Short Note On LIC and Insurance Sector

APPLIEDJOBZ.
ORG
LIC Short Notes

For LIC ADO and AAO Preparation
By Appliedjobz
Second Edition
2013
Follow us on Facebook and Twitter
A Guide to success
Visit for any grievance www.appliedjobz.org
NIDRA PUBLICATION
Short Note on LIC and Insurance Sector for LIC AAO Paper- By Appliedjobz.org
Short Note on LIC and Insurance Sector by Appliedjobz
1.1 Insurance
Insurance may be described as a social device to reduce or eliminate risk of loss to life and property .Insurance is a collective bearing of risk. Insurance spreads the Risk and the loss of few people among a large number of people as people prefer a small fixed liability instead of big uncertain and changing liability. Insurance is a scheme of economic cooperation by which members of the community share the unavoidable risk. Insurance can be defined as a legal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event, which may be certain or uncertain and the other party called insured pays in exchange a fixed sum known as Premium .The insurer and insured also known as Assured, or underwriter and Assured respectively. The document which embodies the contract is called policy According To insurance Act , the undertaking by one person to identify the other person against loss or liability for loss in respect of certain risk or peril to which the object of the insurance may be exposed ,or pay a sum of money or other thing of value upon the happening of certain event and include the life insurance. General Insurance: Insuring anything other than human life is called general insurance. Examples are insuring property like house and belongings against fire and theft or vehicles against accidental damage or theft. Injury due to accident or hospitalization for illness and surgery can also be insured. Your liabilities to others arising out of the law can also be insured and is compulsory in some cases like motor third party insurance.
1.2 History of Insurance in India

In India, insurance has a deep-rooted history. It finds mention in the writings of Manu ( Manusmrithi ), Yagnavalkya (Dharmasastra ) and Kautilya ( Arthasastra ). The writings talk in terms of pooling of resources that could be redistributed in times of calamities such as fire, floods, epidemics and famine. This was probably a pre-cursor to modern day insurance. Ancient Indian history has preserved the earliest traces of insurance in the form of marine trade loans and carriers contracts. Insurance in India has evolved over time heavily drawing from other countries, England in particular. The Oriental Life Insurance Company, the first corporate entity in India offering life insurance coverage, was established in Calcutta in 1818 by Bipin Bernard Dasgupta and others. Europeans in India where its primary target market, and it charged Indians heftier premiums. This Company however failed in 1834. In 1829, the Madras Equitable had begun transacting life insurance business in the Madras Presidency. 1870 saw the enactment of the British Insurance Act and in the last three decades of the nineteenth century, the Bombay Mutual (1871), Oriental (1874) and Empire of India (1897) were started in the Bombay Residency. This era, however, was dominated by foreign insurance offices which did good business in India, namely Albert Life Assurance, Royal Insurance, Liverpool and London Globe Insurance and the Indian offices were up for hard competition from the foreign companies. In 1914, the Government of India started publishing returns of Insurance Companies in India. The Indian Life Assurance Companies Act, 1912 was the first statutory measure to regulate life business. In 1928, the Indian Insurance Companies Act was enacted to enable the Government to collect statistical information about both life and non-life business transacted in India by Indian and foreign insurers including provident insurance societies. In 1938, with a view to protecting
Appliedjobz.org | Visit Appliedjobz for Free online Test For LIC AAO and Prasar Bharti
the interest of the Insurance public, the earlier legislation was consolidated and amended by the Insurance Act, 1938 with comprehensive provisions for effective control over the activities of insurers. 1.2.1 Life Insurance The Insurance Amendment Act of 1950 abolished Principal Agencies. However, there were a large number of insurance companies and the level of competition was high. There were also allegations of unfair trade practices. The Government of India, therefore, decided to nationalize insurance business. An Ordinance was issued on 19th January, 1956 nationalising the Life Insurance sector and Life Insurance Corporation came into existence in the same year. The LIC absorbed 154 Indian, 16 non-Indian insurers as also 75 provident societies245 Indian and foreign insurers in all. The LIC had monopoly till the late 90s when the Insurance sector was reopened to the private sector. Some Insurance Company and time of establishment Bharat Insurance Company (1896) United India (1906) National Indian (1906) National Insurance (1906) Co-operative Assurance (1906) Hindustan Co-operatives (1907) Indian Mercantile General Assurance Swadeshi Life (later Bombay Life) Indias first 150 years were marked mostly by turbulent economic conditions. It witnessed, First War of Independence, adverse effects of the World War I and World War II on the economy of India, and in between them the period of worldwide economic crises triggered by the Great depression. The first half of the 20th century also saw a heightened struggle for India's independence. The aggregate effect of these events led to a high rate of bankruptcies and liquidation of life insurance companies in India. This had adversely affected the faith of the general public in the utility of obtaining life cover. The Life Insurance Act and the Provident Fund Act were passed in 1912, providing the 1st regulatory mechanisms in the Life Insurance industry. The Indian Insurance Companies Act of 1928 authorized the government to obtain statistical information from companies operating in both life and nonlife insurance areas. The subsequent Insurance Act of 1938 brought stricter state control over an industry that had seen several financially unsound ventures fail. A bill was also introduced in the Legislative Assembly in 1944 to nationalize the insurance industry. 1.2.2 General Insurance Triton Insurance Co Ltd was the first general insurance company to be established in India in 1850 whose shares are mainly held by British. The first insurance company setup by the Indians was Indian Mercantile Insurance Co. Ltd. which was established in 1907.The General insurance business was nationalized after the spread of General insurance business Act 1972 . The postnationalization General insurance business was undertaken by the General Insurance Corporation of India (GIC) and it has four subsidiaries. 1. Oriental Insurance Company Ltd. 2. New India Assurance Company Ltd 3. National Insurance Company Ltd 4. United India Insurance Company Ltd Towards the end of 2000, the relation ceased to exist and the four subsidiaries are at present, operating as independent company. Today there are 24 general insurance companies including the ECGC and Agriculture Insurance Corporation of India and 23 life insurance companies operating in the country. The insurance sector is a colossal one and is growing at a speedy rate of 15-20%. Together with banking services, insurance services add about 7% to the countrys GDP. A well-developed and evolved insurance sector is a boon for economic development as it provides long- term funds for infrastructure development at the same time strengthening the risk taking ability of the country.
1.3 Some of the important milestones
1.3.1 In the life insurance business in India 1818: Oriental Life Insurance Company, the first life insurance company on Indian soil started functioning. 1870: Bombay Mutual Life Assurance Society, the first Indian life insurance company started its business. 1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business. 1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses. 1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public. 1956: 245 Indian and foreign insurers and provident societies are taken over by the central government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India. Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd. and the United India Insurance Company Ltd. GIC incorporated as a company.
1.4 Characteristics of Insurance

1. 2. 3. 4. 5. 6. 7. 8. Sharing of Risks C0-operative Device Risk Assessment Payment made on contingency Amount of Payment Large Number of Insured Persons Insurance is by choice not by chance Insurance is not charity
1.5 Fundamental legal principle of Insurance

Apart from the principle governing all contract insurance is also governed by its own unique principle. They are as follows: 1. 2. 3. 4. 5. 6. Principle of Indemnity Principle of Contribution Principle of Subrogation Principle of Insurable Interest Doctrine of Utmost Good faith Cause of Loss Doctrine of Proximate Cause
1.3.2 In the general insurance Business in India:

The General insurance business in India, on the other hand, can trace its roots to the Triton Insurance Company Ltd., the first general insurance company established in the year 1850 in Calcutta by the British. 1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of general insurance business. 1957: General Insurance Council, a wing of the Insurance Association of India, frames a code of conduct for ensuring fair conduct and sound business practices. 1968: The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up. 1972: The General Insurance Business (Nationalisation) Act, 1972 nationalised the general insurance business in India with effect from 1st January 1973. 107 insurers amalgamated and grouped into four companys viz. the National Insurance
1. 5.1 Principle of Indemnity

Under this principle, you should collect the amount of your loss; no more, no less. In insurance terminology, that value is called the actual cash value (ACV) of the loss. ACV is computed using the following equation: ACV = Replacement Cost - Applicable Depreciation Calculation of the actual cash value can be illustrated with an example. Assume an insured purchased an asset that cost $600 and insured the asset on an actual cash value basis. The asset was later destroyed by an insured peril. The asset was 40 percent depreciated at the time of the loss. However, the cost to replace the asset had increased to $700 when the loss occurred. Using the above equation, the insurer would be liable for: Actual Cash Value = $700 - (40%) x ($700) Actual Cash Value = $420
There are several exceptions to the principle of indemnity: 1. Valued policies 2. Valued policy laws 3. Replacement cost insurance 4. Life insurance collect from the negligent driver for the loss paid to Susan. Subrogation accomplishes three things. First, it prevents the insured from collecting twice. It also makes the negligent third party, the person responsible for the loss; bear the burden of the loss. Finally, subrogation leads to lower insurance rates.
1. 5.2 Principle of Insurable Interest

The principle of insurable interest states that the insured must stand to lose financially or in some other way if a loss occurs in order to recover from an insurer. This "standing to lose" is called insurable interest. You have an insurable interest in your car in that you are financially harmed if the car is damaged or stolen. A husband or wife has an insurable interest in their spouse based on ties of love and affection as well as financial support. A complete stranger, however, does not have an insurable interest in your property or your life as the stranger does not stand to lose should a loss occur. Insurable interest is necessary to: (a) Prevent gambling, (b) reduce moral hazard, and (c) measure the loss
1. 5.3 Utmost Good faith

Insurance contracts are contracts based on the principle of utmost good faith. This tenet means that a high degree of honesty is expected from each party to the contract. When an insurance contract is formed, the applicant has an information advantagethere are some facts that only the applicant knows. The insurer must rely on information the applicant provides when making the decision to write the policy
1.6 Type of Insurance

The Following major categories of insurances are important:
1. 5.3 Principle of Subrogation

The principle of subrogation supports the principle of indemnity. Subrogation means substituting the insurer in place of the insured in order to collect from a third party for a loss covered by insurance. The insurer (e.g., Fireman's Fund or Nationwide) pays the insured (their policy owner) for a loss, and the insured gives up their right of action against the negligent third party. An example will help to clarify this principle. Assume that a driver ran a red light and damaged Susan's car. Further assume that Susan had collision coverage under her auto insurance policy. Susan could collect from the other driver (or the driver's insurer) or from her own insurer. If her insurer paid for Susan's loss, the insurer will then try to
Short Note on LIC and Insurance Sector for LIC AAO Paper- By Appliedjobz.org 2.2 Nationalization 2.1 Life Insurance Corporation of India
Life Insurance Corporation of India (LIC) (Hindi: ) is the largest insurance group and investment company in India. Its a state-owned where Government of India has 100%stake. LIC also funds close to 24.6% of the Indian Government's expenses. It has assets estimated of 13.25 trillion( US$240 billion).It was founded in 1956 with the merger of 245 insurance companies and provident societies(154 life insurance companies,16 foreign companies & 75 provident companies). Headquartered in Mumbai, financial and commercial capital of India, the Life Insurance Corporation of India currently has 8 zonal Offices and 113 divisional offices located in different parts of India, around 3500 servicing offices including 2048 branches, 54 Customer Zones, 25 Metro Area Service Hubs and a number of Satellite Offices located in different cities and towns of India and has a network of 13,37,064 individual agents, 242 Corporate Agents, 79 Referral Agents, 98 Brokers and 42 Banks (as on 31.3.2011) for soliciting life insurance business from the public. The slogan of LIC is "Yogakshemam Vahamyaham" which translates from Sanskrit to "Your welfare is our responsibility". The slogan is derived from the Ancient Hindu text, the Bhagavad Gita's 9th Chapter, 22nd verse. The literal translation from Sanskrit to English is "I carry what you require". The slogan can be seen in the logo, written in Devanagiri script. In 1955, parliamentarian Amol Barate raised the matter of insurance fraud by owners of private insurance companies. In the ensuing investigations, one of India's wealthiest businessmen, Ram Kishan Dalmia, owner of the Times of India newspaper, was sent to prison for two years. Eventually, the Parliament of India passed the Life Insurance of India Act on 1956-06-19, and the Life Insurance Corporation of India was created on 1956-09-01, by consolidating the life insurance business of 245 private life insurers and other entities offering life insurance services. Nationalization of the life insurance business in India was a result of the Industrial Policy Resolution of 1956, which had created a policy framework for extending state control over at least seventeen sectors of the economy, including the life insurance.
2.3 Current status

Over its existence of around 57 years (up to 2013), Life Insurance Corporation of India, which commanded a monopoly of soliciting and selling life insurance in India, created huge surpluses, and contributed around 7% of India's GDP in 2006. The Corporation, which started its business with around 300 offices, 5.7 million policies and a corpus of INR 459 million (US$ 92 million as per the 1959 exchange rate of roughly Rs. 5 for a US $,[ has grown to 25000 servicing around 350 million policies and a corpus of over 8 trillion (US$150 billion).
2.4 Life insurance in India

Life Insurance is the fastest growing sector in India since 2000 as Government allowed Private players and FDI up to 26%, and recently Government increased it to 49%. Life Insurance in India was nationalized by incorporating Life Insurance Corporation (LIC) in 1956. All private life insurance companies at that time were taken over by LIC. In 1993, the Government of India appointed RN Malhotra Committee to lay down a road map for privatization of the life insurance sector. While the committee submitted its report in 1994, it took another six years before the enabling legislation was passed in the year 2000, legislation amending the Insurance Act of 1938 and legislating the Insurance Regulatory and Development Authority Act of 2000. The same year the newly appointed insurance regulator - Insurance
Regulatory and Development Authority IRDA started issuing licenses to private life insurers. 2.5.5 Pension Policies Pension policies let individuals determine a fixed stream of income post retirement. This basically is a retirement planning investment scheme where the sum assured or the monthly pay-out after retirement entirely depends on the capital invested, the investment timeframe, and the age at which one wishes to retire. There are again several types of pension plans that cater to different investment needs. Now it is recognized as insurance product and being regulated by IRDA.
2.5 Type of Life insurance in India

