according to the syllabus for B.com 4th sem II year OSMANIA UNIVERSITY

1. PRACTICE
OF
LIFE INSURANCE
B.COM II YR IV SEM
RABIA FATIMA
LECTURER IN COMMERCE
1

2. HISTORY OF INSURANCE
2

3.  Insurance Finds mention in manusmrithi, Dharmasastra
& Arthasasthra.Yogakshema – Community Insurance
 Pooling of resources – re distributed in times of
calamities
 Insurance in its modern form from England in 1818.
Oriental Life Insurance co in Calcutta
Insurance in India
3

4.  Between 1787 and 1837 – 2 dozen cos. Only <6
prospered. Anyone could buy Insurance policy
on anyone else. Strangers being insured wound
up murdered. Purchaser must have legitimate
interest.
Insurance in India
4

5.  1870-British Insurance Act
 Bombay mutual Life Assurance Society 1st
Indian co in 1870 covered Indian lives at
normal rates.
 Many Cos started on Patriotic motives. Bharat
Insurance Co. (1896)
5

6.  Swadeshi movement (1905 – 1907) gave rise to
more
 United India in Madras, National in Calcutta and
Co-operativeAssurance at Lahore in 1906
 In 1907 Hindustan Co-operative took birth in
Jorasanko, house of RabindranathTagore
 Indian LifeAssurance CompaniesAct,1912
6

7.  In 1914 GOI - publishing returns of Insce cos
 In 1928 Indian Insurance companiesAct
 In 1938 InsuranceAct – Comprehensive
provisions
 Insurance AmendmentAct 1950 abolished
PrincipalAgencies
7

8. FORMATION OF LIC OF INDIA
8

9. Mushrooming of Insurance companies &
Unfair trade practices etc.
19th Jan 1956 an ordinance was issued to
nationalise life insurance
19th June 1956 LIC Act by Parliament
1st Sept 1956 LIC came into existence by
taking over 245 ( 154 Indian, 16 Non
Indian, 75 provident societies etc)
9

10. C O
Z O
8
D O
113
B O
2048
S O
1401
M O
1240
F O
12 Countries
STRUCTURE OF
LIC OF INDIA as at 31.03.2016
10

11.  In 1999, the Insurance Regulatory and Development
Authority (IRDA) was created to regulate all
insurance companies and businesses in India.
 Entry of private players in the insurance sector was
permitted in the year 2000
 Since then the growth of the insurance industry in
India has never been the same again
Opening of Indian Insurance Sector
11

12. PVT INSURANCE COMPANIES
1 Aegon Religare 14 ING Life
2 AVIA 15 Kotak Mahindra
3 Bajaj Allianz 16 MAX Life
4 Bharati Axia 17 PNB Met Life
5 Birla Sunlife 18 Reliance
6 Canara HSBC 19 SAHARA
7 DLF Pramerica 20 SBI Life
8 EdelweissTokiyo 21 Shriram Life
9 Future Generali 22 Star Union Dahachi
10 HDFC Standard 23 TATA AIA
11 ICICI Prudential
12 IDIBI Federal
13 India First
12

13. DISTRIBUTION CHANNEL – LIC OF INDIA
Dev Officers
CHIEF LIFE
INSURANCE
ADVISOR
DIRECT
MARKETING
LIFE INSURANCE
CORPORATION
ASSOCIATE
DIRECT AGENTS
MICRO
INSURANCE
13

14. • Rules for appointment of Agents:-
–The candidate should have – X class pass
–Age must be completed 18 yrs & more
–Should undergo 25 hrs class room training and 25hrs
practical training.
–A pass certificate in examination conducted by Inurance
Institute of India
14

15. Remuneration to Agents
COMMISSION
First Premium
Commission
First Year
Renewal
Premium
Commission
Renewal
Commission
Eligible
Renewal
Commission
Hereditary
Commission
Bonus
Commission
15

16. • For continuation of agency, the Agent must fulfil
the required norms for the specified period
16

