
the vehicle where it can operate, limitations as to use etc.
Insurance Documents
Policy Document
Policy is the evidence of the insurance contract. It is stamped as per provisions
of Indian Stamps Act, it is accepted as a valid document in a court of law, in
case of dispute between the insured and the insurers.
Policy is a standard pre printed form, containing all the terms of policy- like
coverage, benefits, exclusions, conditions, claim procedure, etc.

Endorsements
Endorsements are issued as correction to the main policy. They can be issued
either at the beginning of the policy or during the currency of the policy to
record the changes in the original policy.

Renewal Notice
Insurers both in life and non life branches send renewal notices to the insured
to remind them about due dates of the premiums. This is done in form of a
formal letter and generally sent to the insured well in advance
Premium

What is Premium?
Premium is the name given to the consideration that the policy holder has to
pay to the insurer in order to get the promised benefit from him in the event of
specified event happening. It can also be said that the premium is the price
which is to be paid for getting benefits under the insurance policy.

Factors for Determining the Premium

Life Insurance
- Physical Factors such as Age, Build, Physical condition, Physical Deformities,
Personal history, Family History.
- Occupational Factors such as working in places of excessive temp., high
electrical voltage areas, mines etc.

Non Life Insurance

- Physical Factors
- Moral Hazard
Premium
Premium Payment Options
Life Insurance
- Single premium
- Monthly
- Quarterly
- Six Monthly
- Annual Premium

General Insurance
Under S 64 VB of insurance Act 1938, in case of non life insurance full premium
is to be paid in advance.
Non life policies are generally issued for one year and full premium is to be paid
in advance, before commencement of risk
Premium
Methods of Payment of Premium
1. Cash payment subject to maximum of Rs 50,0000
2. Cheque, Demand drafts, pay orders, Bankers cheque
3. Postal money orders
4. Through Credit/ Debit card in insureds name
5. Through Net banking/ e-payment
6. By e- transfer
7. By Direct credit through bank
8. Bank Guarantee
9. Cash Deposit
10. Through ATMs
Concepts of Benefits & Deductibles
Life Insurance
1. Bonus
In Life insurance valuation of life insurance fund is done by an Actuary, periodically. At the end of
valuation, the surplus [if any] is distributed to the policyholders as Bonus. Policyholders, who
have opted for participating [with profits] polices, only, are entitled for bonus.

Revisionary bonus is a method in which the declared bonus is added to the basic sum insured.

In compounded Revisionary Bonus the bonus is calculated not on the basic sum insured but on
the Previous year sum insured with added bonus declared up to last year.

2. Guaranteed Additions
In some life insurance policies guaranteed additions are provided. They are guaranteed by the
insurance company. They have to be paid whether any surplus is declared or not. It is calculated
at a rate per every thousand of sum assured.

3. Surrender Value
In life insurance policies if policy holder wishes to cancel his policy and take back his money, he
can do so. The return of cash value attached to the policy is called Surrender Value. It is
calculated as a percentage of paid-up value. In ULIP the surrender value is Cash Value.
Concepts of Benefits & Deductibles
4. Paid up Value
If the premiums have been paid for three years, the policy acquires value, this value is called paid-
up value and the policy becomes paid up. The policy remains in force for the remaining term with
reduced sum insured.

Premium Paid / Premium Payable * Sum Insured

5. Mortality Tables
Mortality table shows the rate of deaths occurring in a defined population during a selected time
interval. It is also known as a life table & actuarial table.

6. Premium Payment Term

Premium payment term is the period up to which the insured has to pay the premium under a life
policy.

7. Assignment of the policies

A life insurance policy is a property. It represents rights. These rights can be transferred by insured
person in favor of other/s by way of assigning the policy. Assignment is transfer of rights, titles and
interests in the policy to other person.
Concepts of Benefits & Deductibles

Non- Life Insurance

1. No Claim Bonus (NCB)

NCB is generally given under the Motor insurance policy for every claim free year. A
discount in premium is given, for every claim free, completed policy period. It ranges from
20% to 50%.

2. Deductible
It is the portion which is not covered by the insurance. If the claim is up to amount of
deductible it is not payable by insurance company and if it is higher, then only the
difference between the claim amount and deductible is payable.