Following is the list of broad categories of life insurance products: 2.5.1 Term Insurance Policies The basic premise of a term insurance policy is to secure the immediate needs of nominees or beneficiaries in the event of sudden or unfortunate demise of the policy holder. The policy holder does not get any monetary benefit at the end of the policy term except for the tax benefits he or she can choose to avail of throughout the tenure of the policy. In the event of death of the policy holder, the sum assured is paid to his or her beneficiaries. Term insurance policies are also relatively cheap to acquire compared to other insurance products 2.5. 2 Endowment Policies This basically falls into the category of an insurance-cum-investment product. Unlike a regular term insurance policy, an endowment plan provides returns on investment at the end of the policy term. There are several varieties of endowment plans, and the rate of returns and the type of benefits can vary based on the kind of endowment plan an individual has opted for. With an endowment plan, a person can opt for insurance products that provide both the benefit of insurance as well as investment. 2.5.3 Money-back Policies Money back policies are basically an extension of endowment plans wherein the policy holder receives a fixed amount at specific intervals throughout the duration of the policy. In the event of the unfortunate death of the policy holder, the full sum assured is paid to the beneficiaries. The terms again might slightly vary from one insurance company to another. 2.3.4 Unit-linked Insurance Policies (ULIP) Unit linked insurance policies again belong to the insurance-cum-investment category where one gets to enjoy the benefits of both insurance and investment. While a part of the monthly premium pay-out goes towards the insurance cover, the remaining money is invested in various types of funds that invest in debt and equity instruments. ULIP plans are more or less similar in comparison to mutual funds except for the difference that ULIPs offer the additional benefit of insurance.
2.6 List of Life Insurers

Apart from Life Insurance Corporation, the public sector life insurer, there are 23 other private sector life insurers, most of them joint ventures between Indian groups and global insurance giants.
2.6.1 Life Insurer in Public Sector 1. Life Insurance Corporation of India 2.6.2 Life Insurers in Private Sector
1. SBI Life Insurance 2. PNB Metlife India Life Insurance 3. ICICI Prudential Life Insurance 4. Bajaj Allianz Life 5. Max Life Insurance 6. Sahara Life Insurance 7. Tata AIA Life 8. HDFC Life 9. Birla Sun Life Insurance 10. Kotak Life Insurance 11. Aviva Life Insurance 12. Reliance Life Insurance Company Limited -Formerly known as AMP Sanmar LIC 13. ING Vysya Life Insurance 14. Shriram Life Insurance 15. Bharti AXA Life Insurance Co Ltd 16. Future Generali Life Insurance Co Ltd 17. IDBI Fedaral Life Insurance 18. AEGON Religare Life Insurance 19. DLF Pramerica Life Insurance 20. CANARA HSBC Oriental Bank of Commerce LIFE INSURANCE 21. India First Life Insurance Company 22. Star Union Dia-ichi Life Insurance Co. Ltd 23. Edelweiss Tokio Life Insurance Company Ltd
2.7 Foreign Direct Investment (FDI) Policy in Insurance Sector

As per the current (March 2006) FDI norms, foreign participation in an Indian insurance company is restricted to 26.0% of its equity / ordinary share capital. The Insurance Regulator has stipulated that foreign investment in Indian Insurance companies be limited to 26% of total equity issued (FDI limit) with the balance being funded by Indian
promoter entities. The limit to foreign investment includes both direct and indirect investment and has been a cause of significant lobbying by foreign insurance companies for a change in regulations to increase the FDI limit to 49% of equity issued. The Indian government has supported an increase in the FDI limit, which requires a change in the Insurance Act. The Union Budget for fiscal 2005 had recommended that the ceiling on foreign holding be increased to 49.0%. A change in the Insurance Act requires a passage of the bill in both houses of Parliament. The Indian government has tabled the bill in the Upper House of Parliament in August 2010. 7- 10% for 1st year premium if the premium paying term is more than 15 years 7- 10% for 1st year premium if the premium paying term is less than 10 years 7% - yr 2 and 3rd year and 3.5% - thereafter for all premium paying terms. In case of Mutual fund related - Unit linked policies it varies between 1.5% to 6% on the premium paid. Agency commission for retail pension policies 7.5% for 1st year premium and 2.5% thereafter Maximum broker commission - 30% Referral fees to banks Max 55% for regular premium and 10% for single premium. However in any case this fee cannot be more than the agency commission as filed under the product.
2.8 Initial Public Offer (IPO) rules for Indian Life Insurance Companies
A key piece of legislation impacting on the Life Insurance industries capital raising abilities is the lock-in period of 10 years for investment to be limited to promoter group equity investments. Under the Insurance Guidelines, Indian Life Insurance companies can opt for a public issue of equity through an Initial Public Offer (IPO) after 10 years of operations. In October 2010, the securities market regulator, Securities and Exchange Board of India (SEBI), issued disclosure norms for Indian Life Insurance Companies seeking to make an initial public offer for sale of equity shares to the public.
2.10 Awards and recognition

The Economic Times Brand Equity Survey 2012 rated LIC as the No. 6 Service Brand of the Country. Though in the year 2010 is ranked at 4, the organization is consistently among the top rated service company of the India. From the year 2006, LIC is continuously winning the Readers' Digest Trusted brand award. According to The Brand Trust Report 2012, LIC is the 8th most trusted brand of India.
2.9 Indian life insurance industry overview

All life insurance companies in India have to comply with the strict regulations laid out by Insurance Regulatory and Development Authority of India (IRDA). Life Insurance Corporation of India (LIC), the state owned behemoth, remains by far the largest player in the market. The private companies have come out with products called ULIPs (Unit Linked Investment Plans) which offer both life cover as well as scope for savings or investment options as the customer desires. These type of plans are subject to a minimum lock-in period of three years to prevent misuse of the significant tax benefits offered to such plans under the Income Tax Act. Comparison of such products with mutual funds would be erroneous. 2.9.1 Commission / intermediation fees The maximum commission limits as per statutory provisions are: Agency commission for retail life insurance business: 7- 25% for 1st year premium if the premium paying term is more than 20 years
2.11 Golden Jubilee Foundation

LIC Golden Jubilee Foundation was established in 2006 as a charity organization. This entity has the aim of promoting education, alleviation of poverty, and providing better living conditions for the under privileged. Out of all the activities conducted by the organization, Golden Jubilee Scholarship awards are the best known. Each year, this award is given to the meritorious students in standard XII of school education or equivalent, who wish to continue their studies and have a parental income less than 60,000 Rupees
2.12 OBJECTIVES
Spread Life Insurance widely and in particular to the rural areas and to the socially and economically backward classes with a view to reaching all insurable persons in the country
and providing them adequate financial cover against death at a reasonable cost. Maximize mobilization of people's savings by making insurance-linked savings adequately attractive. Bear in mind, in the investment of funds, the primary obligation to its policyholders, whose money it holds in trust, without losing sight of the interest of the community as a whole; the funds to be deployed to the best advantage of the investors as well as the community as a whole, keeping in view national priorities and obligations of attractive return. Conduct business with utmost economy and with the full realization that the moneys belong to the policyholders. Act as trustees of the insured public in their individual and collective capacities. Meet the various life insurance needs of the community that would arise in the changing social and economic environment. Involve all people working in the Corporation to the best of their capability in furthering the interests of the insured public by providing efficient service with courtesy. Promote amongst all agents and employees of the Corporation a sense of participation, pride and job satisfaction through discharge of their duties with dedication towards achievement of Corporate Objective. securities, 35% in other approved investments, and the remaining 15% in other unapproved investment, as decided by the Corporations investment committee. The Controlled Fund (all funds of the Corporation pertaining to its life insurance business and capital redemption insurance business) of LIC shall be invested as under: 1. In Central Marketable Securities Not less than 25% 2. In Central Government, State Government Securities ,including government marketable securities and securities in above Not less than 50% 3. In Socially oriented sector, including the public sector, co-operative, houses built by policy, OYH schemes, plus above Not less than 75% In respect of the balance 25% of the accretion to the controlled fund the government has been indicated that: 1. Above 8% would required for loans against policies within the surrender values 2. Above 2% may be invested in the immovable properties. 3. Above 10% may be invested in the private corporate sector
2.13 Criticism of Investment Policy

1. Some people think that LIC is favoring the lager industrial houses while investing in approved securities. Secondly they are of the view that investments in public sector are avoided and priority sectors also not receiving proper attention. 2. LIC has certainly been favoring large and well to do industrial units under the grab of securities. The argument is that investments in such units are safe and return is regular. LIC should divert some funds to the small scale sector. This sector has a great potential for employments and production .If this sector gets adequate fund then its growth will usher an area of all round economic development. 3. The policy holder feels that investment pattern of LIC does not bring higher returns for them. The investment in Government sector should not bring higher returns for them.
2.12 Investment Pattern of LIC

LIC is essentially an investment institution. Its investment policy has been designed after a thoughtful consideration of the cardinal principles of safety of the principal, the diversification of investment in terms of type of securities, the number and type of enterprises to be associated, maturities of securities and the development of backward region. The Corporation acts on business principles, and its investment policy is guided by the considerations of the interests of its policy holders and the larger interests of the country. The pattern of investment of the LIC was governed by Section 27A of the Insurance Act 1938. According to the provisions of Act, the Corporation was required to invest at least 50% of its controlled funds in central and state Government securities and other approved
10
4. LIC should frames its investment policy by keeping in view the presents factors and provision of the Act of 1938 are no more good now and these should be amended. Mainly its dividing in two categories 1}. Nonparticipating 2} participating but It may be classified as given below:
3.3.1 Non-participating
All values related to the policy (death benefits, cash surrender values, premiums) are usually determined at policy issue, for the life of the contract, and usually cannot be altered after issue. This means that the insurance company assumes all risk of future performance versus the actuaries' estimates. If future claims are underestimated, the insurance company makes up the difference. On the other hand, if the actuaries' estimates on future death claims are high, the insurance company will retain the difference.
3.1 Whole life insurance

Whole life insurance, or whole of life assurance (in the Commonwealth of Nations), is a life insurance policy that remains in force for the insured's whole life and requires (in most cases) premiums to be paid every year into the policy.
3.2 History
All life insurance was originally temporary (term) insurance. However, because term life insurance only pays a claim upon early premature death within the stated term, a number of term insurance policy holders became upset over the idea that they would most likely be paying premiums for 20 or 30 years and then wind up with nothing to show for it. Temporary insurance only pays out 2-3% of the time. This has become known as the "Lost Opportunity Cost" called term insurance. In response to market pressures, actuaries produced an insurance policy with level contributions that would last a lifetime. These contracts would offer a "cash value" that would build up against the fixed claim the death benefit. These policies would also credit guaranteed interest to the cash value account. The cash value would increase as long as the policyholder lived, gradually approaching the death benefit with time. Upon maturity of the contract (usually at age 95 or 100), the cash value would equal the death benefit. The policyholder could at any time opt out and receive the cash value. By guaranteeing the death benefit, the policy owner was assured that insurance coverage would be in force when the insured died, allowing them to unlock and exploit other assets. Upon the death of the insured, the cash value would be surrendered to the insurance company and the beneficiary would receive the death benefit. If, before the death of the insured, the policy owner wished to take the cash value and forfeit the death benefit, the cash value would be paid back with interest minus dividends paid 3.3 Types of whole Life insurance
3.3.2 Participating
In a participating policy (also par in the USA, and known as a with-profits policy in the Commonwealth), the insurance company shares the excess profits (variously called dividends or refunds in the USA, bonus in the Commonwealth) with the policyholder. Typically these refunds are not taxable because they are considered an overcharge of premium. Greater the overcharge by the company, the greater the refund/dividend. For a mutual life insurance company, participation also implies a degree of ownership of the mutuality.
3.3.3 Indeterminate premium

Similar to non-participating, except that the premium may vary year to year. However, the premium will never exceed the maximum premium guaranteed in the policy.
3.3.4 Economic
A blending of participating and term life insurance, wherein a part of the dividends is used to purchase additional term insurance. This can generally yield a higher death benefit, at a cost to long term cash value. In some policy years the dividends may be below projections, causing the death benefit in those years to decrease.
3.3.5 Limited pay

Similar to a participating policy, but instead of paying annual premiums for life, they are only due for a certain number of years, such as 20. The policy may also be set up to be fully paid up at a certain age, such as 65 or 80.The policy
11
itself continues for the life of the insured. These policies would typically cost more up front, since the insurance company needs to build up sufficient cash value within the policy during the payment years to fund the policy for the remainder of the insured's life. European Treaty (according to which any legal or natural person who is a citizen of a Union member State is free to establish him-, her- or itself, or to provide services, anywhere within the European Union), an insurer licensed in and regulated by e.g. the United Kingdom's financial services regulator, the Financial Services Authority, may establish a branch in, and/ or provide cross-border insurance coverage (through a process known as "free provision of services") into, any other of the member States without being regulated by those States' regulators. Provision of cross-border services in this manner is known as "pass porting".
3.3.6 Single premium

A form of limited pay, where the pay period is a single large payment up front. These policies typically have fees during early policy years should the policyholder cash it in.
3.3.7 Interest sensitive

This type is fairly new, and is also known as either excess interest or current assumption whole life. The policies are a mixture of traditional whole life and universal life. Instead of using dividends to augment guaranteed cash value accumulation, the interest on the policy's cash value varies with current market conditions. Like whole life, death benefit remains constant for life. Like universal life, the premium payment might vary, but not above the maximum premium guaranteed within the policy
4.2.2 India
The insurance sector went through a full circle of phases from being unregulated to completely regulated and then currently being partly deregulated. It is governed by a number of acts. The first statute in India to regulate the life insurance business was the Indian Life Assurance Companies Act, 1912. The Insurance Act of 1938 was the first legislation governing all forms of insurance to provide strict state control over insurance business. Life insurance in India was completely nationalized on January 19, 1956, through the Life Insurance Corporation Act. All 245 insurance companies operating then in the country were merged into one entity, the Life Insurance Corporation of India. The General Insurance Business Act of 1972 was enacted to nationalize the about 100 general insurance companies then and subsequently merging them into four companies. All the companies were amalgamated into National Insurance, New India Assurance, Oriental Insurance and United India Insurance, which were headquartered in each of the four metropolitan cities. Until 1999, there were no private insurance companies in India. The government then introduced the Insurance Regulatory and Development Authority Act in 1999, thereby de-regulating the insurance sector and allowing private companies. Furthermore, foreign
4.1 Insurance law and Regulator