17. PREMIUM
PREMIUM
NET or PUREPREMIUM
LEVEL Premium
Office premium
17

18. CALCULATION OF PREMIUM
Calculation of premium depends on the following factors:
1) Age – age is calculated as age nearer birthday
2) Mode of payment – Yly, Hly, Qly, SSS / Mly / ECS
3) Sum Proposed
4) Rebate is allowed for larger Sum Proposed – for example for a sum
proposed Rs 2 lacs – Rs 1.00 per 1000 ; If sum proposed is 5 lacs Rs
3.00 is allowed – on base tabular premium
5) Rebate is allowed for higher frequency mode of payments – for
Yearly mode Rs 3% and Hly more Rs 1.50% is allowed
6) Health condition
18

19. Factors that are considered in
calculation of premium
AGE HEALTH
SUM
ASSURED
TYPE
OF
PLAN
MORTALITY
INTEREST
RATE
19

20. PLANS OF LIFE INSURANCE
20

21. Life
Insurance Plans
Term Assurance
Plan
Whole Life Policy
Pure
Endowment Plan
Money Back
Plan
Endowment
Assurance Plan
21

22. 1) Term Insurance Plan
2) Endowment Assurance Plan
3) Double Endowment Plan
4) Money Back Insurance Plan
5) Child Insurance Plan
6) Joint Life Insurance Plan
7) Whole Life Plan
8) Convertible Whole Life Plan
9) Riders
10) Unit Link Insurance Plan (ULIP)
11) Key Man Insurance Plan
12) Married Women`s Property Act 1874
13) Health Insurance Plan
22

23. BONUS
• A bonus is a benefit in addition to the sum assured that is distributed
to with profit or participatory policyholders
• Types of Bonus:-
1) Simple reversionary bonus
2) Compound reversionary bonus
3) Terminal bonus
4) Interim bonus
23

24. Health
Insurance Plans
Individual Policy
Family Floater
Policy
Group Health
Insurance Policy
24

25. ANNUITY
25

26. ANNUITY
• It is an Investment
• Individual pays either Lumpsum amount or regular payments
• At the end of specified period, the individual receives regular income
• No Medical Check up
• Can opt to receive annuity as YLY, Hly, Qly, Mly
• Has option to receive as :-
Whole Life; or Fixed period; or Fixed number of years and Life
or in case Joint life policy, till the joint applicant survives
Insurance Plan v/s Annuity Plan
26

27. Some Key Terms:
1) Annuitant – The Individual
2) Annuity Income – The amount / income payable to the Individual.
3) Deferment Period – The Period from the date of contract to the date on
which the annuity payments begin.
4) Vesting date – The date from which the annuitant starts receiving regular
income.
5) Commutation – On vesting date, the individual can withdraw an amount
to the extent of 1/3rd of the accumulated amount as lumpsum. On
balance amount, the annuitant can request the Company to pay regular
income. Such amount is called as commuted value.
Annuity:-
Two types – Immediate annuity and Deferred annuity
27

28. TYPES OF ANNUITY
PREMIUM
PAYMENT
• Single Premium
Payment
• Multiple
Premium
payment
PURPOSE OF
ANNUITY
• Immediate
Annuity
• Deferred Annuity
TYPE OF
INVESTMENT
• Fixed Annuity
• Variable Annuity
PAYMENT OF
ANNUITY
• Life Annuity
• Annuity Certain
• Joint Life – Last
survivor annuity
• Annuity for life
with return of
premiums
• Increasing
annuity
28

29. GROUP INSURNCE
29

30. GROUP INSURNCE
• It provides insurance cover to a group of under people a Master
policy. The individuals covered under the policy are called as
Members.
• The amount of insurance depends upon certain criteria as:
a) Employee grade / Designation
b) Salary drawn by individuals
c) Duration of the employment with the Employer
ELIGIBILITY FOR GROUP INSURANCE
Employer –
Employee
Group
Professional
Associations
Coop Socities Creditor –
Debtor
Weaker
sections of the
Society
30

31. I ) Categorisation of Group Insurance:
a) contributory; b) Non-Contributory
II ) Eligibility Conditions
a) Formation of Group – Should not be prime motive of insurance
b) Minimum number – Generally 15 – 20 members
c) Actively at work – Should have not availed sick leave for the
last 6 months
d) Age Limit – For entry depends on the Provider
e) Cover Limit – Member does not have option to chose but as per
G I Contract eligibility conditions
f) Administration – Under single authorised person
31