3. Excess
The excess is the amount of expenses that must be paid by insured, before an
insurer will pay further expenses. An excess is an amount a policyholder must
bear before the liability passes to the insurer (subject to sum insured).
Concepts of Benefits & Deductibles

4. Franchise
In case of franchise, if the amount of claim is up to franchise it is not paid. Once
it reaches amount of franchise it is paid in full, without any deduction.

5. Depreciation
If the damaged property has depreciated [natural wear and tear], the insurance
company will pay claim which is equivalent to depreciated property value. An
amount is deducted towards depreciation depending upon the life of
property/machinery.

Health Insurance

1. Cumulative Bonus
For each claim free year the policyholder gets a benefit known as cumulative
bonus. In the next years renewal premium the health insurance company adds
more benefits for the same premium paid.
Concepts of Benefits & Deductibles
2. TPA Fees
TPA fees is the amount paid by insurer to the Third Party Administrator who
processes the claims under health insurance policies of the company. It is paid
as percentage of a premium amount for the policies handled by him.

3. Co-pay
Co-Pay is the amount which the insured person has to bear out of the medical
expenses incurred by him for hospitalization of a particular sickness insured
under a health policy.
Claims- Life Insurance

1. Maturity Claims
Under an Endowment type policy the sum assured is paid when the term of the
policy is over. The date on which the policy is completed is called as maturity
date. The amount payable is sum assured minus loans, outstanding unpaid,
premiums etc. and to this bonus is added in case of participating [with profit]
policies. Documents such as original policy document, assignments &
discharge voucher is reqd. by Insurance co.

2. Death Claim
In case of a death claim on receipt of intimation of death of policyholder, the
insurer starts the claim procedure. Intimation may be given by nominee,
assignee, and relative of policy holder or even from the agent. The death claim
intimation must contain date, place and cause of death. Documents such as
policy document, claim form, Death certificate, Deed of assignment, discharge
voucher is reqd. by insurance co.
Claims- Life Insurance
3. Nomination
The nominee is the person to whom insurer will pay the money in the case of
death of a policyholder. Nomination can be done either at the time of taking
policy, during currency of policy, before maturity or after reassignment of the
policy by the assignee.

4. Assignment of a life policy

Assignment is a process by which the policyholder transfers rights, titles and
interests in the policy in favor of other person. Assignment can be made only by
a major who is competent to contract.

5. Surrender of a Life policy

Surrender is return of the policy to insurer for cancellation and receiving of
surrender value, if any, payable under the terms of policy. Surrender value is
generally part of the premiums paid by the insured during the existence of the
policy. Surrender value is also called cash value.
Claims- Non-Life Insurance

1. Intimation of Claim
In non life insurance if there is a claim under the policy the same needs to be
immediately reported to the insurance company. This reporting or information is
called Claim Intimation.

2. Survey Report
Under Insurance Act 1938, if the amount of loss is Rs 20,000/- or more, a
licensed surveyor is to be appointed to assess the loss. Survey report contains
details such as cause of loss, quantum of loss, comments on policy conditions,
comments about admissibility of claim & compliance of policy terms &
conditions.

3. First Information Report (FIR)

First information report is information to police authorities about accident or
claim. The information to police is required became on intimation police conducts
an investigation and issue their report about the findings of investigation.
Claims- Non-Life Insurance
4. Death Certificate
It is required as a supporting document for claim under personal accident policy which
covers death due to accident. Death certificate is issued by Municipality or Gram
panchayat of the area in which the deceased was residing or died. It gives the name,
age, address and date of death of a person.

5. Post Mortem Report

It is examination of dead body of a person and testing various organs to find out the
cause of death. Generally it is conducted in case of accidental death or doubtful death at
any place. The post mortem is performed at government or local bodys hospital in
nearby area by the surgeons trained for that.
6. KYC Documents
KYC norms are carried out at settlement stage, where claim payout/premium refund is
more than one lakh per claim/premium refund. In cases where payments are made to
service providers such as hospitals/garages/repairers etc., the KYC norms are applied on
the customers on whose behalf they act. The Customer reqd to submit proof of identity &
proof of residence.
Claims- Non-Life Insurance
Motor Insurance Claims
o Claim Form
o Estimate of repairs, repair bills
o Survey Report
o Vehicle Documents
o FIR in case of theft