Insurance law is the practice of law surrounding insurance, including insurance policies and claims. It can be broadly broken into three categories - regulation of the business of insurance; regulation of the content of insurance policies, especially with regard to consumer policies; and regulation of claim handling.
4.2 Regulation of insurance companies

Insurance regulation that governs the business of insurance is typically aimed at assuring the solvency of insurance companies. Thus, this type of regulation governs capitalization, reserve policies, rates and various other "back office" processes.
4.2.1 European Union

Member States of the European Union each have their own insurance regulators. However, the E.U. regulation sets a harmonsied prudential regime throughout the whole Union. As they are submitted to harmonised prudential regulation, and in consistency with the
12
investment was also allowed and capped at 26% holding in the Indian insurance companies. In 2006, the Actuaries Act was passed by parliament to give the profession statutory status on par with Chartered Accountants, Notaries, Cost & Works Accountants, Advocates, Architects and Company Secretaries. A minimum capital of US$80 million (Rs.400 Crore) is required by legislation to set up an insurance business. policies, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith.
4.3.2 Duties, powers and functions

The duties, powers and functions of IRDA are laid down in section 14 of IRDA Act, 1999 as:1. Subject to the provisions of this Act and any other law for the time being in force, the Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance business and reinsurance business. 2. Without prejudice to the generality of the provisions contained in sub-section (1), the powers and functions of the Authority shall include, 1. issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration; 2. protection of the interests of the policy holders in matters concerning assigning of policy, nomination by policy holders, insurable interest, settlement of insurance claim, surrender value of policy and other terms and conditions of contracts of insurance; 3. specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents 4. specifying the code of conduct for surveyors and loss assessors; 5. promoting efficiency in the conduct of insurance business; 6. promoting and regulating professional organizations connected with the insurance and re-insurance business; 7. levying fees and other charges for carrying out the purposes of this Act; 8. calling for information from, undertaking inspection of, conducting enquiries and investigations including audit of the insurers, intermediaries, insurance intermediaries and other organizations connected with the insurance business; 9. control and regulation of the rates, advantages, terms and conditions that may be offered by insurers in respect of general insurance business not so controlled and regulated by the Tariff Advisory Committee under section 64U of the Insurance Act, 1938 (4 of 1938); 10. specifying the form and manner in which books of account shall be maintained and
4.2 Insurance Regulatory and Development Authority ( )
Insurance Regulatory and Development Authority (IRDA) is an autonomous apex statutory body which regulates and develops the insurance industry in India. It was constituted by a Parliament of India act called Insurance Regulatory and Development Authority Act, 1999 and duly passed by the Government of India. The agency operates its headquarters at Hyderabad, Andhra Pradesh where it shifted from Delhi in 2001. Headquarters 3rd Floor, Parisrama Bhavan, Basheer Bagh, Hyderabad, Andhra Pradesh Pin Code: 500 004 Hyderabad, T S Vijayan[1] irda.gov.in
Location Chairman, IRDA Website
4.3.1 History
The IRDA Act, 1999 was passed as per the major recommendation of the Malhotra Committee report (1994) which recommended establishment of an independent regulatory authority for insurance sector in India. Later, It was incorporated as a statutory body in April, 2000. The IRDA Act, 1999 also allows private players to enter the insurance sector in India besides a maximum foreign equity of 26 % in a private insurance company having operations in India.(Note- now hiked to 49 %) It serves as an Authority to protect the interests of holders of insurance
13
statement of accounts shall be rendered by insurers and other insurance intermediaries; regulating investment of funds by insurance companies; regulating maintenance of margin of solvency; adjudication of disputes between insurers and intermediaries or insurance intermediaries; supervising the functioning of the Tariff Advisory Committee; specifying the percentage of premium income of the insurer to finance schemes for promoting and regulating professional organisations referred to in clause (2.6); specifying the percentage of life insurance business and general insurance business to be undertaken by the insurer in the rural or social sector; and exercising such other powers as may be prescribed
transfer his shares in the firm , but the assignee does not thereby become a partner and is merely entitled to the assigning partners share of the profits. Number Of Members: A private company must have at least two members and maximum 50 members. A partnership cannot consist of more than 20 persons (10 persons in case of banking business). Management: Members of a company are not entitled to take part in the management of the company unless they become directors. Partners are entitled to share in the management of the firm unless the articles provide otherwise. Agency: A member of a company is not an agent of the company or that of other members, and he cannot bind a company by his acts. Each partner is an agent of the firm and his partners, and nay binds the firm by his acts. Liability Of Members: The liability of a member of a company may be limited by shares or by guarantee. The liability of a partner is unlimited. Powers: The affairs of accompany are closely controlled by the Companies Act, 1956 and the company can only operate within the objects laid down in the memorandum of association, though these can be altered to some extent by special resolution. Partners may carry on any business as they please so long as it is not illegal and make whatever arrangements they wish with regard to the running of the firm from time to time. Termination: No one member of a company can wind up the company, and the death, bankruptcy or insanity of a member does not mean that the company must be wound up. A partnership may be dissolved by any partner at any time unless the partnership is entered into for a fixed period of time. A partnership is also dissolved by the death or bankruptcy of a partner.
11. 12. 13. 14. 15.
16.
17.
4.3.3 Organizational structure

IRDA is a ten member body consisting of: A Chairman, Five whole-time members and Four part-time members. All members are appointed by the Government of India.
5. Some More terms Frequently asked in Examination 5.1 COMPANIES AND PARTNERSHIPS COMPARED
The major difference between companies and partnerships may be considered under the following headings : Formation: A company is created by registration under the Companies Act. A partnership is created by agreement which may be expressed or implied from the conduct of the partners and is subject to the Indian Contract Act and the Indian Partnership Act. No special form is required , though partnerships articles are usually written. Status At Law: A company is an artificial legal person with perpetual succession. Thus a company may property , make contracts and sue and be sued. It is an entity distinct from its members. A partnership is not a legal though it may sue and be sued in the firms name. Thus the partners own the property of the firm and are liable for the contracts of the firm jointly as well as severally. Transfer Of Shares: Shares in a company are freely transferable unless the companys constitution otherwise provides; restrictions may, of course, appear in the articles of a private company. A partner can
5.2 Life Insurance: Claim Pending Ratio Life insurance policies provide financial protection to your loved ones in case you are not available. That is the prime reason for buying life insurance. Also since you feel your case is genuine, theres no probability of the claim getting rejected. However there have been cases where claims remain pending for long period. Its already tough with the dependents suffering from the loss and if proceedings are delayed it will only worsen the situation. Claim Pending ratio provides the percentage of the claims which have been left pending to be solved later. Claims Pending ratio of 70% means 70 claims out of 100 are still to be settled either way.
5.2.1Reasons for high Claim Pending ratio:
- New insurer typically has high claim pending ratio because it implies early death claims
14
which could be fraudulent in nature. Say, an insurer operating in its first year gets 60 death claims out of 100 policies. So many early death claims means there is probability of fraud which would make insurer carry thorough investigation. The investigation takes time and hence the delay. - The total number of policies also makes a difference in claim pending ratio. Lower number of claims might not reflect the true scenario. - Non disclosure of information on the insured part can also delay settlement of claims - Slow turnaround time of the insurer can also postpone settlement of claim. - Claim pending ratio also depends on products. Typically term life products have higher pending ratios than investment products. Claims pending ratio of insurers for period ending Dec31, 2010 is given below:
Insurer AEGON Religare Aviva Life Bajaj Allianz Bharti AXA Birla Sun Life Canara HSBC Future Generali HDFC Life ICICI Prudential IDBI Federal ING Vysya Kotak Mahindra Max New York Life MetLife % Claim Pending 33% 0% 25% 45% 3% 58% 8% 16% 17% 46% 23% 37% 27% Reliance Life SBI life Tata AIG LIC 29% 14% 6% 22%
No one wants to keep the claims pending and make it harder for the people involved. However insurers carry thorough investigation to make sure that the concerned persons are legitimate and there is no scam involved. Considering the amount involved there has been number of fraud cases which have made insurers to be patient in their approach. The insured should consider claims pending ratio as only assistance to make the purchase. A genuine case will be settled positively whatever be the circumstances. 5.3 Life Insurance: Death Claim Repudiation Ratio
(CRR)
At present, insurance claims are the biggest concern for the customers. A person buys life insurance so that he can secure his loved ones in case he is not available for them in the coming years. But if the claim gets rejected, not only all the premiums paid go waste, the financial security for his family is at stake. Claim repudiation ratio provides us with the percentage of total claims rejected by the insurer. A claim repudiation of 45% would imply that 45 out of every 100 claims have been rejected by the insurer. One should always check CRR as it tell us about the overall process quality of the insurers. Even though genuine cases are never rejected, CRR does provide insight into the insurers probability to reject the claim. 5.3.1 Reasons for high Claim repudiation ratio:
14%
- New insurer typically has high repudiation ratio because it implies early death claims which could be fraudulent in nature. Say, an
15
insurer operating in its first year gets 80 death claims out of 100 policies. So many early death claims means there is probability of fraud which would make insurer carry thorough investigation. - The total number of policies also makes a difference in claim repudiation ratio. Lower number of claims might not reflect the true scenario. - Better insurer practices while accepting the policies also lowers claim repudiation ratio. The insurer also carries extensive investigation at claim time to reveal discrepancies which may result in rejection of claim. - Low standards of insurers underwriting by accepting policies without careful examination also increases claim repudiation ratio. - Non disclosure of information on the insured part is the major reason behind claim rejection. If the policyholder withholds information while filling the proposal form, then claim might be rejected by insurer. The claim repudiation ratio of insurers for period ending Dec 31, 2010 is given below in the following table: Insurer AEGON Religare Aviva Life Bajaj Allianz Bharti AXA Birla Sun Life Canara HSBC Future Generali HDFC Life ICICI Prudential IDBI Federal % Claim Repudiated 41% 12% 5% 7% 4% 8% 22% 3% 3% 11% ING Vysya Kotak Mahindra Max New York Life MetLife Reliance Life SBI Life Tata AIG LIC 0% 3% 9% 3% 5% 14% 17% 0%
CRR mostly happens in two cases-(a) while filling policy form some important information was hidden intentionally (b) fraudulent cases. The point of insurance is to pool risks, the insurer will make sure that no honest person is deprived of his rightful claim and as such reviews the cases which are fraudulent and rejects them.
CRR is definitely not a foolproof method to choose your insurer. CRR gives you an idea and assists you in making final decision. CRR considers all the claims, it cannot tell which cases were legitimate and which were not. Apart from CRR, other things like company history, product details, and quote should be considered before buying life insurance policy.
6.1 LIC insurance Products/Plan: Insurance plan Pension plan Unit plan Special plan Health plan 6.1.1 Insurance plan
Each individual's insurance needs and requirements are different from that of the others. LIC's Insurance Plans are policies that talk to you individually and give you the most suitable options that can fit your requirement.
16
Bima Account 1 Bima Account 2 Jeevan Shree-I Jeevan Pramukh
Endowment Plus
Jeevan Anurag CDA Endowment Vesting At 21 CDA Endowment Vesting At 18 Jeevan Kishore Child Career Plan Jeevan Ankur
Komal Jeevan Marriage Endowment Or Educational Annuity Plan Jeevan Chhaya Child Future Plan
The Money Back Policy-20 Years The Money Back Policy-25 Years Jeevan Surabhi-15 Years Jeevan Surabhi-20 Years Jeevan Surabhi-25 Years Bima Bachat
Jeevan Bharati - I
The Whole Life Policy The Whole Life PolicyLimited Payment The Whole Life PolicySingle Premium Jeevan Anand Jeevan Tarang
Jeevan Aadhar Jeevan Vishwas Two Year Temporary Assurance Policy The Convertible Term Assurance Policy Anmol Jeevan-I Amulya Jeevan-I
The Endowment Assurance Policy The Endowment Assurance Policy-Limited Payment Jeevan Mitra(Double Cover Endowment Plan) Jeevan Mitra(Triple Cover Endowment Plan) Jeevan Anand New Janaraksha Plan Jeevan Amrit
Jeevan Saathi
6.1.2 Pension Plans

Pension Plans are Individual Plans that gaze into your future and foresee financial stability during your old age. These policies are most suited for senior citizens and those planning a
17
secure future, so that you never give up on the best things in life.
Jeevan Akshay-VI New Jeevan Nidhi
6.2. Unit Plans

Unit plans are investment plans for those who realise the worth of hard-earned money. These plans help you see your savings yield rich benefits and help you save tax even if you don't have consistent income.
Endowment Plus Flexi Plus
Company Limited, The New India Assurance Company Limited, The Oriental Insurance Company Limited and The United India Insurance Company Limited with the head office at Kolkata ,Mumbai ,Delhi and Chennai. The entire general insurance business in India was nationalised by the Government of India (GOI) through the General Insurance Business (Nationalisation) Act (GIBNA) of 1972. 55 Indian insurance companies and 52 other general insurance operations of other companies were nationalized through the act. The General Insurance Corporation of India (GIC) was incorporated as holding company of these 4 general insurance companies in 1972. The GOI subscribed to the capital of GIC which in turn, subscribed to capital of these four companies. All the Four general insurance companies are government companies are registered under The Company Act GIC and its subsidiaries had a monopoly on the general insurance business in India until the landmark Insurance Regulatory and Development Authority Act (IRDA Act) of 1999 came into effect on 19 April 2000. This act also amended the GIBNA Act and Insurance Act of 1938. The act along with the amendments ended the monopoly of GIC and its subsidiaries and liberalized the insurance business in India. In November 2000, GIC was renotified as India's Reinsurer, but its supervisory role over its subsidiaries was ended. This was followed by the General Insurance Business (Nationalization) Amendment Act of 2002. Coming into effect from 21 March 2003, this amendment ended GIC's role as a holding company of its subsidiaries. The ownership of the subsidiaries was transferred to the Government of India, which in turn divested its stake in the companies through listings on Indian stock exchanges. As a result of these reforms, GIC became the sole ReInsurer in India, and is now called GIC Re. Indian insurance companies are required by law to cede 5% of every policy value to GIC Re w.e.f. 1st April 2013, subject to some limitations and exceptions. GIC Re has diversified its operations and is now emerging as an important Re-Insurer in SAARC countries, Southeast Asia, Middle East and Africa. GIC Re has also expanded its international operations through branches in London and Moscow. GIC Re has a rating of A- (Excellent) from A. M. Best for its financial strength
6.2.4 Health Plans