32. Benefits:-
a) Low Premium for Individuals
b) Individuals not eligible otherwise, are eligible
c) Low administration cost for administration
d) No Medical examination, as the employees are actively at work and
prerecruitment medical examination is conducted
e) Adverse selection is minimal for the Insurer
f) Option to renew or not every year for the Company
32

33. GROUP SCHEMES
Group Term
Insurance
Group
Gratuity
Scheme
Group
Superannua
tion Scheme
Group Leave
Encashment
G I Scheme
in lieu of
EDLI
Social
Security
Scheme
33

34. Social Security Schemes:-
a) Health Scheme
b) Rickshaw pullers
c) Handloom workers
d) Artisans
e) Tailors
f) Barbers
g) Masons
h) Coop Milk Producers
i) Landless Agriculture Labors / workers etc
34

35. UNIT LINK INSURANCE PLAN
35

36. • ULIP is a combination of Insurance protection and Investment.
• It gained popularity from 2003 onwards
• The investment will be done as per the choice of Individual, so that
the individual can participate in growth of Capital Market to derive
more benefits out of the investments. The investment will be in the
form Units. Initially, the Unit value will be at minimum. The value will
get vary as per the Market conditions. The unit value is called NAV
( Net Asset Value)
ULIP Premium
Expenses
Mortality
Investment
36

37. • ULIP expenses can further be divided as
a) Premium Allocation Charges
b) Mortality charges
c) Fund Management Charges (FMC)
d) Policy Administration Charges
e) Surrender charges
f) Fund Switching charges
• The ULIP charges will be recovered
a) by way or deduction from premium and/or
b) by reducing the units
37

38. INVESTMENT OPTIONS
Equity Fund
( High risk & High
returns) Growth Fund
Major proportion will be invested in Equity fund &
remaining in equity related investments
Debt Fund
(Low risk & Low
returns) – Bond Fund
Major proportion will be invested in Govt Bonds , Govt
Guaranteed Securities – Bonds, FDs etc.
Balanced Fund
( Moderate risk &
Moderate return)
Will be invested in a mix of equity and debt instruments
Money Market Fund
( Capital secured & Low
return)
Invested in money instruments – Treasury bills,
Certificate of Deposits etc
38

39. Pricing of Units ( Offer price & Bid price)
Appropriation Method – Applied when funds are expanding
Unit Price= (Market value of fund + Cost of Purchase of Assets +
Current Assets + Income – Current Liabilities) / No. of Units
Expropriation Method – Applied when funds are contracting
Unit Price= (Market value of fund – Expenses involved in selling of
assets + current assets + Income – Charges applicable –
Current liabilities) / No. of units
39

40. ULIPs offer flexibility
• Flexibility in increase in insurance cover
• Flexibility in change in premium
• Liquidity
• Top up
• Riders
• Choice of funds
• Switching
• Redirection
• Premium holiday
40

41. IRDAI Guidelines:-
a) Lock-in period 5 years
b) All regular ULIP premiums shall have uniform / regular paying
premiums. Any additional premiums (top up) shall be treated as
Single premiums for the purpose of Insurance cover.
c) Other than Single premium products, shall have premium paying
term minimum of 5 years.
d) All ULIP products other than pension and annuity, shall provide a
minimum mortality cover or a health cover.
41

42. APPLICATION AND ACCEPTANCE
42

43. Fundamentals of Life Insurance Contract:
C
Essentials of a Valid Contract
Capacity to Contract
Free Consent
Offer and Acceptance
Consideration
Legality of Object
Consensus ad idem
Capability of being informed
Utmost good faith
Insurable Interest
43

44. • Applies principle of Utmost Good Faith
• Involves Insurable Interest
The process of Life Insurance Application:
a) Prospectus
b) Proposal form and related documents
c) Age proof – Standard / Non-standard
d) Non – Medical / Medical examination
e) Special medical examination – Reports
44

45. Factors involved in Underwriting of an Insurance Policy:
• Age & Sex
• Health
• Income
• Plan offered
• Personal History – Build & Body
• Family History – Ruling out Hereditary disease
• In addition to the above-
• Physical Hazard
• Occupational Hazard
• Moral Hazard
45

46. Basing on the above factors, the proposal can be accepted as
follows:
a) At ordinary / standard rates
b) At other than the proposed – Term, Sum proposed or Plan
c) Imposing health extra
d) Imposing Lien – reducing the liability of Insurer
e) Postpone the risk for a specified period
f) Decline the proposal
46