Death Claims for Cattles

o Claim Form
o Death Certificate to be issued by Panchas consisting of any two Sarpanch, president of
Co-op Credit society, Official of milk collection center, supervisor of banking institution
o Post Mortem Report
o Ear Tag
o Valuation certificate by veterinary doctor
Poultry Insurance
o Claim Form
o Post Mortem report
o Daily Records of mortality, feeding etc
o Purchase Invoice for Birds
o Photographs, medical bills
Claims Health Insurance
Health Insurance Claim Process
A claim is admissible when the insured person undergoes, hospitalization.
This hospitalization may be planned. In such a case TPA/ insurance co.
must be informed about the treatment & reasons for hospitalization. The
TPA will arrange cashless facility with the tie-up hospitals.
In case the insured has taken treatment in non-network hospitals, the
insured will have to bear all the expenses initially and submit all the
documents to the TPA insurance company for reimbursement, within 15
days of discharge from the hospital.
The original bills, receipts, consultation fees, prescriptions, diagnostic tests
and cash memos etc. for pre hospitalization must be preserved by the
insured and submitted to the TPA on completion of treatment.
If the policy has an excess or co-pay the insured will have to pay the
relevant amount at the first stage and balance will be paid by the insurer
through the TPA.
Claims Health Insurance
Documents Health Claims
1. Cashless Claims
Hospital discharge card
All pathological reports
Hospital bills and receipts
Prescriptions and cash memos
Indoor case summary
all consultants, specialists etc fee bills and receipts
All pre and post hospitalization expenses as above must be submitted by
the insured on completion of treatment or 60 days
2. Reimbursement Claims
Claim Form
Discharge summary
Prescription/s and cash memos for expenses
All pathological Report
Original Diagnosis Report
Claims Health Insurance
Personal Accident Claims
On intimating the insurance company, will provide a claim form which is to
be completed by the insured and by the treating doctor.
The accident needs to be reported to the police authorities if major injuries
or death has occurred whether in public place or at home/private place.
If death has occurred, a postmortem may be required. A death certificate is
required.
If the accident has resulted in permanent disablement the treating doctors
certificate mentioning the disability will be required.
For temporary disablement the period of disablement and fitness certificate
will be required.
Claims Health Insurance
Documents Personal Accident Claims
Claim intimation letter
Claim form duly completed
Death claim- Post Mortem, Death certificate, legal heirs certificate with identification.
Permanent Partial Disablement claims- doctors certificate on nature of disability and
percentage
FIR
KYC Documents

Documents Overseas Travel Policy

The travel documents like ticket, passport etc copies, claim form are to be submitted
along with the following:-
For health related claim the TPA is to be contacted, the excess amount to be settled
directly with the medical service provider balance paid by TPA if consent obtained.
For loss of baggage/delay of checked baggage- complaint to airline, copy for insurer
For theft claims or liability claims- Police complaint, plaint or other documentary
proof including incident report
Policyholders Protection Regulations
Stages of Insurance Policy
1. Pre-sale
. There should be utmost transparency at the time of promotion and sale
. The prospectus of any insurance product must state the scope of benefits,
the extent of insurance cover; in an explicit manner explaining the
warranties, exceptions and conditions of the insurance cover
. Full details and all other material information are given to the customer so
that he can take decision which is in his / her benefit.
. In all cases, proposal is required to be filled up.
. Forms and documents should be made available in local languages.
. Benefit of nomination must be explained to the proposer, he should be
encouraged to avail the facility.
. Decisions regarding proposals must be communicated within 15 days from
receipt of proposals by the insurer.
Policyholders Protection Regulations
Post Sale
1. Issuance of Policy
The policy is a legal document containing the terms and conditions of the
contract. Along with the policy letter needs to be sent informing about the free
look period.
Insurance company has to ensure that the contents of the policy document are
easy to understand. The language used should be simple.
2. Free look Period
The option has to be exercised within 15 days of receipt of the policy. If he is
not satisfied with the product, the customer will be required to send the original
documents of the insurance policy and an application form for its cancellation to
the customer service department, or the local branch of the insurance
company.
Policyholders Protection Regulations

Policyholders Servicing :
Insurance co. has to respond within 10 days of the receipt
of any communication from policyholders :
Change in address
Change in nomination
Assignment
Advising present status of the policy
Processing of loan under life policy
Claim procedural aspect
Amendments in policies like change in sum insured
Policyholders Protection Regulations

Claim Procedure - Life Insurance Policy

On receipt of claim, any additional queries & documents to be done within
15 days of receipt of claim
Claim to be paid/ rejected within 30 days from the date of receipt of all
relevant papers
2% interest rate to be paid in case of delay in payment of settled claim.