Health Protection Plus Jeevan Arogya
6.2.4 Special Plans

LICs Special Plans are not plans but opportunities that knock on your door once in a lifetime. These plans are a perfect blend of insurance, investment and a lifetime of happiness!
6.2.4.1 Golden jubilee plan

New Bima Gold
6.2.4.2 Micro insurance plan

Jeevan Madhur Jeevan Mangal Jeevan Deep
6.2.4.3 Special Plans

Bima Nivesh 2005 Jeevan Saral
7 General Insurance Corporation Of India (GICI / Now (GIC Re) )
GIC of India (GIC Re) is the sole reinsurance company in the Indian insurance market with over three decades of experience. GIC has its registered office and headquarters Type in Mumbai. 107 insurers including branches of foreign companies Industry operating in India, were amalgamated and grouped into Founded Chairman and four companies , namely, The National Insurance
Public-sector undertaking Insurance Nov 22 1972 A K Roy Appliedjobz.org | Visit Appliedjobz for Free online Test For LIC AAO and Prasar Bharti
18
MD Headquarter Owner Website Mumbai India Government of India www.gicofindia.com
National transacts general insurance business of Fire, Marine and Miscellaneous insurance. The Company offers protection against a wide range of risks to its customers. The Company is privileged to cater its services to almost every sector or industry in the Indian Economy viz. Banking, Telecom, Aviation, Shipping, Information Technology, Power, Oil & Energy, Agronomy, Plantations, Foreign Trade, Healthcare, Tea, Automobile, Education, Environment, Space Research etc. As of 2010, NICL has a AAA rating from Indian rating agency, CRISIL, a subsidiary of Standard and Poor's Company. The gross premiums from underwriting by the company grew by 32.22% to over INR 61 Billion during the Financial Year 2010-2011.With this, the company was ranked third among general insurance companies operating in India, behind New India Assurance and United India Insurance Company Limited, at the end of the 2011 Financial Year. With about 1000 offices and 16,000 employees and agents, the company operates in all of India, and neighboring Nepal.
8 National Insurance Company Limited (NICL) 8.1 Overview

National Insurance Company Limited (NICL) is one of the largest and fastest growing general insurance companies in India. The company headquartered at Kolkata was established in 1906, and nationalized in 1972. National Insurance Company Limited was incorporated in December 5, 1906 with its Registered office in Kolkata. Consequent to passing of the General Insurance Business Nationalisation Act in 1972, 21 Foreign and 11 Indian Companies were amalgamated with it and National became a subsidiary of General Insurance Corporation of India (GIC) which is fully owned by the Government of India. After the notification of the General Insurance Business (Nationalisation) Amendment Act, on 7th August 2002, National has been de-linked from its holding company GIC and presently operating as an independant insurance company wholly owned by Govt of India. National Insurance Company Ltd (NIC) is one of the leading public sector insurance companies of India, carrying out non life insurance business. Headquartered in Kolkata, NIC's network of about 1000 offices, manned by more than 16,000 skilled personnel, is spread over the length and breadth of the country covering remote rural areas, townships and metropolitan cities. NIC's foreign operations are carried out from its branch offices in Nepal. Befittingly, the product ranges, of more than 200 policies offered by NIC cater to the diverse insurance requiremekjnts of its 14 million policyholders. Innovative and customized policies ensure that even specialized insurance requirements are fully taken care of. The paid-up share capital of National is Rs.100 crores. Starting off with a premium base of 500 million rupees (50 crores rupees) in 1974, NIC's gross direct premium income has steadily grown to about 9000 crores rupees in the financial year 2012-13.
Type Industry Founded Headquarters CMD Total assets Owner(s) Website
Public-sector undertaking Financial services 1906 Kolkata, India
Shri N S R Chandraprasad INR 88.67 Billion Government of India www.nationalinsuranceindia.com
8.2 Products and services

NICL has a range of coverage policies targeting different sectors: Personal Insurance policies include medical insurance, accident, property and auto insurance coverage
19
Rural Insurance policies provide protection against natural and climatic disasters for agriculture and rural businesses Industrial Insurance policies provide coverage for project, construction, contracts, fire, equipment loss, theft, etc. Commercial Insurance policies provide protection against loss and damage of property during transportation, transactions, etc. and achievement thereof was helped by the strong traditions built up overtime. ORIENTAL with its head Office at New Delhi has 30 Regional Offices and nearly 900+ operating Offices in various cities of the country. The Company has overseas operations in Nepal, Kuwait and Dubai. The Company has a total strength of around 15,000+ employees. From less than a lakh at inception, the Gross Premium went up to Rs.58 crores in 1973 and during 2010-11 the figure stood at a mammoth Rs. 5569.88 crores
8.3 Awards
The company received the Best Auto Insurer 2010 award from J. D. Power and Associates in the Asia Pacific for customer satisfaction. The criteria evaluated for the award included interaction, claims, product/policy offerings, renewal/purchase process, billing/payment process and premium/price.
Type
Founded Headquarters CMD Owner(s) Website
Public-sector undertaking
Bombay on 12th September 1947. Delhi, India Dr.A.K.Saxena Government of India
9 Oriental Insurance-General Insurance Company of India

The Oriental Insurance Company Ltd was incorporated at Bombay on 12th September 1947. The Company was a wholly owned subsidiary of the Oriental Government Security Life Assurance Company Ltd and was formed to carry out General Insurance business. The Company was a subsidiary of Life Insurance Corporation of India from 1956 to 1973 ( till the General Insurance Business was nationalized in the country). In 2003 all shares of our company held by the General Insurance Corporation of India has been transferred to Central Government. The Company is a pioneer in laying down systems for smooth and orderly conduct of the business. The strength of the company lies in its highly trained and motivated work force that covers various disciplines and has vast expertise. Oriental specializes in devising special covers for large projects like power plants, petrochemical, steel and chemical plants. The company has developed various types of insurance covers to cater to the needs of both the urban and rural population of India. The Company has a highly technically qualified and competent team of professionals to render the best customer service. Oriental Insurance made a modest beginning with a first year premium of Rs.99,946 in 1950. The goal of the Company was Service to clients
www.orientalinsurance.org.in
10 The New India Assurance Co. Ltd.

The New India Assurance Co. Ltd., based in Mumbai, is one of the five public sector insurance companies in India. It is the "largest general insurance company of India on the basis of gross premium collection inclusive of foreign operations. It was founded by Dorab Tata in 1919, and nationalized in 1973. Previously it was a subsidiary of the General Insurance Corporation of India (GIC). But when GIC became an reinsurance company as per the IRDA Act 1999, its four primary insurance subsidiaries New India Assurance, United India Insurance, Oriental Insurance and National Insurance got autonomy. New India Assurance operates both in India and foreign countries. In the recent past it has succeeded in forging tie-ups with some of the leading public sector banks in India such as State Bank of India, Central Bank of India, Corporation Bank and United Western Bank to increase its distribution network.
20
The company with its corporate office in Mumbai has about 28 regional offices, 397 divisional offices, 588 branches, 27 direct agent branches and 23 extension counters in the year 2011-2012. Its overseas offices for the year 20112012 consisted of 19 branches, seven agencies, four associate companies and three subsidiary companies spread over 23 countries.
11 United India Insurance Company Limited
Type
Industry Founded Headquarters Chairman cum Managing Director Products
Financial services 1919 Mumbai, India G.Srinivasan
General insurance which include health Government of India www.nationalinsuranceindi a.com
Owner(s) Website
10.2 Premium earned

The domestic gross premium procured for the period from April 2012 to September 2012 was Rs.5100.19 crores with a growth of 16.91%, when compared to the same corresponding period pertaining to previous financial year. In the previous financial year 2011-2012, the company's global gross premium stood at Rs.10,073.87 crores, in which, domestic gross premium alone accounted for Rs.8542.86 crores.
10.3 Awards
J.D Power Asia Pacific part of McGraw Hill Companies has ranked New India Assurance Company Ltd, the highest in satisfying auto insurance customers. The award relates to 2011 India Auto Insurance Customer Satisfaction Index Study wherein out of a 1000 point scale, the company scored 804.
United India Insurance Company Limited (UIIC) is the one among the 4 public General Insurance Companies of India and a leading General Insurance player including public and private sector. With the net worth of Rs 4,587 crore as on September 30, 2011, The Company has more than three decades of experience in Non-life Insurance business. It was formed by the merger of 22 companies, consequent to the nationalisation of General Insurance companies in India. Its Head Quarters is at 24, Whites Road, Chennai, India. United India Insurance Company Limited was incorporated as a Company on 18 February 1938. General Insurance Business in India was nationalized in 1972. 12 Indian Insurance Companies, 4 Cooperative Insurance Societies and Indian operations of 5 Foreign Insurers, besides General Insurance operations of southern region of Life Insurance Corporation of India were merged with United India Insurance Company Limited. After nationalization United India has grown by leaps and bounds and has 18300 work forces spread across 1340 offices providing insurance cover to more than 1 Crore policy holders. The Company has variety of insurance products to provide insurance cover from bullock carts to satellites. United India has been in the forefront of designing and implementing complex covers to large customers, as in cases of ONGC Ltd, GMR- Hyderabad International Airport Ltd, Mumbai International Airport Ltd Tirumala-Tirupati Devasthanam etc. It has been also the pioneer in taking Insurance to rural masses with large level implementation of Universal Health Insurance Programme of Government of India & Vijaya Raji Janani Kalyan Yojana ( covering 45 lakhs women in the state of Madhya Pradesh), Tsunami Jan Bima Yojana (in 4 states covering 4.59 lakhs of families), National Livestock Insurance and many such schemes. It has also made its presence in more than 200 tier II & II towns and villages through its innovative Micro Offices.
Type
21
Industry Founded Headquarters Chairman cum Managing Director Employees Owner(s) Website General Insurance 1938 Chennai, India 14th Asia Insurance Industry Awards held in Bali, Indonesia. United India Insurance Co. Ltd. has been awarded the Best Non-Life Insurance Company by NDTV ProfitBusiness Leadership Awards 2010. United India Insurance Co. Ltd. has been awarded 'iAAA rating for its claims paying ability by ICRA(Investment Information and Credit Rating Agency) for the third successive year. This rating indicates company's highest claims paying ability, its strong fundamental and its overall financial strength for meeting the policy holders obligations. PCQuest, one of India's premier IT magazines has selected MPLS VPN project of UIIC as one of the best implemented IT projects in the year 2007. The details of the same are published in the June 2007 issue of the PCQuest magazine. MPLS VPN proj ect of UIIC was selected after a rigorous screening process in which 250 IT projects of various companies in the country were evaluated. Subsequently, a jury of eminent personalities selected the top 21 IT projects implemented in 2007, in which the MPLS project of UIIC figures prominently.
Milind Kharat
17,332 Government of India
www.uiic.co.in
10.2 Products
Personal Policies Householder Personal Accident Mediclaim Unimedicare Bhavishya Arogya Commercial Policies Fire Insurance Marine Insurance Motor Insurance (vehicle insurance) Industrial Insurance Liability Insurance
11.3 Awards and recognitions

United India gets Skoch award 2010: United India Insurance Company has won the award for successful implementation of the financial inclusion initiatives. The company has impleted the Rashtriya Swasthya Bima Yojana in Kerala. Skoch awards, distributed by Skoch Consultancy Services, are meant to honour extraordinary achievements in governance, capacity building, empowerment, inclusive growth, citizen services delivery, technology, academics and change management. http://www.thehindu.com/ todays-paper/tpbusiness/article1151356.ece United India Insurance Company has been selected as one among the top three General Insurance companies in Asia by Asia Insurance Review at the
12.1 Recent Trend Online Insurance in India