47. POLICY DOCUMENT
47

48. • The Policy bond can be divided into
1. Preamble – Specifies the basis for issue of policy
bond
2. Operative Clause
3. Proviso – Privileges & Conditions
4. Schedule
5. Attestation
48

49. PRIVELIGES & CONDITIONS
49

50. 1. Proof of Age
2. Days of Grace , Payment of Premium
3. Revival of discontinued policy
4. Non-forfeiture regulations
5. Taxes
6. Forfeiture in certain events
7. Suicide
8. Surrender value
50

51. 9. Policy Loans
10. Assignment & Nomination
11. Accident Benefit Rider
12. Participation in the profits of the Corporation
13. Normal requirements for a Claim
14. Legislative Changes
15. Free Look period
16. Benefit Illustration
The Policy bond shall contain address of
• Grievance Redressal Mechanism – Divisional level, and Branch Level
• Address of the Ombudsman
51

52. Types of Alterations which may be requested:-
• Alteration in Plan and Term
• Reduction in Sum assured
• Change in mode of payment
• Change in Name, Change of Nominee
• Removal of extra premium
• Splitting of policy into two or more policies
• Alteration from Without profit plan into with profit plan
• Grant of Accident Benefit
• Settlement option
• Grant of premium waiver benefit
52

53. Alterations which increases risk not allowed
Increasing the Sum assured
Increasing the term of the policy
Change of insurance plan – from term plan to whole life plan
Duplicate Policy – In case of loss of policy document, the company can
issue a duplicate policy with the same terms and
conditions on which the original policy document
was issued subject to fulfilment of conditions as
proposed by Insurer.
53

54. PREMIUM PAYMENT,
POLICY LAPSE AND REVIVAL
54

55. At the time of accepting the proposal, the premium is calculated and
on payment of premium, the policy document will be issued and
contract will come into existence.
Such ascertained premium, would be required to pay periodically to
keep the policy in force on due date as per the conditions of the policy.
Grace period is allowed for mode of payment: Yly, Hly & Qly - 30 days
or one calendar month. Mly, ECS and SSS 15 days.
As per the terms and conditions of policy, if the premium is not paid
within the grace period as specified, the policy will lapse and there will
not be any insurance coverage for the Insured individual.
55

56. Non-forfeiture regulations:
In the event of policy becoming lapse due to non-payment of premium
the following options are available –
a) Payment of surrender value or cash value
b) Reduced paid-up value for remaining term of the policy
c) Automatic advance of future premium until the surrender
value is exhausted.
d) Extended term insurance cover available on the basis of the
net surrender value.
56

57. Revival of a Lapsed Policy (novatio)
• Revival of a lapsed policy means “ to bring back to life”.
• A revival requires – arrears of premiums be paid with interest and
submission of evidence good health.
• On revival of a policy, the insurance coverage will be restored.
• If revival is affected under automatic advance of premium from
surrender value, the risk cover or any other benefits under the policy
remain unaffected. Therefore, revival requires only that the amounts
advanced from the surrender value be paid.
57

58. REVIVAL OPTIONS OFFERED BY INSURERS
ORDINARY REVIVAL
SCHEME
SPECIAL REVIVAL
SCHEME
INSTALMENT
REVIVAL SCHEME
LOAN-CUM-REVIAL
SCHEME
58

59. ORDINARY REVIVAL SCHEME
WITHOUT
EVIDENCE OF HEALTH
If the arrears of premiums are paid with interest
within 12 months from FUP due date, provided the
policy had been in force for 5 years or more
If the policy is in the nature of Pure Endowment, or
Deferred annuity plans, does not cover any death
cover.
If the arrears of premiums are paid with interest
within 6 months from FUP due date
If the arrears of premium are paid with interest
within 12 months from the date of maturity, in case
of Endowment type policies
59

60. SPECIAL REVIVAL SCHEME
can be considered
provided the conditions
are met
1) The Policy should not have acquired any
Surrender Value and
2) The policy should have lapsed at least 6 months
before and not more than 3 years before the date
of revival and
3) Revival under this scheme has not been effected
under the same policy on a previous occasion
60