Claim Procedure Non-Life Insurance Policy

Appointment of surveyor within 72 hours of claim intimation
The report has to be submitted within 6 months
Any query within 15 days of receipt of the report
Surveyor to reply within 3 weeks
Within 30 days of surveyor reply, insurer must offer claim settlement
Money must be paid within 7 days of the acceptance of claim by insured
2% interest rate in case of delay in payment of claim amount
Grievance Redressal Procedure available to Policyholders

Procedure to be followed for grievance redressal

Every Insurance company has procedures and mechanism to handle

complaints and grievances of policyholders. The grievance redressal procedure
is communicated to the policyholder in the policy document

On receipt of a complaint, the Grievance Cell has to :

Record the complaint maintained for the purpose. Allot a complaint number,
Complainants letter should be acknowledged providing the reference
number allotted to his complaint.
The Cell calls for the file, papers and information relating to complaint from
the relevant office.
The Cell examines genuineness of the complaint and give its decision
within one month, and communicates and to the complainant
Grievance Redressal Procedure available to Policyholders

Insurance Ombudsman
Insurance Ombudsman is an authority which is created by Central
Government for a State/ States under Redressal of Public Grievances
Rules 1998.
The time limit for making complaint to the Ombudsman is one year from
the date of cause of action.
Ombudsman can be approached only for personal line of insurance
policies.
The details of Ombudsman is available on policy document.
Maximum award can be the amount of loss only.
Jurisdiction of the Insurance Ombudsman is up to the amount of Rs. 20
lacs.
The Ombudsman may award ex gratia payment.
Grievance Redressal Procedure available to Policyholders

Integrated Grievance Management System of IRDAI

It facilitates online registration of policyholders complaints and helps

track their status.
A policyholder can make use of this system by giving accurate
information about the complaint like the policy number, name of the
insurer, complainants contact details etc.

Civil Court
Case can also be filed in court of law against the insurance company within
3 years. However it takes a long time for settlement and is expensive as
court fees and lawyers fees are very high.
Grievance Redressal Procedure available to Policyholders

Consumer Protection Act 1986

The Act covers deficiency in service for goods sold and services
rendered.
The Act applies to all goods and services unless exempted by Central
Govt. It covers all sectors whether private, public or co- operative.
The time limit for filing the complaint the time limit is 2 years from the
cause of action
Jurisdiction:-
i) District forum: - upto Rs.20 lacs .
ii) State commission: up to Rs. 1 crore.
iii) National commission: Above Rs. 1 crore.
iv) Appeal lies to higher forum- within 30 days of the award. In case of
National Commission, the appeal lies with the Supreme Court of India
Role of TPAs in Health Insurance

Third Party Administrators (TPA)

TPA are intermediaries providing health insurance services on behalf of

Insurance Companies.

Third Party Administrators operating in Health insurance sector are licensed

by IRDA under IRDA (Third Party - Health Services) Regulations of 2001.

The main services provided by TPA are processing claims and provides
cashless facilities. Third Party Administrations are paid fee by the Insurance
company which enters into agreement with them.

The liability to settle the claim cannot be transferred to TPA.

Role of TPAs in Health Insurance
Services Provided By TPA
1. Cashless services
2. To Insurance Cos.
Settlement of claims
Reduction in claims cost
Maintenance of data of Health insurance claims
Advise in developing insurance schemes
3. To policy holders
Guidance on Health & insurance matters
Finding out suitable doctors & beds in hospitals
Health care management
Quality treatment at lesser cost
4. Maintenance of Records
Role of TPAs in Health Insurance
Process Flow
Issuance of ID cards - The policyholders will have to show the identity cards
to the hospital authorities before availing any services from the hospital.
Prior intimation to TPA - Policyholders will have to inform the TPA on a 24hr
toll- free line provided by them
Network Hospital - The policyholder will be directed to a hospital where the
TPA has a tie-up arrangement.
Authorization Letter - TPA issue an authorization letter to the hospital for the
admission of the policyholder in the hospital.
Bills to be sent at the point of discharge
Payment to the hospital.
Sending all documents to insurance co.
Reimbursement to TPA by Insurance Co.