Internet access in India has been doubled every year over the last five years and forecast predicts this growth to a quadruple every year over the next year. According to the E marketer report on Indian Online, in 2007 about 33.6 million people in India accessed internet and thats about 2.9 % of Indian Population. This figure is going to be 71.6 million people, which will be about 6% of Indian Population by 2011.Considering limited access of human insurance agents in rural area, there will be more demand of purchasing insurance online from these areas, followed by semi urban areas. The insurance portals that are active in online distribution are http://www.icicilombard.com www.bajajallianz.co.in www.inurancemall.in www.bimaonline.com www.inurancepandit.com And so on
22
13.1 Some More About Life Insurance
13.1.2 Principal of Life Insurance Contract: Insurable Interest: True, valid, determinable, and direct economic stake of an insurance policy holder A person has an insurable interest in his/her own life. A person has an insurable interest in the life of his/her spouse. Parents have an insurable interest in the life of his children. Children may have insurable interest in life of his parents. A creditor has an insurable interest in the life if the debtor, to the extent of the debt. A servant employed for a specified period has insurable interest in the life of his employer. Insurers Utmost good faith: In the absence of utmost good faith the insurance contract becomes Null and Void. The contract of life insurance is a contract of faith. The insured should be open and truthful and should not conceal any material fact in giving information to the insurance company, while entering into a contract with insurance company. Misrepresentation or concealment of any face will entitle the insurer to repudiate the contract if he wishes to do so. A Contract of life insurance is not a contract of indemnity. The loss of life cannot be compensated and only a fixed sum of money is paid in the event of death of the insured. So, the life insurance contract is not a contract of indemnity. The loss resulting from the death of life assured cannot be calculated in terms of money. 13.1.3 Types of Life Insurance Policies: Life-based contracts tend to fall into two major categories: (a) Protection policies: Designed to provide a benefit in the event of specified event, typically a lump sum payment. A common form of this design is term insurance. (b) Investment policies:where the main objective is to facilitate the growth of capital by regular or single premiums. Common forms are whole life, universal life and variable life policies. Life insurance may be divided into two basic classes: Temporary and Permanent; (a) Term Policy (Temporary): Term life insurance plans provide insurance to an individual for a fixed tenure. It is the pure and cheapest form of life insurance for an individual. This type of policy is suitable for people who are unable to pay high insurance in order to buy endowment policies. Once the term of insurance has passed, the agreed upon rate of payment and coverage expires and the former holder of the insurance must either go without coverage or renegotiate a new policy covering a different term. Term is generally considered "pure" insurance, where the premium buys protection in the event of death and nothing else.
Term Insurance is of the following types in India: 1. Straight Term Insurance:- The corporation issues term insurance for 2 years .The sum assured will be payable only in the event of the life assureds death occurring within 2 years from the commencement of the policy. 2. Renewable Term Policies:- Annual renewable term is a 1 year policy, but the insurance company guarantees it will issue a policy of an equal or lesser amount regardless of the insurability of the applicant, and with a premium set for the applicant's age at that time. The policy holder can renew it many times. Provided the attained age has not crossed 55 years. 3. Convertible Term Policy:- Under this policy, option to convert it into whole life or endowment policy is available. The premium rates will be increased according to the age attained. (b) Permanent life insurance: Life insurance that remains active until the policy matures, unless the owner fails to pay the premium when due. The policy cannot be cancelled by the insurer for any reason except fraudulent application, and any such cancellation must occur within a period of time (usually 2 years) defined by law.
13.1.4 Information about Policies: i. Single Premium Policy: The premium is paid only once. ii. Limited Payment Policy: The minimum amount for which a policy will be issued under this policy is Rs.1000. iii. Convertible whole life Policy: It provides maximum insurance protection at minimum cost and offers a flexible contract which can be allowed to an endowment policy. The minimum assured for which a policy will be issued under this plan is Rs.5000 and the maximum age at entry shall be 45 years. iv. Health Insurance Scheme: This provides financial support during health problems. v. Joint Life Policy: This is taken on the lives of 2 or more persons simultaneously. Under this policy the sum assured becomes payable on the death of anyone of those who have taken the joint life policy.
23
vi. With Profit (Participating) and Without Profit Policy (Non-Participating): Under with profit policy the assured is paid, in addition to the sum assured, a share in the profits of the insurer in the form of bonus. Without profit policy is a policy under which the assured does not get any share in the profits earned by the insurer and gets only the sum assured on the maturity of the policy. vii. Double Accident Benefit Policy: This policy provides that if the insured person dies of any accident. His beneficiaries will get double the amount of the sum assured. viii. Annuity Policy: Under this policy, the sum assured is payable not in one lump sum payment but in monthly, quarterly and half-yearly or yearly installments after the assured attains a certain age. ix. Policies for women: Women, now a days are free to take life assurance policies. However, some specially designed policies suit their needs in a unique manner. x. Group Insurance: Group Insurance Scheme is life insurance protection to groups of people. This scheme is ideal for employers, associations, societies etc. and allows you to enjoy group benefits at low costs. xi. Insurance Policies for children: Child insurance plans are one of the tools that help parents secure the financial future of their child for eg education, marriage, security etc. xii. Money Back Policy: Money back policy provides good returns on the investment & Insurance protection to you and your family member. This policy also offers bonus on regular intervals to meet your specific expenses such as children education, limited medical insurance or other things. If the insured person dies during the policy period then total sum insured is paid to the nominee, irrespective of previous survival benefits. You can take this plan for at least 20 years or more depending on your age. Corporation of India and 23 life insurance companies operating in the country. FDI allowed in Insurance sector is 49%. The insurance sector is a colossal one and is growing at a speedy rate of 15-20%. Together with banking services, insurance services add about 7% to the countrys GDP.
15.1 Office of Insurance Ombudsman & its Functions:

(a) Introduction: The institution of Insurance Ombudsman was created by a Government of India Notification dated 11th November, 1998 with the purpose of quick disposal of the grievances of the insured customers and to mitigate their problems involved in redressal of those grievances. This institution is of great importance and relevance for the protection of interests of policy holders and also in building their confidence in the system. The institution has helped to generate and sustain the faith and confidence amongst the consumers and insurers.
(b) Appointment of Insurance Ombudsman: The governing body of insurance council issues orders of appointment of the insurance Ombudsman on the recommendations of the committee comprising of Chairman, IRDA, Chairman, LIC, Chairman, GIC and a representative of the Central Government. Insurance council comprises of members of the Life Insurance council and general insurance council formed under Section 40 C of the Insurance Act, 1938. The governing body of insurance council consists of representatives of insurance companies.
(c) Eligibility for Ombudsman: Ombudsman is drawn from Insurance Industry, Civil Services and Judicial Services.
c) Terms of office: An insurance Ombudsman is appointed for a term of 3 years or till the incumbent attains the age of sixty five years, whichever is earlier. Re-appointment is not permitted. (d) Territorial jurisdiction of Ombudsman: The governing body has appointed 12 Ombudsman across the country allotting them different geographical areas as their areas of jurisdiction. The Ombudsman may hold sitting at various places within their area of jurisdiction in order to expedite disposal of complaints. The offices of the 12 insurance Ombudsman are located at 1) Bhopal
14.1 POINTS TO REMEMBER

IRDA:
Insurance regulatory and development authority (IRDA) is the regulatory body of Insurance sector In India. Mr. T.S. Vijayan is the chairman of IRDA (Earlier J Harni Narayan). The Authority is a ten member team consisting of a Chairman (b) five whole-time members (c) four parttime members. At present there are 24 general insurance companies including the ECGC and Agriculture Insurance
24
2) 3) 4) 5) 6) 7) 8) 9) 10) 11) 12) Bhubaneswar Cochin Guwahati Chandigarh New Delhi Chennai Kolkata Ahmedabad Lucknow Mumbai Hyderabad. recommendations, he will send a communication in writing within 15 days of the date of receipt accepting the settlement. (h) Award The ombudsman shall pass an award within a period of 3 months from the receipt of the complaint. The awards are binding upon the insurance companies. If the policy holder is not satisfied with the award of the Ombudsman he can approach other venues like Consumer Forums and Courts of law for redressal of his grievances. As per the policy-holder's protection regulations, every insurer shall inform the policy holder along with the policy document in respect of the insurance Ombudsman in whose jurisdiction his office falls for the purpose of grievances redressal arising if any subsequently.
(e) Removal from office: An Ombudsman may be removed from service for gross misconduct committed by him during his term of office. The governing body may appoint such person as it thinks fit to conduct enquiry in relation to misconduct of the Ombudsman. All enquiries on misconduct will be sent to Insurance Regulatory and Development Authority (IRDA) which may take a decision as to the proposed action to be taken against the Ombudsman. On recommendations of the IRDA, the Governing Body may terminate his services, in case he is found guilty.
16. Terms Commonly Used In Insurance Sector