61. INSTALMENT REVIVAL
SCHEME
IS POSSIBLE
Where the policy holder is not in a position to pay
arrears of premium in a lumpsum and the policy
can not be revived under Special Revival Scheme
Where the out-standing premium is more than ONE
year.
There is no loan out-standing under the policy
61

62. LOAN – CUM - REVIVAL
SCHEME
This scheme involves two functions – 1) Granting of
loan and 2) Revival of policy simultaneously
This scheme enables the policyholders to avail of a
loan to pay the arrears of premium
This is possible if the policy acquired surrender
value from which a loan can be advanced
62

63. ASSIGNMENT, NOMINATION
AND
SURRENDER OF POLICY
63

64. ASSIGNMENT (Section 38 of Insurance 1938)
Assignment is a process of transferring the title, rights and interest on
assets or property including Life Insurance Policy from one person to
another person or to any Financial institution.
Generally, it is done to provide security against loan.
The individual or policyholder who transfers the right is called as
Assignor and the person to whom is transferred is called as Assignee.
64

65. Features of Assignment
a) It can be done only on issue of a policy
b) Applicable to all kinds of policies excluding policies issued MWP Act.
c) Assignment can be made with or without consideration
d) Assignor should be major and competent to contract.
e) Assignor should have absolute ownership over the policy
f) After assignment, assignee becomes absolute owner to the policy
g) There can be more than one Assignee
h) Notice of assignment to be given to Insurer to record
i) Insurer has to record about the fact of assignment in their records
65

66. TYPES OF ASSIGNMENT
Conditional Assignment The rights, title and interest in the policy
automatically reverts to the Assignor on
happening of the specified conditions as
mentioned below:
a) On the death of the assignee before the
death of the Assignor
b) The loan is repaid
Absolute Assignment The rights, title and interest of the Assignor
passes absolutely to the assignee
a) Absolute assignment is done for valuable
consideration.
b) The policy vests in the assignee absolutely
and forms part of his estate on his estate.
66

67. Process of Assignment
a) Making endorsement on the policy document in the policy issue
stage. In this process NO stamp duty is required to pay.
b) The assignment form along with the policy should be duly signed by
the Assignor, Assignee and a Witness.
c) If the Assignment is executed on a separate paper, necessary stamp
duty is required to pay.
d) A notice to the affect of assignment is required to serve to the
Insurer to record in their records.
67

68. NOMINATION ( Section 39 of Insurance Act 1938)
Nomination is the right provided to the Policyholder to appoint a certain
person, who will receive the benefits of the policy in the event of
policyholder`s death during the policy term.
The individual who is entitled to receive the benefits of the policy in the
event of policyholder`s death during the policy term is called as the
Nominee.
This is simple method enables insurer for settlement of the death claim.
68

69. Nomination can be made
At the time of proposal
Anytime after commencement
of the policy
69

70. Features of Nominations
• Section 39 of Insurance Act 1938 deals with Nomination of Insurance
Policies
• Nomination can be done by policyholder provided risk is on his own life.
• If the policyholder and insured person are different individuals, then the
policyholder cannot appoint nominee(s).
• If the nominee dies after death of the policyholder, but, before death
claim settlement, the policy monies become part of the estate of the
deceased policy holder and the claim will be paid to legal representatives
of the deceased policyholder.
• If the Maturity claim is payable in instalments, then remaining
instalments are paid to nominee.
70

71. If the nominee is a minor
a) If the nominee is a minor, the life assured needs to appoint
appointee. The appointee has to duly sign the document to confirm
that he consents to fulfil the duties of an appointee.
b) The Life assured can change the appointee at any time during the
policy term.
c) On becoming minor as major, the appointee looses his / her status.
d) In case the nominee is minor, and there is no appointee has been
appointed, then the proceeds of death claim, if it happens, will go
to the legal heirs of the deceased.
71

72. DIFFERENCE BETWEEN NOMINATION AND ASSIGNMENT
NOMINATION (Sec 39) ASSIGNMENT ( Sec 38)
What is Nomination or
Assignment
Nomination is the process of
appointing a person to receive
the death claim
Assignment is the process of
transferring the title of the
insurance policy to another
person or institution
When can the nomination or
assignment be done?
Nomination can be done at
time of proposal or after
commencement of the policy
Assignment can be done only
after commencement of the
policy
Who can make? Nomination can be done only
by the life assured of his own
life.
Assignment can be done by
only owner of the policy either
by the life assured or the
assignee
Where it applicable? It is applicable only where
Insurance Act 1938 is applicable
It is applicable all over the
world, according to law of the
respective country relating to
transfer of property.
72