Legal aspects of Insurance Relevant to VLE

Insurance Act 1938

The Insurance Act 1938 is the basic insurance legislation of the country. This
governs insurance business in India. It was created to protect the interest of the
Insurance public, with comprehensive provisions for effective control over the
activities of insurers. It came into force from 1st July, 1939
Sec 42 Licensing of agents & intermediaries
Sec 41 Prohibition of Rebate
Sec 64VB Advance payment of premium
Sec 64 UM Survey of losses more than Rs 20,000
Sec 38 & 39 Assignment & nomination
Sec 45 Indisputability Clause -
After two years of commencement , Insurance company can not cancel the life
insurance policy or reject the claim, merely on the basis of mis-statement or
untrue answers in the proposal papers.
Legal aspects of Insurance Relevant to VLE

The Insurance Regulatory & Development Act1999

Insurance Regulatory and Development Authority (IRDA) came in to force

in 2000 as an independent authority to regulate and develop the insurance
industry by an Act of parliament.

Purpose of the IRDA Act :

i) to provide for the establishment of an Authority to protect the interests of
holders of insurance policies,
ii) to regulate, promote and ensure orderly growth of the insurance industry
iii) for matters connected therewith or incidental thereto.
Legal aspects of Insurance Relevant to VLE
Motor Vehicles Act, 1988
Compulsory TP Insurance
Exemption from Insurance - Government, semi government bodies, local authorities
etc. are exempted from TP Insurance.
Certificate of Insurance
No Fault Liability - In case of no fault liability the person injured due to motor vehicle
accident is to get minimum compensation without proving the fault of the driver. This
is Rs. 50,000/- for death and Rs 25,000/-for grievous hurt.
Structured Formulae - a fixed compensation can be given depending upon the factors
given in the formulae.
Hit & Run
Death- Rs 25000/-
Injury- Rs 12,500/-
This compensation is to be paid out of a fund called Solatium Fund established by
the Central Government.
Motor Accident Claims Tribunal - All the cases of motor third party claims are to be
filed with MACT and not civil courts.
Legal aspects of Insurance Relevant to VLE

Lok Adalats
From June, 1985 with a view to speedy disposals of Third Party claims the concept
of Lok Adalat or Peoples Court was introduced.
The market practice is to place claims up-to Rs. 500000/- before the Lok-Adalat,
where liability is otherwise clear.

Consumer Protection Act 1986

Policyholder can file an application against the insurer in case of any complaint,
under Consumer Protection Act,
The Act covers deficiency in service for goods sold and services rendered. The Act
applies to all goods and services unless exempted by Central Govt. It covers all
sectors whether private, public or co- operative.
The Act deals with the following matters:
i) Repudiation of claims,
ii) delay in settlement of claims,
iii) delay in finalising the claim
Insurance Customer

Categories of Insured
1. Retail Insured
2. Corporate Insured
3. Govt. organisations
4. Local Bodies & Gram Panchayats
5. Public Sector organisations
6. Non Government organisations
7. Social Sectors
8. Educational Institutions

Understanding the Insurance Needs of the prospects

. Identifying needs
. Quantifying needs
. Prioritising needs
The Selling of Insurance Products
1. Art of Prospecting

Prospecting is the art of finding out probable buyers of insurance. It is major activity,
which leads to insurance selling.
Out of 20 people met in a day few say 8 to 10 may show interest in buying insurance. Out
of these even few 2or 3 may go in for actual buying.

Methods to have list of prospects :

References
Centre of Influence
Nests
Cold Canvassing
Policy Holders

Pre- approach : Collect maximum information about the prospects through various
sources before meeting

Meeting the Prospect : Present the policy which suits the requirements of the prospects
The Selling of Insurance Products
2. Ethical Selling
3. Communication Skills
4. After sales service
5. Customer loyalty building for persistency

High level of Persistency can be achieved by

1. Need Based selling
2. Continues right advice
3. Good Servicing
Insurance Terminology
Absolute Assignment: The transfer of ownership of a life insurance policy from one person to another which
cannot be revoked or taken back.