Actual Cash Value: The fair market value of property taking into account factors that might augment or reduce the value of the property in question. AD (Accidental Death) : The policy pays you additional sum assured in case the death happens due to an accident, even if you dont take this rider, the sum assured is always paid on death, whether accidental or not. Additional Living Expense Insurance: Coverage applicable when an insured's dwelling is damaged by an insured peril to such an extent that one cannot live in it until repaired. This insurance pays the extra amount it costs to live elsewhere until repairs are made, such as the cost of living in a hotel. Agent: An insurance agent is one who contracts with one or more insurance companies to sell their insurance policies to the public and is paid a commission on or receives compensation for such business. All Risk Policy: A name given to an insurance policy which covers against the loss caused by all perils except those which are specifically excluded by the terms of the policy. Frequently, a policy of insurance is written to insure damage to property caused by specific "named perils," which are listed on the policy. However, policies may be issued in certain cases to insure against "all risks of loss or damage" and are then called "all risks" policies. The term excludes insurance against certain hazards. Annuity : Annuities refer to the regular payments the insurance company will guarantee at some future date i.e. After you cross 55, the insurance company will start giving you a monthly or quarterly return. This is often done to supplement income after retirement. Applicant: The person or firm requesting insurance.
(f) Power of Ombudsman: Insurance Ombudsman has two types of functions to perform conciliation, (1) Conciliation, (2) Award making. The insurance Ombudsman is empowered to receive and consider complaints in respect of personal lines of insurance from any person who has any grievance against an insurer. The complaint may relate to any grievance against the insurer i.e. (a) Any partial or total repudiation of claims by the insurance companies, (b) Dispute with regard to premium paid or payable in terms of the policy, (c) Dispute on the legal construction of the policy wordings in case such dispute relates to claims; (d) Delay in settlement of claims. (e) Non-issuance of any insurance document to customers after receipt of premium. Ombudsman's powers are restricted to insurance contracts of value not exceeding Rs. 20 lakhs. The insurance companies are required to honour the awards passed by an Insurance Ombudsman within 3 months. (g) Recommendations of the Ombudsman: When a complaint is settled through the mediation of the Ombudsman, he shall make the recommendations which he thinks fair in the circumstances of the case. Such a recommendation shall be made not later than 1 month and copies of the same sent to complainant and the insurance company concerned. If the complainant accepts
25
Application: A request for insurance. This may be done verbally, in writing or by using a printed form. Appraisal: A valuation or an estimation of the value of property usually done by an expert in that field who has no personal interest in the property. Appraisal Clause: A clause in an insurance policy that gives the insurer the right to demand an appraisal on the damaged property. It gives both the insurer and insured a means of settling disputes over the value of lost or damaged property. Appraiser: Person who because of special knowledge is vested with authority in determining the real value of property or damage. Appurtenances: That which belongs to something else, e.g., appurtenances of automobile. The term "appurtenances" means that one thing belongs to another thing, which the two will remain in relationship, and will pass with the ownership. Arbitration: Reference of a dispute to one or more impartial persons chosen by the parties to the dispute to determine their rights and/or obligations. The parties agree in advance to abide by the arbitrament. Each party has a chance to be heard. Audit: An examination of evidential matters to determine the reliability of a record or assertion. In connection with financial statements a review of the accounting records and other supporting evidence of an individual or an organization to assess the reasonableness of the statements as presented (not a guarantee of accuracy). Automatic Reinstatement: After a claim has been paid or the property restored, most policies automatically return the stated limit of insurance to its original amount. Automobile Insurance: Insurance coverage that provides indemnity and/or compensation for injury or physical damage which ensues from the ownership, use or operation of an automobile. Bailee : In contract and property law one to whom goods or property are entrusted for a stated purpose. Can be either gratuitous (for no consideration) or for hire (for consideration). Bailment: The act of placing goods in the possession of a bailee. Bailor: A person entrusting goods to another. Balance Sheet: Financial statement showing assets, liabilities and equity of a company. Basic Premium: A starting charge made to which is added the premium developed by the application of rates as directed. Betterment: Physical improvements beyond mere maintenance or repairs that augment the value of a property. Bid Bonds: A bid bond is a bond where the contractor i.e. the principal guarantees the oblige i.e. the owner, that the principal will honor the bid and the sign the contract, if bid is awarded. Binder: A written or oral agreement given by an insurer to insure a risk, pending the issue of a policy. A binder is deemed to be the policy and must be cancelled in the same manner. Blanket Crime Policy: An individual policy covering several crime perils on a single amount rather than on individual limits. Blanket Policy (Insurance) : Insurance on two or more items, or locations, in one aggregate sum insured without separate amounts for each item. Boiler and Machinery Insurance: Coverage that indemnifies in the event of loss with respect to and arising from the ownership, use and operation of boilers, pressure vessels and machinery. Bonus: This is the amount given in addition to the sum assured. Broker: An independent person or firm who acts on behalf of the insured in placing business with insurance companies. Builders Risk Insurance: Insurance coverage on property under construction including loss to buildings or ships, including machinery and equipment, under course of construction, and materials incidental to construction. Building Codes: Rules and regulations of governmental bodies defining standards that construction in that jurisdiction must meet. Burglar Alarms: Devices of various types which give warning of entry into premises by unauthorized persons. Burglary: Unlawful removal of property from premises involving visible forcible entry. Burglary Insurance: Insurance against loss of property caused by burglars. Business Insurance: A form of insurance to protect a business against the loss of services of a key employee or employees. Usually accident and sickness, however, life insurance may also form part of the package. Also called Partnership Insurance or Corporation Insurance. Business Interruption Insurance: Various types of insurance against business expenses and loss of income resulting from a fire or other insured peril.
26
By-law : A law or ordinance dealing with matters of local or internal regulation made by a local authority or by a corporation or association. By-law Endorsement: An endorsement explaining how a particular insurance company deals with a claim which is affected by a local by-law. Care, Custody and Control: A term used primarily in liability coverages which refers to property belonging to another but which is legally in the insured's possession or under his control. Cash Surrender force, the higher the cash value is likely to be. It is a sum paid back by the life insurance company to the insured when an insured requests the termination of the policy. Certified Copy : Reproduction of a document, that authority having custody of original signs and attests as a true, genuine and authentic copy. CI (Critical Illness) : This rider gives you a lump sum amount if you are diagnosed with an illness which is mentioned in the policy. Generally all the major illness are covered in Critical Illness cover. Claim settlement Ratio of Life Insurance Companies : Claim Settlement ratio of a company tells you that how many policies were settled by paying back the claims in case of death Claim: Strictly speaking, a claim is the exercising of the right of an insured to be indemnified by his insurance company for damage suffered. It is frequently used, however, to indicate the amount of the claim. Claimant: One who makes a claim. Claims Examiner: An employee of an insurer who handles and is responsible for incoming claims. Claims Made Basis: Provision in some insurance and reinsurance contracts covering only claims made during term of the contract. Clause: Words in a policy which describe certain specifications, limitations or modifications. Co-Insurance Clause: A clause in an insurance policy requiring an insured to carry a certain percentage, usually 80, 90 or 100 per cent of insurance in relation to the value of the property insured. If the insured fails to do this, then he agrees to be a self-insurer of all losses large or small in the same ratio as his failure to comply with the percentage required, is related to the insurance required. Co-Insurer: Two or more persons or companies who may be sharing a loss. A company, whose policy covers the same risk as that of one or more other companies, is a coinsurer whether the policies are written separately or together. Collapse: Falling in of a building. Collision: A vehicle or a ship collides when it strikes another object or another vehicle or ship. Collision insurance insures against loss so caused. Collusion: A secret agreement between persons to defraud another. Comprehensive General Liability Policy: A policy particularly suited to a manufacturer, contractor or large wholesaler or retailer providing broad coverage for claims made against him for bodily injury or damage to property of others for which he may become liable and which arise out of his entire business operation. Comprehensive Personal Liability: A form of liability insurance for individuals which insures the policyholder in the event he has become liable to pay money for damage or injury he has caused to others. This form does not include automobile liability, but does cover almost every activity of the policyholder except those which arise from the operations of a business, Hence "Personal" Liability. Consent of Surety: Consent of Surety is issued at the time of tender and state that if the contractor enters into a contract, the surety company will provide the final bonds. Consequential Loss: The word "consequential" means something following as an effect or result. It is an indirect result of the occurrence that causes the loss. Consideration: The money, or whatever is being used in substitution of money, paid for the article or contract is "the consideration." Construction Insurance: Insurance coverage specifically tailored to meet the needs of General Contractors and Sub Trades. Wordings usually include coverage for General Liability, physical loss damage to owned property and business interruption (loss of income). Constructive Total Loss: A partial loss but where the damage is so extensive that repairs would cost as much or more than the repaired property would be worth, or the limit of insurance. Contract: An agreement made between two or more persons, which is intended to be enforceable at law, and is constituted by the acceptance by one party of an offer made to him by the other party, to do or to abstain from doing some act. The offer and acceptance may either be expressed or inferred by indication in the conduct of the parties. Commercial bonds: Commercial bonds fulfill public, legal and government security requirements against financial risk and to guarantee that a business, organization, or individual complies with specified legal obligations. Contract Documents: Agreement, addenda, supporting documents, general conditions, supplementary conditions, specifications and drawings and modifications to an agreement.
27
Contract Surety Bonds: Contract Surety Bonds, through the Surety Companys financial strength and rigorous prequalification procedures, provide security to Owners, Sub-contractors, and others that the Contractor will transform plans and specifications into a timely and successfully completed project. Contractor's Liability Insurance: Insurance protecting contractor from defined liability claims arising from contractor's operations. Contractual Liability: Liability assumed by a contract either written or implied. Legal liability policies are based upon liability in tort or negligence and have very little coverage normally for contractual liability (with a possible exception of such matters as sidetrack agreements, etc.) However, contractual liability may be covered in many instances as an additional risk with an additional premium. Contributory Negligence: Many accidents are the fault of both parties who are involved in the occurrence. The plaintiff who sues another party for damages also may be guilty of some negligence, which is a concurrent cause of the damage. Such a party is guilty of contributory negligence. Cover: To protect with insurance or the insurance protection provided. Coverage: The nature of protection afforded by a particular policy. Can be used at times interchangeably with "insurance" or Value: When an insured wishes to cancel a life insurance policy before the full term, the policy may have a cash value which is stipulated in the policy. The longer the policy is in "protection" as "fire coverage" or "fire protection" or "fire insurance." Credit Report: A report provided by a commercial credit reporting company which provides details on the reputation and financial strength of an individual or corporation. Daily Report: Copy of the policy or bond for company or agency records. This term may also include all correspondence, notes, inspection reports, credit reports, etc. pertaining to the policy. Data Processing Or Equipment Insurance: A special insurance usually on an all risks basis. It covers physical loss and loss from business interruption if the damage necessitates shutdown of operations. Declaration: Statement, signed by the insured, warranting that information given by him is true. Decline: To refuse acceptance of an insurance application. Deductible: An agreed specified sum to be deducted from the amount of loss and assumed by the insured. Deductible Clause: A clause defining the amount of loss for which insured is liable; defines insurer's and insured's contributions to cover losses. Depreciation: Reduction in value of property through use, aging, deterioration and obsolescence. Direct Billing: A system for the collection of premiums whereby the insurance company "directly bills" the insured for the premium in lieu of the conventional collection of premiums by the agent or broker. DR (Accidental Disability Rider) : This rider covers you for disability and pays you Sum assured in 10 installments per year in case yoy becomes temporary or permanent disabled person. Equipment: Material for use on one machine, one vehicle, one unit. For example, a car comes "equipped" with five tires. Tires other than those on the car are not "equipment" of the car. Estate: In law, one of the various interests in land. The net worth of an individual's worldly goods.
Explosion: A rupture of a pressure vessel of some kind due to excessive internal pressure (usually accompanied by a loud noise). Exposure: The hazard threatening a risk because of external or internal physical conditions. Extended Coverage Insurance: An endorsement that enlarges the coverage afforded by the primary policy. Coverages such as windstorm, hail, smoke, riot are extended coverages on a fire policy. Extra Expense Insurance: A form of insurance policy covering the extra expense of an insured in carrying on a business following a loss by an insured peril. Face of Policy: The front of the policy on which normally the name of the insurance company, the name of the insured, the amount of insurance and the type of insurance appear among many other items. Fair Market Value: Price at which a buyer and seller, under no compulsion to buy or sell, will trade. Fire Marshall: A public official involved in fire prevention and in investigation of fires particularly where arson is suspected. Fixed Assets: Tangible long-term assets such as land, building, furniture, fixtures, machinery, equipment etc. held for use rather than for sale. Fixtures: Anything that is attached to real property is known as a "fixture." Flat Cancellation: The cancellation of a policy as of the effective date with all paid premium refunded. Fleet Policy: In automobile insurance, this is a policy insuring a number of cars for one owner. In marine
28
insurance, a policy insuring a number of ships for one owner. Floater Policy : A policy covering the same risk at a number of perhaps unspecified locations possibly over a wide area (even world-wide); usually includes goods being frequently moved from one location to another, e.g., Fur Floater, Jewelry Floater, Contractors' Equipment Floater, etc. Forgery: The illegal signing of another's name to a document, such as, a cheque. Falsely making or altering a written instrument. Frame: Refers to the construction of a building built of lumber. Fraud : Methods used to deceive to cause unwarranted favourable decision for one's own benefit. Fraudulent : Dishonest; based on or obtained by fraud. Fraudulent Misrepresentation : A false statement made knowing it to be false and intending another to act on it to his detriment, or made carelessly or recklessly without regard to whether it is true or false. Free look period: Once you get an insurance policy, the rules offer you 15 days within which you can revisit your purchase decision. This gives you the time to go through the policy's fine print, understand how the policy is going to work and be convinced that you need such a policy before deciding to commit funds every year over the insurance plan's tenure. Free on Board (F.O.B.) : When goods are shipped F.O.B., the shipper is responsible only until the goods have been placed on board the vessel or freight car or truck or other means of transport. After that the risk belongs to the consignee. General Liability: The legal exposure under common law, Statute or Civil law, to act as a reasonably prudent person would, or would not, under the circumstances. Liability may be for bodily injury, property damage, or monetary loss. The standard of care is lower than that of a professional. Good Faith: Most ordinary contracts are good faith contracts. Insurance contracts are agreements made in the utmost good faith. This implies a standard of honesty greater than that usually required in most ordinary commercial contracts. Gross Negligence: The degree of negligence somewhat greater than ordinary negligence. It may be a reckless wanton and willful misconduct causing bodily injury and/or property damage. Hazard: A risk or probability that the event insured against might occur or Condition which engenders or increases the chances of a loss. Holdup : The taking of money or property by threat or the use of force or violence. Hostile Fire: A fire which occurs in or escapes to a place not anticipated, e.g., a fire in a fireplace becomes uncontrollable and ignites something externally. Improvements and Betterments: Additions or changes to a rented premises by a tenant at his own expense, also called Tenant's Improvements. Inception: The date and time on which coverage under an insurance policy takes effect. Indemnify: To provide compensation for loss or expenses incurred. Indemnity: A contract, expressed or implied, to repay in the event of a loss. Insured neither gains nor loses. Indemnity Period: The policy period. Independent Adjuster: One who adjusts losses on behalf of insurance companies, but is not employed by any one insurance company. In Force: Insurance policy which is in effect, and has not expired or been cancelled. Inherent Vice: The quality that something has to deteriorate or damage itself without outside help, e.g., milk sours; coal combusts spontaneously. Insurer: The insurer is the insurance company that offers the policy. Insured: The person in whose name the insurance policy is made is referred to as the policy holder or the insured. Insurable Interest: An interest which the insured must have in the subject matter of the insurance he buys so that if the event insured against occurs, the insured will suffer a pecuniary loss. Moral Hazard : Hazard arising from character, interest, habits and lack of integrity of the insured or person concerned. Physical Hazard: Hazard arising from physical condition or characteristics of the object that is insured, e.g., using and storing volatile materials and substances on the premises. Highway Traffic Act: The body or system of laws which govern the obligations of the provincial governments and users of roads. A breach or conviction of any of these laws may be an offence but does not of itself impose legal liability, but it may be relied upon in any proceeding to establish or negate any liability. Hit and Run Accident : Collision between motor vehicle and/or a motor vehicle and another object and/or a motor vehicle and a pedestrian where a driver leaves the scene of the accident without identifying him/herself. This is an offence under the Highway Traffic Act.
29
Insurance: A contract in which one party, the insurer, for monetary consideration agrees to reimburse another, the insured, for loss or liability for a loss on a defined subject caused by specified hazards or perils. Insurance Policy: A written contract of insurance. Insuring Clause: Describes the intent of the policy, just what insurance coverage is provided by the policy and in what limits. Intermediary: The agent/broker negotiating insurance or reinsurance contracts for another. Any party representing another party, in negotiation with a third party. Inventory: Itemized list of goods and property on hand. Judgment: An order given by a Court. Jurisprudence: Common law, being based partly on decisions made in previous cases and quotations from these earlier cases, supports the decision that should be reached in any particular case presently before the Court. These previously decided cases are known as jurisprudence. Jury: A body of persons selected from the general populace sworn to hear evidence in a law case and to make a decision according to their findings. Lapse: An insurance policy which, having reached its expiry date, is not renewed or extended is said to have lapsed, Or When the policy holder is unable to or does not pay the premium any more, within the specified grace period, the policy is said to have lapsed. Latent Defect: A defect which is not apparent, it is A hidden defect. Lease: A contract by which one party, called the lessor, conveys to another, called the lessee, real estate, equipment or facilities for a specified term and for a specified rent. Legal Liability: Liability imposed by law on individuals or corporations to pay for harm done to others. Such law may be the common law, statute law or customs which over a period of time have taken on the same status as law. Legal liability may also be assumed under the terms of a contract. Lessee : One that holds real or personal property under a lease, e.g., a tenant of rented premises. Lessor : One that conveys property by lease, e.g., a landlord of rented premises. Liability Insurance: Insurance which agrees to indemnify the insured for sums he may be required by law to pay to third parties as damages for bodily injury or damage to property. Liability Limits: The maximum amount of insurance provided under a policy of liability insurance. Libel Insurance: Insurance against claims arising from alleged libel, slander, defamation of character, etc. Lien: A charge upon real or personal property as security for some debt or duty. Also, the security interest created by a mortgage. The conditions of an insurance policy require the disclosure to the insurer of any existing lien on the insured property. Like Kind and Quality (LKQ): Refers to replacement of damaged, destroyed or lost property with used property of similar type and condition. Limit of Liability: The maximum amount, as stated in the policy, which an insurer is bound to pay in case of a loss. Livestock Insurance: Insurance against loss (death) of horses, cattle, hogs, sheep, dogs, etc. owned by the insured. The cover can be on an all risk or a specified perils basis and includes loss by theft. The insurance is usually written by specialist livestock insurers. Loss: A word often used in place of the word "claim." It refers to the amount an insurer must pay because one of the possibilities of loss insured against under a policy, has happened. Malicious Mischief: Injury to the rights or property of another with a wicked or perverse intent. Market Value: The value of an asset based on a current market valuation, e.g., the amount for which the item could be sold on the open market. Maturity Value: Maturity value is the amount the insurance company has to pay you when the policy matures. This would include the sum assured and the bonuses. Mercantile Risk: Hazard or peril of a merchant in selling his stock of goods. Merchandise: Those goods which a commercial enterprise ordinarily sells to its customers. Merit Rating: A system of rating in which the loss experience of a particular risk is a factor in determining the rate for that risk. Minor: A person under the age of being legally capable of transacting business on his own behalf. Misrepresentation: An incorrect statement made about a material fact. Money and Securities (Broad Form) Rider : A broad form of policy protecting against loss of money or securities. There is no coverage for losses caused by, among other things, employee infidelity. Named Insured: The person or party designated in the policy as the insured, as opposed to someone who may be covered by the policy, but is not specifically named. Named Peril Policy: A policy in which the perils insured against are listed, as opposed to one which insures against "all risks." Negligence: Failure to use the degree of care expected from a reasonable and prudent person. Nominee / Beneficiary: This is the person who will receive the policy proceeds in case of death of the insured. The owner of the policy designates the nominee but the nominee is not a part of the insurance contract. The nominee is not required to pay any premium.
30
Non-disclosure: An applicant for insurance is required to disclose to the company all material facts which are necessary to underwrite a policy. If the applicant does not disclose all these facts, he/ she is guilty of non-disclosure and may risk having coverage voided from inception. Non-insurable Risk: A risk for which no insurance can be written. The chance of loss is very high or cannot be accurately measured. Notice of Loss: The conditions of the insurance policy require that any person sustaining a loss insured by the policy shall immediately give notice to the company of such loss. Failure to give notice as required has been held to be a bar against recovery. The notice is required to be in writing, and verbal notice to the agent or broker will not be sufficient to comply with the condition. Notice of Termination: The conditions of insurance policies stipulate how a policy may be terminated during its term. For example, a policy may be terminated by the insured at any time or by the insurer who must give the insured a certain number of days' notice of termination by registered mail or a certain lesser number of days' written notice of termination personally delivered. Null and Void: Of no legal or binding force or invalid. Occurrence: A happening or event. Liability policies are usually written on either an accident or occurrence basis. Off Premises Clause: A provision in residential policies affording coverage on some of the household goods when away from the premises. within certain limits. Operations: The business of an Insured or the type of business of an Insured. Optional Settlement Clause: A clause in an insurance policy permitting the insured under certain circumstances to have a choice of benefits. In accident and health policies the insured may have a choice of payment of various amounts as periodical indemnity for a certain period of time or a lump sum settlement of a pre-determined amount set out in the policy. Overlapping Insurance: When 2 different kinds of policies cover the same loss, the insurance is said to be "overlapping." For e.g. if an inland marine policy and a fire policy covered the same loss, they would be overlapping. Package Policy: Any insurance policy which covers two or more lines or types of insurance in the same policy. Paid-up value: Paid-up value is different. If you stop paying the premiums, but do not withdraw the money from your policy, the policy is referred to as paid up. The sum assured is reduced proportionately, depending on when you stopped. You then get the amount at the end of the term. Partial Loss: A loss covered by an insurance policy where the property or the premises are not completely destroyed or rendered completely worthless. Performance Bonds : A bond issued by a surety company which guarantees the client that if the contractor fails to complete the project in accordance with the terms of the construction agreement, the surety company will either complete the contract itself, or arrange for a clientapproved contractor to complete the contract. Peril: The event that caused a loss covered by the policy, e.g., fire windstorm. Perjury: Giving false evidence or information while under oath. Personal Auto Policy: Insurance policy issued to individuals covering risks arising out of the ownership or operation of a licensed automobile. Personal Effects Floater: A policy covering personal effects usually carried by tourists. Can be all risk or specified peril form. Covers worldwide but excludes coverage at the insured's residence. Personal Lines: Insurance for individuals and families, such as private passenger auto insurance and homeowners policies. Personal Property Floater (P.P.F.) : A Broad Form policy covering all personal property worldwide including at the insured's home, usually on an all risks basis. Policy Limit: The maximum that the insurance company is obligated to pay in actual claims under an insurance policy. Certain additional costs may also need to be paid. Policy Provisions: Statements contained in an insurance policy which explain the benefits, conditions and other features of the insurance contract. Policy Year: Period between anniversary dates. Power of Attorney: Authority given one person or organization to act for and obligate another to the extent of the instrument creating the power. Preferred Risk: Any risk considered to be better than the average risk on which the premium rate was based. Premises: Building including the land immediately surrounding it and belonging to it. Premium: This is the amount you pay to the insurance company to buy a policy for a specified period of time. Prescription: In law, a limitation of time within which legal action can be taken by a claimant. In insurance, the period of time in which a claim may be brought by the policyholder. Principle of Indemnity: The concept that an insured will be reimbursed for his loss (subject only to the policy limit and terms). If there is no loss there can be no indemnity. Private Passenger Car : Four-wheeled motor vehicles of the private passenger, station wagon or van type, designed for use on public highways and subject to motor vehicle registration. Product Liability: Liability insurance, generally for contractors, for products liability and for claims arising out of completed work. Professional Liability: The legal exposure any Professional has acting in their capacity as an expert in their given field. Proof of Loss: A formal statement made by a policy owner to an insurer regarding a loss. It is intended to give information to the insurer to enable it to determine the extent of its liability. Property Damage Liability Insurance: Protection against liability for damage to the property of other, including loss of the use of the property.
31
Pro Rata Cancellation: Cancellation of an insurance policy or bond with the return premium credit being the full proportion of premium for the unexpired term of the policy. Proscription: Outside the time period in which a legal action can be commenced. Protection: Used interchangeably with "coverage" to denote insurance provided under the terms of a policy. Proximate Cause: Cause of loss or damage. Unbroken chain of cause and effect between the occurrence of an insured peril and damage to property. Punitive Damages: Damages in excess of those required to compensate the plaintiff for the wrong done, which are imposed in order to punish the defendant because of the particularly wanton or willful character of his wrongdoing. Quantum: Amount or quantity. Quasi-Contract: An undertaking that is not a written contract but is an implied contract. In insurance it is most frequently found in reference to preservation of salvage. Quotation (Quote) : The amount of premium that an insurer sets as the price to cover a particular risk. Rate: The rate is the premium for a specified amount of insurance, for a specified time. Receiver: Person appointed to hold in trust and to administer property of insolvent companies. Refund: A return to the policyholder of part of the paid premium, because of cancellation, suspension, reduction in insurance coverage, or because of rate reduction. Regulator: The federal, provincial or territorial government agency responsible for the control and regulation of the insurance industry under its jurisdiction. Reinstatement: The reactivation of suspended or cancelled insurance. Restoration of full amount of insurance or reinsurance after a claim has been paid, with or without the payment of additional premium. Release: A discharge from obligation or responsibility. Removal: means taking of property to some place other than that at which it was insured. Renewal: A certificate which attests to the fact that an insurance policy has been extended for another term. Renewal Premium: The premium for the new term of the policy. Repairs: Generally an insurance policy will set out the conditions for an insured to effect repairs to insured property. Ordinary repairs are usually permitted without notice to the insurer. Replacement: Most policies of insurance of property give the company the right to substitute other property of like kind and quality for insured property which has been damaged or destroyed. This is making a replacement. Replacement Cost Clause: Applies generally to some fire insurance policies where a special cover may be purchased so that in the event of fire, repairs or replacement will be made with material of like kind without cost to the insured for depreciation or betterment. Replacement Value: The cash value representing what it would cost to replace the particular article which is the subject of the insurance. Reversionary bonus: It is a bonus that is added to policies throughout the term of the policy. It may or may not be declared every year. Rider: It is an optional feature that can be added to a policy. For instance, you may take a life insurance policy and an add on accident insurance as a rider. You will have to pay an additional premium to avail this benefit. Risk: The chance of loss. Specifically the possible loss or destruction of property or the possible incurring of a liability. Sometimes refers to the subject of an insurance contract. Robbery: The taking of another's property by force or threat of force. Salvage: The remaining value of property after severe damage by fire or other peril. The overall loss is reduced by the salvage value. Undamaged property may be quite saleable and some property may be partially damaged, thus repairable and then saleable. Schedule: A comprehensive list accompanying a policy to detail the property, locations and amounts insured, and the applicable conditions. Scheduled Property Floater: An inland marine form of policy specifically insuring various individual items. Articles of unusual value, provided they are movable, may normally be written this way and insured against many hazards, often against "all risks." Seasonal Risk: A risk occupied only part of the year, such as a summer dwelling. Self-insurer: A person, corporation or organization which assumes all or part of a risk itself rather than use an insurer, government departments often self-insure. Settlement: An agreement between concerned parties. In insurance, the agreement is usually on the money changing hands to discharge an insurance claim. Slander: The oral utterance or spreading of falsehood harmful to another's reputation. Libel is written; slander is spoken. Sprinkle red Risk : Property protected against fire by a system of overhead pipes with regularly spaced heads designed to melt at the heat of a fire, thus releasing water for extinguishment. Solvency Ration of Life Insurance Company: It indicates how solvent a company is, or how prepared it is to meet unforeseen exigencies. It is the extra capital that an insurance company is required to hold to meet all the claims which arise. In other words, Solvency margin refers to the excess amount of asset the insurance company has to maintain over its liabilities. Sum assured: This is the minimum amount of money that the policy will pay out to the nominee in case of the insured's death or the occurrence of the insured event. Survival Benefit: This is the amount payable at the end of specified durations. These amounts are fixed and predetermined.
32
Surrender Value: Halfway through the policy, you might want to discontinue it and take whatever money is due to you. The amount the insurance company then pays is known as the surrender value. The policy ceases to exist after this payment has been made. Do remember, you will lose out on returns if you withdraw your policy before time. Statement of Claim: A written statement by a plaintiff detailing the facts which support the claim against the defendant and the relief sought. the Bonding Company (Surety). The Surety by lending its reputation and credit, guarantees, that the Contractor's obligation to the Owner will be fulfilled. Surrender: Cancellation of a policy before its normal expiry by mutual consent of insured and insurer. Tenant's Policy: A package policy specially designed to meet the normal insurance requirements of a private tenant covering personal belongings and liabilities. Term: The period of time from the inception to the termination of an insurance policy or bond. Term Insurance: Term insurance is a type of insurance policy. It provides policyholder with protection only. If the policyholder dies within the specified number of years (the term), his nominee gets the sum insured. If he lives beyond the specified period, the policyholder gets nothing. This is the cheapest and most basic type of life insurance. Theft: The wrongful taking of the property of another. It is a broad term and includes larceny, pilfering, hold-up, robbery and pick-pocketing. Third Party: A claimant under a liability policy, so called because he is not one of the two parties (insured and insurer) who has entered into the insurance contract which pays his claim. Third Party Insurance: When a policy insures a person against the liability he may incur to another for damages, it is "Third Party Insurance." The insured is indemnified with respect to any loss which he might suffer as a result of his legal liability to others arising out of the peril against which insurance is written. Title : The right to ownership of property. The owner of real property having just possession of his property. Total Loss: Loss of all the insured property. Also a loss involving the maximum amount for which a policy is liable. Umbrella Policy: A special form of liability policy designed to protect the insured for certain unknown contingencies over and above coverages and to provide excess insurance. Underwrite: To insure. More commonly, to scrutinize a risk and decide on its eligibility for insurance. Underwriter: The insurance company or group that underwrites or insures a particular risk. OR The individual within an insurance company whose responsibility it is to accept or reject business in the particular line in which he/she specializes and in this way chooses risks his/her principals are prepared to underwrite. Unoccupied: Where the premises contain contents but no human beings, such persons being temporarily away from the premises, on vacation for example, the premises are said to be unoccupied. This is distinguishable from Vacant in that in vacancy, the contents have been moved out leaving nothing but the building. Unprotected: A property located in an area not regularly serviced by a fire department. Utmost Good Faith: A phrase in a legal document calling for the highest standards of integrity on the part of the insured and the insurer. Valuation: An estimate or the act of assessing of value. This will frequently be done through the process of an appraisal. Valued Policy: A policy which provides that a special amount shall paid in the event of a total loss of the property.
Statement of Values: The information required when a single rate is to cover more than one item or building. To determine a correct average, the rating bureau requires the policyholder to give the value of each separate risk and its contents. Statute: An act of the legislature. Common law is made up of the various court decisions over the years. Case law may be altered by statute. Statute of Limitations: Law determining the period within which a specific legal action must be taken. Statutory Conditions: Special prescribed and standardized conditions that the Provincial Insurance Acts require to be included in fire, automobile and accident and sickness policies. Stock: Merchandise for sale or manufacture, as distinguished from furnishings, fixtures or equipment. Stock Company: A company owned by a series of investors or stockholders (shareholders) who assume the risks of profit or loss. Storage: A term applied to articles or substances held for safekeeping. If storing of such articles is prohibited by a policy, the policy will be voided if loss consequently occurs, unless the company's permission and consent has been specially granted. Structured Settlement: A financial package permitting a settlement to be paid in regular installments either for a fixed period or for the lifetime of the claimant. Subcontractor: A trade contractor such as a roofer who usually subcontracts with a general contractor. Subscription Policy: A single policy covering a risk that is divided among a number of insurers; the policy is issued by the "lead" company (usually the one with the largest percentage) and signed by all participating companies. Suit: A legal proceeding brought by one person against another. Superintendent Of Insurance: The chief officer of the Government Department which regulates insurance. Surety Bond: Surety Bond is a three party contract between the Owner (Obligee), Contractor (Principal) and
33
Void: 1) Invalid, not legally binding. 2) An insurance contract that is prohibited by law and thus cannot be held to be a valid contract. Waiting Period: The time which must elapse before an indemnity is paid. Waiver: The intentional relinquishment of a known right. A waiver under a policy is required to be clearly expressed and in writing. Warranty: Statement or stipulation in a contract, the breach of which nullifies the contract. Without Prejudice : An action taken during claims negotiations designated as "without prejudice" is intended to be without detriment to the existing rights of the parties. With-profit bonus : It is linked to the profit of the company. If the company makes a profit, it declares a bonus in accordance with the profits. The profits are added to your insurance policy and given to you either on maturity of the policy or to your nominee if death occurs before that. WP (Waiver of Premium) : This rider makes sure that in case you are not able to pay future premium due to disability or income loss, the future premiums are waived off, but your policy is still in force like always. 13. Muslims In Indian Cities - By Laurent Gayer & Christophe Jaffrelot 14. When Loss is Gain by Diplomat Pavan K. Varma 15. Matters of Discretion: An Autobiography- I K Gujral
18 Interview Questions:
Q1- What do you know about Life Insurance? Answer- Life insurance is a contract that pledges payment of an amount to the person assured (or his nominee) on the happening of the event insured against. The contract is valid for payment of the insured amount during: The date of maturity, or Specified dates at periodic intervals, or Unfortunate death, if it occurs earlier.
17. IMPORTANT BOOKS AND AUTHORS