73. DIFFERENCE BETWEEN NOMINATION AND ASSIGNMENT
NOMINATION (Sec 39) ASSIGNMENT ( Sec 38)
Does the Policyholder retain
control over the policy?
The Policy retains title & control
over the policy and nominee has
no right to sue under the policy
The policy loses control the
right, title and interest under the
policy until a reassignment is
executed and the assignee has a
right to sue under the policy.
Is a witness required? Witness is not required? Witness is a mandatory.
Do they get any rights? Nominee has no right Assignee gets absolute rights
over the policy and he can sue
under the policy
Can it be revoked? It can be revoked or cancelled It can not be revoked or
cancelled
In case of minor In case of nominee is a minor,
appointee has to be appointed.
In case of Assignee is a minor, a
guardian has to be appointed.
73

74. Surrender Value
A Life Insurance policy can be withdrawn before the Maturity, and this process is
known as surrender of policy and the value is known as surrender value
Surrender is calculated in two methods:-
1) Guaranteed Surrender Value as Sec 113 of Insurance Act, 1938.
30% of premiums paid excluding First year premium. The percentage
depends on duration of policy from commencement of policy
2) Special Surrender Value is offered as a percentage of premiums paid. The
percentage depends on duration of policy from commencement of policy.
Insurer calculates surrender value as per both methods, the higher value will be
paid. As per LICI, SSVs are higher than GSVs.
If the policy is issued with profits, the bonus attached will also be reduced as per
the SSVs and will be paid to Insured.
74

75. Factor involved in calculation of Surrender Value:
1) Paid up value – Ratio of Number of premiums paid to the actual
number of premiums payable for the sum assured
2) Bonus attached to the policy for actual number of premiums paid
3) Ascertaining SSV factor
Loan facility:
The Insurer facilitates loan facility to policy holders. Under this facility,
the policy holder can request for a loan and officer his insurance policy
as collateral security. The loan value depends on Surrender value .
75

76. Features of Loan against Insurance Plan
1) Generally, the loan amount that can be granted against insurance policy is 90%
of Surrender value. In case of fully paid up policy, loan could be granted up to
85% of surrender value.
2) The rate of interest charged needs to be paid Half-yearly to coincide with the
due date of premium
3) If the premiums are paid continuously, payment of interest is not compulsory,
as the surrender value of the policy will increase which can be adjusted against
the out standing loan amount and interest.
4) The minimum period for which loan can be granted is 6 months. If the policy
holder wishes to repay the loan within 6 months, he has to pay interest for a
minimum period of 6 months.
5) If the policy holder dies within 6 months from the date of loan, the interest will
be charged up to the date of death only. And the policy matures within 6
months, then also interest will be charged up to date of maturity only.
6) The loan can be repaid during the policy term.
7) Additional loan can be granted along with the previous loan provided the total
loan is within 90% of surrender value
76

77. Payment of Loan interest:
Interest on loan availed to be paid every half-yly coinciding premium
due. The period from the date of loan to the date of next hly premium
due is called Broken Period.
Annuity & Pension policies and Term insurance policies are not eligible
for loans.
If the premiums are not paid regularly and interest on loan is not paid
regularly as when fallen due, the loan can be foreclosed before the
maturity of the policy. The process is called foreclosed.
The foreclosed policy can be reinstated subject to payment of Loan
with interest and all outstanding premiums
77

78. POLICY CLAIMS
78

79. A Claim is a demand from insured to the insurer to fulfil its promise as
per the terms and conditions of the policy.
Insurance claim is:
• A formal request to the Insurance Company
• Asking for payment
• Based on terms and conditions of the policy
79

80. Policy Claims
Maturity
Claim
Claims for periodic
survival Benefits
Death
Claim
80

81. Maturity Claim
A maturity claim is payable as per the terms of the policy at the end of term
of the policy, if the life assured lives up to that term.
Requirements:
• Original Insurance Document / Policy Bond
• Discharge form duly stamped and signed and witnessed
• Proof of age if age is not admitted
• Document of assignment if there is any assignment
Amount of Claim
• Basic Sum Assured,
• Guaranteed Additions if any / Bonus attached to the policy and any other
dues payable to Claimant
• Out of the Gross claim amount the following deductions if any will be
deducted:
• Loan and Interest on Loan and any other charges recoverable from Claimant
81

