Important points for Life Insurance Sector and related questions and answer

1. Insurance : Insurance is compensation of financial loss caused due to unpredictable, unexpected and unwanted event. Que 1. Mr. Amit wants to accumulate 10 lakhs for his daughter's marriage but he is afraid that if he dies before her marriage then It will cause problem in her marriage arrangements. What arrangements should he make Ans! He should have Insurance cover equivalent to his needs. That means he should have insurance to meet his responsibilities. 2. Proposer : A person who proposes to buy a policy. Que 1. "iro# bu$s a polic$ for %asmine. "iro# will be called as.. Que 2. &ainab takes insurance in the life of %asmeet. &ainab will be called as.. Ans: Proposer 3. Proposal Form : This is a form to be filled by a person who wishes to buy a policy. (all his information is filled in this form' Que 1. (nderwriter can get the re)uired information related to proposer from.. Ans: Proposal form *.Policy Holder : A person in whose name policy is taken. That means a person who pays for polic$. Que 1. "iro# bu$s a polic$ for %asmine. "iro# will be called as.. Ans: Policy Holder . Life to be Insured : A person on whose life is covered or protected. (If husband buys policy for his wife then husband is polic$ holder and wife is life to be insured' Que 1. "iro# bu$s a polic$ for %asmine. %asmine will be called as.. Ans: !ife to be Insured

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". Insurer

: One who gives the policy, one who settles the claim. e.g. eliance, Tata, !irla etc. Que 1. +aluation is done b$.. Ans: Insurance #ompany Que 2. According to ,00, I-.A regulation which insurer should have /rievance -edressal s$stem. Ans: All Insurance #ompanies

$. Agent

: Agent is the intermediate between Insurance company and the policy holder. Que 1. Who is the primar$ underwriter while taking the polic$ Ans: A%ent

&. Premium

: Amount paid to buy a policy or Installment Que 1. What does 0onsideration mean in an$ Insurance 0ontract Ans: Premium

'. Sum Assured

: The limit of policy amount or the amount payable to nominee in case of unwanted event occurs. Que 1. If 1aresh wishes to take the tax benefit of the full premium paid which is 200003 what amount of sum assured should he avail in (4I5 plan Ans: ( !acs

1). Maturity

: The lump sum amount received at the end of the term on survival. Que 1. Who initiates the process of settlement of Maturit$ 0laim Ans: Insurance company initiates the process

11.

ider

: It can be taken along with normal policy for e"tra benefit. Accidental !enefit -ider or 0ritical 0ondition -ider etc can be added to polic$. It is extra benefit over the actual 6um assured b$ pa$ing small amount.

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Que 1. If a Accidental 7enefit -ider is added to a 8erm 5lan3 how much extra amount should the person pa$ for the rider benefit Ans: ()* of the basic premium 12. !nder"riting : To e"amine the proposal to decide whether to give the policy or not. Que 1. +ishal and sandeep applied for a health plan in 9:& 4ife Insurance 0ompan$. +ishal is asked to undergo a medical checkup but 6andeep is not asked to do so. What will be most possible reason Ans: +ishal is older than ,andeep Que 2. An insurance agent sold two policies to two different persons having the same polic$ term. ;e declares the commission to each of them. 8he commission of one of the polic$ is more than the other. What should be the reasons for this difference Ans: -oth have chosen different types of policies 1(. !nder"riter : #e is the employee of company who decides whether to accept or re$ect the proposal after examining the level of risk faced b$ particular individual. Que 1. +arun wishes to pursue a career in insurance and wishes to be in a department which examines the level of risk. In which department should he <oin Ans: .nder/riter 10. is#$ Ha%ard & Peril : isk is %conomic loss i.e. death, ha&ard is reason for risk i.e. disease and 'eril is the 1atural calamit$. Que 1. ;ow are perils and ha#ards normall$ distinguished under term insurance policies Ans: Perils are ris1s that policyholders /ill die before a specified date and ha2ards are factors /hich could influence that ris1.