1. The Orphan Masters Son: Adam Johnsons novel The Orphan Masters son won the Pulitzer Prize for fiction in 2013. 2. Religion, Law & Society Authored by Prof. Tahir Mahmood 3. The First Woman President of India, Reinventing leadership, Smt. Pratibha Devisingh Patil - written by Professor Sunaina Singh 4. Walking with Lions: Tales from a Diplomatic Past - written by K. Natwar Singh, the former Union Minister for External Affairs. 5. Ek Thhi Kusum - book by Prakash Pant 6. Water: Asia's New Battleground - by Brahma Chellaney 7. Behind the Beautiful Forevers: Life, Death, and Hope -by Katherine Boo 8. Yuvi- Book on Cricketer Yuvraj Singh authored by Makarand Waingankar 9. Narcopolis - Jeet Thayil shortlisted for the Man Booker for his debut novel Narcopolis 10. Non-Stop India: written by Mark Tully 11. The Sense of an Ending: written by Julian Barnes 12. Joseph Anton - written by Salman Rushdie
Among other things, the contract also provides for the payment of premium periodically to the Corporation by the policyholder. Life insurance is universally acknowledged to be an institution, which eliminates risk, substituting certainty for uncertainty and comes to the timely aid of the family in the unfortunate event of death of the breadwinner. By and large, life insurance is civilizations partial solution to the problems caused by death. Life insurance, in short, is concerned with two hazards that stand across the life-path of every person: 1. That of dying prematurely leaves a dependent family to fend for itself. 2. That of living till old age without visible means of support. Q2 - Do you explain who can buy a Policy? Any person who has attained majority and is eligible to enter into a valid contract can insure himself/herself and those in whom he/she has insurable interest. Policies can also be taken, subject to certain conditions, on the life of ones spouse or children. While underwriting proposals, certain factors such as the policyholders state of health, the proponents income and other relevant factors are considered by the Corporation.
34
Q3- Where is Corporate Office/Head Quarter of LIC located ? Answer- Mumbai Q4 -Can you tell some of the Objectives of LIC? Spread and provide life insurance to the masses at a reasonable cost. Spread Life Insurance widely and in particular to the rural areas and to the socially and economically backward classes with a view to reaching all insurable persons in the country and providing them adequate financial cover against death at a reasonable cost. Maximize mobilization of peoples savings by making insurance-linked savings adequately attractive. Bear in mind, in the investment of funds, the primary obligation to its policyholders, whose money it holds in trust, without losing sight of the interest of the community as a whole; the funds to be deployed to the best advantage of the investors as well as the community as a whole, keeping in view national priorities and obligations of attractive return. Conduct business with utmost economy and with the full realization that the moneys belong to the policyholders. Act as trustees of the insured public in their individual and collective capacities. Meet the various life insurance needs of the community that would arise in the changing social and economic environment. Involve all people working in the Corporation to the best of their capability in furthering the interests of the insured public by providing efficient service with courtesy. Promote amongst all agents and employees of the Corporation a sense of participation, pride and job satisfaction through discharge of their duties with dedication towards achievement of Corporate Objective. Q7- What is your perception Development Officer as a Career? Q8 -How do you differentiate between Marketing and Sales? 1. A sale is 1:1. Marketing is 1: many. Even with social media marketing, it is 1:1: many. That means that even though I may be replying to a single person on Facebook, it is a public reply and other people are watching. What I say will influence that one person, but it will also influence all those silent watchers who may choose not to be silent and jump in themselves. 2. Sales is relationship driven. Marketing is data driven. Marketers analyze data and do tests, like A/B testing with ads. We analyze website analytics and public behavior. Salespeople analyze the behavior of a limited group of people, the sales prospects whom they can deal with on an individual basis. Sure, Marketers also focus on groups, but our target audiences are way too big to contact individually. You try contacting all American women between 25 and 50, whove graduated from college, and have two kids. Yeah, I thought so. 3. Salespeople dont develop products. Marketers do. Marketing is more than just convincing people to buy. Marketing is also researching what a target population desires and then turning those desires into a product that can be sold. Salespeople work with the prospect to figure out which of the available products is best for her, yes, but they dont develop products from scratch. 4. Sales are very track-able. Marketing is not. If a sales guy makes a sale, he knows. Marketers dont get that instant gratification. If a person comes in because she saw an ad, she might not even know it herself. She may think she was just walking down the street and was thirsty. Ive heard it said that you have to be in front of a person 3 times before she buys. Does she remember the first time? Did she consciously notice it? 5. Sales is about sales. Marketing is about more than sales. Salespeople sell. That is what they do and part of the reason they make commission. You want a salesman to focus on selling. Marketers do more than sell. We manage reputations. Coca-Colas brand was worth$68.73 billion in 2009. Its hard to say how much a single marketing action affects a brands image, but you can feel it when the marketings not there. Marketers get paid
Q5 -When was the LIC of India came into existence? Answer- 1st Sept. 1956 Q6 Tell us about yourself?
35
salary because their value is in more than driving sales, so rewarding them based on just sales doesnt fit. Q9 How is your field experience useful in performing this job ? Q12 Tell us your educational qualifications? Q13 How these qualifications are helpful to you in discharging the duties of ADO Or AAO? Q14- What do you know about Development Officer job? Practice Test Question 1. Describe the six major parts of an insurance contract. Answer 1. The six parts of an insurance contract are the: (1)declarations section, in which you would find statements concerning the property or life to be insured. (2) Definitions section, in which important terms used in the contract would be defined. (3) Insuring agreement, in which the promises of the insurer are summarized. (4) Exclusions section, in which perils, losses, and property not covered are enumerated in this section. (5) Conditions section, in which the rights and duties of each party to the contract are stated. (6) Miscellaneous provisions section - the procedures for such matters as cancellation, subrogation, and assignment are spelled out in this section. Question 2. Why are deductibles used in insurance policies? How do straight deductibles differ from aggregate deductibles? Answer 2 Deductibles are used to eliminate small claims, reduce moral hazard, and reduce premiums. If deductibles are not used, insurers would have to raise premiums because of the increases in the losses they would have to indemnify and the costs of handling claims. Straight deductibles remain the same amount no matter the size of a loss. With an aggregate deductible, the insurer has no liability if the loss is less than the deductible. However, the insurer is liable for the entire loss once the amount is reached. Therefore, if you have a $100 deductible and incur a $300 loss, the insurer would pay $200 if you have a straight deductible and $300 if you have an aggregate deductible. Question 3. What is the difference between concealment and misrepresentation? Why is materiality important with regard to concealment and misrepresentation? Answer 3 Concealment is silence when you are obligated to speak, whereas misrepresentation is lying. To make an insurance contract voidable, the concealment or misrepresentation must be material. If, for example, you lie to your agent about the results of a softball game, it is misrepresentation, however it is not material. If you lie about your occupation or conceal important information about your health history, it is material. Question 4. How are subrogation and insurable interest related to the principle of indemnity? Answer 4- Subrogation and insurable interest both support the principle of indemnity. Subrogation prevents the insured from collecting twice for the same loss. Insurable interest specifies that only those persons that stand to lose when a loss occurs can be indemnified and covered. Question 5. What are the four requirements that must be met in order to have a valid insurance contract? Answer 5- A valid contract must have the following four conditions satisfied: (1) an offer and an acceptance of the offer, (2) the parties to the contract must be legally competent, (3) consideration must be exchanged, and (4) the contract must be for a legal purpose.
Practice Paper
1. In which of the following years the Government of India nationalized the general insurance business under the General Insurance Business (Nationalized) Act? (1) 1970 (2) 1972 (3) 1976 (4) 1973 (5) 1981 2. The small payment or series of regular payments made by the insured are: (1) Interest (2) Sum assured (3) Premium (4) Either 1 or 2 is correct (5) None of these One of the role of insurance in the development of economy is: (1) To reduce inflation in the economy (2) To give the financial support to the insurer (3) Both 1 or 2 are correct (4) Either 1 or 2 (5) None of these
3.
36
4. Suicide clause is applicable if the life insured committed suicide within one year from the: (1) Date of Commencement of Policy (2) Date of Policy revival (3) Both 1 and 2 (4) Either 1 or 2 (5) None of these In the absence of utmost good faith the insurance contract becomes: (1) Null and Void (2) Void ab-initio (3) Wagering Contract (4) Allium Fact per se (5) None of these To avoid a contract after 2 years from the date of acceptance of risk, it is necessary for the insurer to establish that: (1) The prosper was aware of the correct facts (2) The statement by the proposer was inaccurate or false and material (3) Both 1 & 2 (4) Either 1 & 2 (5) None of these The premium regarding permanent assurance whole life policies can be made payable: (1) For a certain number of year (2) Till survival (3) Both 1 & 2 (4) Either 1 & 2 (5) None of these The Premium can be paid in lump sum of: (1) Term insurance (2) Market linked plan 3) Both 1 & 2 (4) Either 1 & 2 (5) None of these In case of Joint life policy after death of the spouse the future payment of premium is: (1) Continued (2) Waived (3) Forfeited (4) Deposited (5) None of these
Answers: 1 2 2 3 4 5 3 1 3 1
6 7 8 9 10
3 3 3 2 3
5.
1. The Life Insurance Corporation of India does not have its foreign units in which of the following countries? (1) UK (2) Sri Lanka (3) Fiji (4) Afghanistan
6.
2. Who is the Present chairman of the Life Insurance Corporation of India? (1) Arvind Mayaram (2) Sushbohan Sarker (3) Thomas Mathew (4) DK Mehrotra 3. Insurance is meant to: (1) Prevent specified events (2) Prevent damage to assets from specified events (3) Compensate for losses from specified events (4) Rebuild the assets lost because of specified events 4. The amount of Insurance depends upon: (1) The peril (2) The risk (3) Neither the peril nor the risk (4) Both the peril and the risk 5. The amount payable under a life insurance policy depends on: (1) The income of the insured person at the time of the claim (2) The income of the insured person when he took the insurance (3) The amount of the sum assured (5) None of the above 6. Which of the following event are insurable in a life insurance policy? (1) The child to be born is not a male child (2) The child, when born, has physical deformities (3) Neither of the above situations (4) Both the above situations 7. In a life insurance contract, the beneficiary may be the: (1) The Policy holder (2) The life insured (3) The depends of the life insured (4) All the above
7.
8.
9.
10. Special investigation is necessary if death is occur within two years from: (1) the date of commencement (2) the date of revival (3) either of the two (4) the date of maturity (5) None of these
37
8. Which one of these principles does not apply in the case of a life insurance contract? (1) The principle of indemnity (2) The principle of good faith (3) The principle of insurable interest (4) The principle of large numbers 9. Reinsurance is the name given to: (1) An individual taking insurance for the second time (2) An insurer placing insurance with another insurer (3) Both the above situations (4) Neither the above situations 10. Life insurance is better than other avenues of savings in respect of: (1) Marketability (3) Transferability (2) Liquidity (4) All of the above
Answers: 1 4 2 3 4 5 4 3 4 3
6 7 8 9 10
3 4 1 2 4
For any grievances candidates directly discuss on Appliedjobz Forum Visit Appliedjobz.org For Previous Paper about LIC recruitment Free Online Quiz For Lic AAO vacancy starts, Visit Appliedjobz.org/onlinetest Short Notes on Prasar Bharti Telecom uploaded soon Please share any material regarding LIC AAO 2013 recruitments