82. Periodical Survival Benefits
As per policy conditions under Money back policies, a certain percentage of
Sum Assured is payable at specific intervals to Policy holder during the term
of policy. The payments are called as Survival Benefits.
The following documents are required for payment of Survival Benefits:
a) Discharge form duly stamped, signed and witnessed
b) Original Policy Bond / Document – the same will be returned
to the Policy Holder after recording necessary remarks
thereon.
If the policyholder / Life assured dies before making payment of survival
benefit after due date, the unpaid Survival Benefit will be paid along with
Death Claim / Benefit.
At present, LIC of India settling the Survival Benefits up to claim amount
Rs 2,00,000 on obtaining Bank details only through NEFT without calling for
above requirements.
82

83. Death Claims
The Death Claim is the amount payable by the Insurer as per the policy
condition provided the policy is in force as on the date of death if the
Life Assured dies.
Death claim can be Full SA or reduced S A ( Paid up value)
Death Claim
Early Claim Non-Early Claim
83

84. Early Death Claims
If L A dies within 3 years from the date of accepting risk / date of revival
or reinstatement, the claim is termed as Early Claim. ( Sec 45 of
Insurance Act 1938)
Documents to be submitted:
Intimation of Death along with the proof of Death and it can be given
any one of the following:
a) The Nominee
b) The assignee of the policy
c) The relative of the deceased policy holder
d) The employer
e) The agent / Development officer
84