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Que 2. According to insurance terminolog$ which of the following is correct Ans: 2. ,mo1in% is a ha2ard and lun% cancer is a peril 1 . In'estigator : A person who investigates in case of mishap or during settlement of higher claims. ;e collects information from external source. Que 1. Investigators are appointed mainl$ to settle which kind of claim Ans: The claims /hich are doubtful accordin% to company and the claims /hose ,um Assured is hi%h. 3r in case of 4arly claim 5claims raised /ithin ( years are considered as early claims6 1". Medical refree :This is team of (octors who prepare a confidential report of medical checkup in case of individuals with high risk. 8he$ are not emplo$ee of the Insurance 0ompan$. Que 1. +ishal and sandeep applied for a health plan in 9:& 4ife Insurance 0ompan$. +ishal is asked to undergo a medical checkup but 6andeep is not asked to do so. What will be most possible reason Ans: +ishal is older than ,andeep 1$. I (A : Insurance egulatory and (evelopment Authority was formed in )*** and is followed since ,000. Que 1. As per the I-.A regulations the decisions on the proposal must to conve$ to the proposer within...... Ans: 1 days Que 2. According to I-.A guidelines3 how long does an insurance compan$ have to complete its investigation of a claim Ans: 1&) days or " months

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1&. )ominee

: +egal heir of insured. A person who gets the ,um Assured on death of +ife Assured. Que 1. Which of the following statement is not true in connection with nomination Ans: A person havin% a policy on the life of another should ma1e a nomination.

1'. *ruste

: A individual who is appointed nominee through a special law. -aturity or death claim are given in his=her name onl$.

2). Married +oman Property Act 578P Act 1&$06

: According to this act a married man can appointee his wife and children as trustee3 that means the mone$ will be given onl$ to his wife and children in both maturit$ and death claim cases. > for ;indu people 1 wife and , children can be appointed as trustee and for Muslim people , wives and * children can be appointed as trustee. Que 1. (nder Married Women?s 5ropert$ Act3 1@A* a polic$holder is... Ans : Trustee Que 2. In MW5 act 1@A* there is a provision made regarding 4ife Insurance polic$ and is applicable to.. Ans : 7arried 7an

21. ,ndorsement

: It is a process to make changes in the 'olicy documents, e.g. address, mobile number3 mode etc.

name,

Que 1 . If a customer has mentioned he is a drinker in the proposal form3 the insurance compan$ can exclude this ha#ard and mention it in which part of the polic$ document Ans: 4ndorsement Que 2. Which part of the polic$ document are the locations of Bmbudsman 0ourts mentioned Ans: 4ndorsement

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22. Assignment

: A process to transfer the rights or title of the policy. (gift.loan/. One who transfers the title is called Assignor and the one who accepts it is Assignee. 8here are two t$pes of Assignment C 1' Absolute Assignment and ,' 0onditional Assignment Que 1. Which of the following statements in correct in connection with assignment Ans: Assi%nee cannot ma1e fresh nomination in the policy Que 2. Manish took a loan from 5anka< of -s.10 lac3 Manish transferred his Insurance polic$ of 10 lac to 5anka< as a securit$ with the agreement of when 4oan is full$ paid3 polic$ title will be revert back to name of Manish is called Ans: #onditional Assi%nment

2(. -ontract

: As policy is a asset a +egal 0ontract.Agreement is formed between 0ompany and 5olic$ holder. 8here two t$pe of contracts C 1' 4ife Insurance C +alue 0ontract and ,' ;ealth Insurance C Indemnit$ 0ontract Que 1. An individual is said to be competent to enter into a contract if the$ are Ans: 1& years Que 2. If a contract is signed b$ a 1D $ears old bo$3 this contract will be considered as.. Ans: Invalid

20. -lause

: It is a condition which is applicable to the individual with high risk, e.g. $ob profile3 disease=disorder3 etc. Bnce this condition is applied it works for whole polic$ term. Que 1. +ikas is ED $ear old and is posted as a soldier in Indian Arm$. ;e wants to bu$ a polic$ for himself. ;is risk will be categori#ed according to which regulation of Insurance Act Ans: Accordin% to #lause 5as he is in Army the ris1 for loss of life is more9 hence !ife Insurance company /ill not pay any claim if he dies durin% /ar:on duty6

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2 . Lien

: This condition is applicable where the risk is reducing. It is applicable for certain period of the polic$ term not for the whole term. (nderwriter wil decide the term for 4ien >D $ears is the maximum 4ien 8erm' Que 1. In certain case if (nderwriter feels that the risk associated with the individual is is reducing3 he will accept the proposal with.... Ans: !ien Que 2. 4ien is imposed on a polic$ when underwriter feels that..... Ans: the ris1 associated mi%ht decrease