Short Note On LIC and Insurance Sector

Diunggah oleh

Informasi Dokumen

Judul Asli

Hak Cipta

Format Tersedia

Bagikan dokumen Ini

Bagikan atau Tanam Dokumen

Opsi Berbagi

Apakah menurut Anda dokumen ini bermanfaat?

Apakah konten ini tidak pantas?

Hak Cipta:

Format Tersedia

Short Note On LIC and Insurance Sector

Diunggah oleh

Hak Cipta:

Format Tersedia

APPLIEDJOBZ.

LIC Short Notes

Visit for any grievance www.appliedjobz.org

1.2 History of Insurance in India

1.3 Some of the important milestones

1.4 Characteristics of Insurance

1.5 Fundamental legal principle of Insurance

1.3.2 In the general insurance Business in India:

1. 5.1 Principle of Indemnity

1. 5.2 Principle of Insurable Interest

1. 5.3 Utmost Good faith

1.6 Type of Insurance

1. 5.3 Principle of Subrogation

2.3 Current status

2.4 Life insurance in India

2.5 Type of Life insurance in India

2.6 List of Life Insurers

2.7 Foreign Direct Investment (FDI) Policy in Insurance Sector

2.10 Awards and recognition

2.9 Indian life insurance industry overview

2.11 Golden Jubilee Foundation

2.13 Criticism of Investment Policy

2.12 Investment Pattern of LIC

3.1 Whole life insurance

3.3.3 Indeterminate premium

3.3.5 Limited pay

3.3.6 Single premium

3.3.7 Interest sensitive

4.1 Insurance law and Regulator

4.2 Regulation of insurance companies

4.2.1 European Union

4.3.2 Duties, powers and functions

4.2 Insurance Regulatory and Development Authority ( )

Location Chairman, IRDA Website

11. 12. 13. 14. 15.

4.3.3 Organizational structure

6.1.2 Pension Plans

6.2. Unit Plans

6.2.4 Health Plans

6.2.4 Special Plans

6.2.4.1 Golden jubilee plan

6.2.4.2 Micro insurance plan

6.2.4.3 Special Plans

7 General Insurance Corporation Of India (GICI / Now (GIC Re) )

8 National Insurance Company Limited (NICL) 8.1 Overview

Type Industry Founded Headquarters CMD Total assets Owner(s) Website

Public-sector undertaking Financial services 1906 Kolkata, India

Shri N S R Chandraprasad INR 88.67 Billion Government of India www.nationalinsuranceindia.com

8.2 Products and services

9 Oriental Insurance-General Insurance Company of India

10 The New India Assurance Co. Ltd.

11 United India Insurance Company Limited

General insurance which include health Government of India www.nationalinsuranceindi a.com

10.2 Premium earned

17,332 Government of India

11.3 Awards and recognitions

12.1 Recent Trend Online Insurance in India

15.1 Office of Insurance Ombudsman & its Functions:

14.1 POINTS TO REMEMBER

16. Terms Commonly Used In Insurance Sector

17. IMPORTANT BOOKS AND AUTHORS

Anda mungkin juga menyukai