85. The intimation of death should contain:
• The Policy number
• Name of the deceased L A
• The date of death
• The cause of death
• The place of death
• The relationship of the claimant with the L A
Submission of proof of death is mandatory
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86. Other documents to be submitted:
a) A statement from the doctor who last treated the L A
b) A certificate from the Hospital where the LA died
c) FIR, PIR and PMR if death due to Accident
d) A certificate from the employer about the leave availed by the LA if
LA is an employee
e) A certificate of cremation / burial by a respectful person
f) Proof of age of LA if age is not admitted at the time of issue of
policy or during the currency of policy
g) Original Policy bond
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87. Proof of Title
If there is a nominee or assignee is existing under the policy no other
proof of title is required. But the claimant is not nominee or assignee,
proof of title is required as detailed below:
a) A succession certificate or
b) Letter of administration or
c) Probate of will or
d) A registered will
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88. Where a policy resulted into a Early Death claim, the insurer has right
to conduct independent enquiry into the bonafide of the claim,
however, the insurer has to admit the claim or repudiate within 6
months. If there is a delay in settlement of claim, the Insurer has to
pay 2% above the bank interest rate.
When all formalities are completed, the Insurer issues discharge
voucher to the claimant which is to be signed and attested. The
claimant can be –
a) A nominee if there is a nomination or
b) The assignee, if the policy is assigned or
c) A legal representative or successor
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89. Non-early Claim
If a policy is resulted into a claim after completion of 3 years from the
date of risk or revival or reinstatement of a policy, the claim is referred
as Non-early claim.
Documents to be submitted:
Intimation of Death along with the proof of Death and it can be given
any one of the following:
a) The Nominee
b) The assignee of the policy
c) The relative of the deceased policy holder
d) The employer
e) The agent / Development officer
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90. The intimation of death should contain:
• The Policy number
• Name of the deceased L A
• The date of death
• The cause of death
• The place of death
• The relationship of the claimant with the L A
Submission of proof of death is mandatory
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91. Other documents to be submitted:
a) Claimant statement
b) Original Policy bond
c) FIR, PIR and PMR if death due to Accident
d) Discharge voucher duly stamped, signed and witnessed
e) Proof of age of LA if age is not admitted at the time of issue of
policy or during the currency of policy
Waiver of evidence of title
Where there is no nomination or assignment, the insurer may call for
proof of title from honourable court of Law. If claimant expresses
difficulty as it involves financial burden, the insurer can waive proof of
title. ( LIC of India waives proof of title in deserving cases).
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92. Proof of Title
If there is a nominee or assignee is existing under the policy no other
proof of title is required. But the claimant is not nominee or assignee,
proof of title is required as detailed below:
a) A succession certificate or
b) Letter of administration or
c) Probate of will or
d) A registered will
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93. • Proof of Death
a) In case of Natural Death – A certificate from Municipal or relevant
authority
b) In case of accidental Death – In addition to (a), FIR, PIR & PMR
c) In case of death due to accident while travelling by air, rail or natural
calamities where body not found – A certificate from relevant
authority
d) In case person is missing while on board a ship – A Certificate from
the captain of the ship
Presumption of death: Sec 107 & Sec 108 of Indian evidence Act. If a
claimant submits a claim under a policy, the claimant must obtain a decree
from court of Law stating that LA has not heard of 7 years, the LA presumed
to be dead. On receipt of a claim, the claimant must be informed as:
a) To get a decree from court of Law and
b) Must continue to pay the premium till the date of decree
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94. Claim Concession
Generally, the Insurer can consider death claim for full SA provided the
policy is in force as on the date of death of LA. But, Insurer can also
consider claim for full S A on following conditions:
a) If a policy has remained in force for a period of 3 years and LA dies
within 6 months from the date of FUP, the claim may be considered
for full S A. The concession is called as Claim concession.
b) If a policy has remained in force for a period of 5 years and LA dies
within one year from the date of FUP, the claim may be considered
for full S A. The concession is called as Extended Claim Concession.
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95. Riders
A Rider is an additional benefit payable with Basic Sum Assured subject
to the terms and conditions.
Features of Riders:
a) Riders are voluntary and not compulsory
b) Riders need additional amount of premium
c) They are useful for monetary benefits in case certain untoward
event occurs
d) No single rider will have a premium that exceeds the basic premium
of the policy selected
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96. Types of Riders
1) Accident Death Benefit (ADB)
2) Permanent Disability Benefit
If Accident Benefit rider is opted and LA dies in accident, an additional
benefit equalent to the Basic S A is payable subject to the condition
that the policy should be in force as on the date of death.
Conditions for payment of Accident Benefit:
a) When death or injury was caused by outward, violent, visible
b) When death was caused solely and directly from accident
c) When death occurred within 180 days of the accident or such
other period as may have been mentioned in the policy
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97. When Accident Benefit is not payable
a) When death is caused by intentional self-injury, attempted
suicide, insanity, immortality, or while the influence of
intoxicating liquor, drugs, narcotic substances.
b) When death due to accident when the life assured was
engaged in aviation or aeronautics other than a fare paying
passenger in an air craft licensed to carry passengers.
c) When death occurred as a result of committing any breach of
Law.
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98. Permanent Disability Benefit
Accidents do not always result in death. In case of disability, the policy
holder unable to earn their normal livelihood and financial position of
family gets affected severally. In such situations, permanent Disability
Benefit is useful. It is neither death claim nor maturity claim.
Benefits:
a) An additional sum equal to BSA, payable in instalments over a
period of 10 years. The instalment may be Yly / Hly / Qly / Mly.
b) The future premiums are waived
c) In case of death or maturity, the remaining instalments will be
paid along with the Death claim or Maturity Claim.
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99. The interpretation of Disability – Disability means in physical terms and
definition may vary from one Insurance company to another.
Precautions:
1) If a person is not competent to enter into legal transactions, he can
not sign a contract.
2) Payments of claims to Non-residents will have to comply with the
Foreign Regulations.
3) If the policy had been financed through an HUF, the money will
have to be paid to the Karta of the HUF.
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100. Section 45 of Insurance Act, 1938 as amended on 26 Dec 2014
45 (1) No policy of life insurance shall be called in question on any ground
whatsoever after expiry of three years from the date of policy, i.e. from the date of
issuance of policy or date of commencement of risk or the date of revival of the
policy or date of rider to the policy whichever is later.
45(2) A policy of life insurance may be called in question at any time within three
years from the date of issuance of life insurance policy or the date of
commencement of risk or date of revival of policy or date of the rider to the policy
whichever is later, on the ground of fraud.
Provided that the Insurer shall have to communicate in writing to the Insured or
the legal representatives or nominees or assignees of the Insured the grounds and
materials on which such decision is based.
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101. THANK U
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