Accelerated Benefits: Under this the policyholder receives benefits before death, usually in cases of his
suffering from a major disease or needing long-term care.

Accelerated Endowment: A cover in which dividend declared under the policy accumulates and gets
converted to a life insurance policy into an endowment, or to shorten the endowment term.

Accelerative Endowment: An option to use policy dividends to mature a policy as an endowment before the
regular maturity date.

Accidental Death and Dismemberment Insurance: Insurance policy that provides payment if the insured's
death is the result of an accident, or suffers a major disability due to that.

Any one illness : Any one illness means continuous period of illness and it includes relapse within 45 days
from the date of last consultation with the Hospital/Nursing Home where treatment may have been taken.

Assignment: The transfer of ownership of a life insurance policy from one person to another. Also refers to
the document that effects the transfer

Assurance: A term which is used generally in life insurance to mean insurance. An assurance means the
certainty of an event like death.
Insurance Terminology
Conditions: Part of every insurance policy; qualify the various promises made by the
insurance company
Condition Precedent: Condition Precedent shall mean a policy term or condition
upon which the Insurer's liability under the policy is conditional upon.

Consequential Loss: Losses which are indirect to an invent insured. Like fire in a
factory closes it down and with the result production loss takes place. Production loss
is consequential loss. Generally it is excluded from specific policy but can be covered
under a separate policy.
Co-Payment: A co-payment is a cost-sharing requirement under a health insurance
policy that provides that the policyholder/insured will bear a specified percentage of
the admissible costs. A co-payment does not reduce the sum insured.

Convertible: A policy that may be changed to another form without evidence of

insurability. Most Term policies are convertible
Cover Note: A document issued to the insured confirming the granting of insurance.
Generally this is issued pending issue of the policy by insurers.
Insurance Terminology
Cumulative Bonus: Cumulative Bonus shall mean any increase in the sum assured granted by
the insurer without an associated increase in premium.
Deferred Premium: Part of the premium which is to be paid in future and not immediately. The
premium payment may be quarterly or six monthly
Double Indemnity: Payment of twice the basic benefit in the event of loss resulting from
specified causes or under specified circumstances such as accidental death.
Ex-Gratia Payment: A payment made by an insurer to a policyholder where there is no legal
liability so to pay.
Expense ratio: The percentage of premium, which an insurer spends on commission,
administrative and other expenses in doing insurance business.

Fidelity Guarantee Insurance: A policy that reimburses an employer, up to the stated amount, in
the event that an employee commits a dishonest act covered by the policy.

First Loss Insurance: Insurance where there are two sum insured one representing total value
at risk and other the amount up to which any loss is payable.

Knock For Knock: An agreement between two insurance companies under which they agree not
to take any action against each other under subrogation in the event of any accident involving
both companies vehicles..
Insurance Terminology
Malus: Loading in renewal premium due to high claim ratio in previous year/s of the
policy.
Participating Policy: A life insurance policy that is eligible for the payment of
dividends by the insurer.
Product Liability Insurance: These policies cover the insured's legal liability for
bodily injury to persons, or loss of or damage to property caused by defects in goods
(including containers) sold, supplied, erected, installed, repaired, treated,
manufactured, and/or tested by the insured.

Professional Liability Insurance: This policy protects a professional man against

his legal liability towards third parties for injury, loss, or damage, arising from his own
professional negligence or that of his employees.

Reasonable Charges: Reasonable charges means the charges for services or

supplies, which are the standard charges for the specific provider and consistent with
the prevailing charges in the geographical area for identical or similar services, taking
into account the nature of the illness / injury involved
Insurance Terminology
Salvage: A recovery of all or part of the value of an insured item on which a
claim has been paid.
Speculative risk: An insurance term that includes the possibility of gain or
loss.
Subrogation: When an insurance company, after paying a loss, seeks to
recover the money from the other party who is legally liable

Sum Insured: The maximum amount payable in the event of a claim under
contract of insurance.

Volunteer excess: An excess opted by the insured himself while taking the
insurance. The purpose is to reduce the premium by getting additional
discounts.

Warranty: A very strict condition in a policy imposed by an insurer. A breach

entitles the insurer to deny liability.
THANK
YOU