2". Indemnity

: This 'rinciple states that you cannot make profit out of Insurance. It is the amount paid as per actual loss occurred. It is applicable to /eneral Insurance and not to the 4ife Insurance as 4ife Insurance is a +alue 0ontract. Que 1. 8he concept of indemnit$ is based on the ke$ principle that polic$holders should be prevented from Ans: 7a1in% profit out of Insurance

2$. !tmost .ood Fait/

: This principle is concerned with 1aith between Insurer and Insured. (eclaration b$ client that all the information filled in proposal form are correct and true. If the information filled is incomplete or is false3 then settlement of death claim will not take place. 5eriod for this is ,* months from inception. Que 1. 5rinciple of utmost good faith will operate in existing polic$ Ans: If the policy has lapsed and it has to be revived

2&. Insurable Interest

: This 'rinciple means that you can insure the things.people which you own, i.e. its presence causes profit and absence causes loss. Que 1. In case of life insurance3 Insurable interest must exist Ans: At inception of policy Que 2. What amount of insurable interest does an individual have in his own life Ans: .nlimited

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Que (. If Insurable interest does not exists at the time of inception of the life Insurance polic$ then3 life insurance contract is Ans: Invalid 2'. Surrender : After paying premium for 2 full years, policy holder willingly returns the policy. Que 1. Available 4oan amount under life Insurance polic$ is generall$ based on Ans: ,urrender +alue

(). P/ysical

is#

: 'hysical 0haracteristics, 3ob 'rofile and 4ender. Que 1. If both parents of proposer died in their thirties due to heart attack what is the kind of peril or ha#ard the proposer has Ans: Physical ;is1 Que 2. In the personal statement3 ;arish declares that he consumes alcohol twice ever$ week. 8his is a... Ans: Physical ;is1

(1. Moral Ha%ards

: isk caused due to habits, untruthfulness, carelessness, and greed. Que 1. A person with a criminal background due to "inancial fraud would come under which ha#ard Ans: 7oral Que 2. Manish being a sole earning member of his famil$ not Insured himself 7ut looking for insurance for his son who is student there is possibilit$ Ans: 7oral ha2ard

(2. Foreclosure

: +oan5interest6surrender value, when this situation occurs the policy is foreclosed b$ Insurer. Que 1. Bn foreclosure3 if .eath claim arises before the pa$ment of the surrender value3 the pa$ment would be pa$able to! Ans: !e%al heir of !ife Assured

((. 0mbudsmen

: It is a platform where the disputes between 0ompany and 'olicy #older are resolved. Bmbudsman can resolve cases upto ,0 lacs 6um Assured.

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.isputes are resolved in 10 da$s. .ecision given b$ Bmbudsman is obligator$ to the 0ompan$ but not for the 5olic$ ;older. 5olic$ holder can approach onl$ one forum at a time. Que 1. If a case is alread$ before the consumer forum3 then the ombudsman should Ans: <ismiss the case Que 2. 8he Bmbudsman?s powers are restricted to insurance contracts of value not exceeding Ans: 2) !acs Que (. What is the period of award passed to the customer decided b$ ombudsman Ans: ( months Que 0. ;ow man$ Bmbudsman offices are situated in India Ans: 12 (0. is# etension : To bear the isk on our own. 7o Insurance bought to cover the risk. Que 1. +ina$ doesn?t want to take insurance on himself. ;e feels that his famil$ will survive with the funds available in the bank and monthl$ rentals received from village. 8his comes under -isk Ans: ;etainin% 5;is1 retention6 ( . is# *ransfer : Transfer the risk faced by us to the someone else, i.e. Insurance 0ompany. Que 1. Mr. Mahesh is a software engineer. ;e has taken a term insurance for -s. E03000300=F for E0 $ears. 8his is an example forFFFFFFFFFFFFFFFFF Ans: ;is1 Transfer Que 2. Which is the best option to transfer risk Ans: Transfer 31. Human Life 2alue 5H!+6 : #uman +ife is actually the annual income of the individual but as far as Insurance is considered ;4+ is ,0 times of the annual income. Que 1. While calculating the ;4+3 individual's future income3 total period in the services3 hike in monthl$ take home salar$ andGGGGGGGG is considered. Ans: <iscount ;ate

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($. Paid up 'alue

8(7o. of premium paid 9 ,um Assured/5 bonus (Total no. of premium payable/

3ue 1. -r. ,hailesh has an endowment policy with 2: years policy term, he has paid for eight years. The sum assured s.;,::,:::.< and accumulated bonus s.=:,:::.<. >hat is the paid up value? Ans: 453333

36. Loan

: +oan amount given is *:@ of the ,urrender value. +oan is not given over A+I' policies. Que 1. Available 4oan amount under life Insurance polic$ is generall$ based on Ans: ,urrender +alue

37. Lapse

: If the revival period of the policy comes to an end and the policy is still not revived3 then it gets lapsed. Que 1. -amesh has bought one polic$ and has paid onl$ one premium. ;e is unable to pa$ further premiums. ;e wishes to revive the polic$ after D $ears of commencement date. What will happen to this polic$ Ans: Policy /ill %et lapsed 5revival period is years6

0). Actuary

: #e is the officer in the Insurance company who calculates the profit, premium rates and bonus rates. Que 1. In life insurance business if a person is working in calculating premium rates of insurance products3 then he is mostl$ likel$ a member of Ans: Institutes of actuaries of India Que 2. Hunal works for Insurance compan$ to decide the Insurance amount which institute do he belong to.... Ans: Institutes of actuaries of India

01. First Premium ;eceipt

: This is proof given by company on commencement of risk. Que 1. When is the "irst premium receipt considered as proof

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Que 2. Mr. A has submitted the proposal form3 when does the risk commences for the compan$ Ans: 3n %eneration of =irst Premium ;eceipt 02. ene"al Premium : All future receipts received after first premium receipt. ;eceipt Que 1. Amit bu$s a pure Indowment plan on half $earl$ mode. What would be the receipt called when he pa$s ,nd installment of his half $earl$ premium Ans: ;ene/al ;eceipt 0(. Pooling of is# : To pool all the people facing same kind of risk together. Que 1. 4aw of large numbers is worked out b$ which of the following Ans: Poolin% of ;is1 Que 2. With pooling of risks an insurance compan$ pools the premium collected from several individuals to insure them against similar risks. At what circumstances will the insurance companies pool the risk of a life insurance and health insurance together Ans: .nder no circumstances 00. Income *a8 Act 1'"1 : ). ;: 0 B ta" e"emption over ) +ac invested in life Insurance ,. @0 . C tax exemption of 1D000=F extra for investment in health insurance for himself and ,0000=F if he bu$s health insurance for parents E. 10 >10' . C All the returns from 4ife Insurance are tax free *. @0 I C interest paid over education loan is deducted from taxable income D. ,* >b' C interest paid over home loan is deducted from taxable income Que 1. What's the limit of tax benefit that can be availed under 6ection @00. Ans: 1))))):> Que 2. (nder which section of Income tax Act 1J21 a person can

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ac)uire tax benefit over the premium paid for ;ealth Insurance 5olic$ Ans: &) < 0 . *erm Insurance : If the policy holder dies within the policy term then the nominee will receive the 6um Assured. Que 1. In case of a term plan the maximum premium of the accidental rider can be. Ans: ()* of -ase Premium Que 2. In term insurance if 0ritical illness rider claim happens then what will happen to existing polic$ Ans: #ritical Illness benefit /ill ceases. After ta1in% benefit of #I ,um Assured if the policy holder dies /ithin " months9 nominee /ill not receive basic sum assured. -ut if he dies after " months nominee /ill %et basic sum assured as /ell. Que (. Mr.7askar had taken a 8erm plan for a sum assured of -s. A lakhs. ;e also has an A.7 rider worth -s. * lakhs. (nfortunatel$ 7askar died in a car accident. ;ow much will be the death claim settlement Ans: Total 11 la1hs /ill be paid Que 0. 5ure 8erm Insurance is example of Ans: ?on>participatin% Plan 0". Pure ,ndo"ment Plan : 'olicy holder gets the sum assured only on survival. Que 1. 5rashant bought a polic$ of sum assured of AD4acs for E0 $ears. According to document if 5rashant survives for E0 $ears then he will get AD lacs3 but if he dies during polic$ period his famil$ will not receive sum assured. Which polic$ is this Ans: Pure 4ndo/ment plan 0$. ,ndo"ment Plan : !oth -aturity and (eath benefit are given in this kind of plans Que 1. Mr. 6hailesh has an endowment polic$ with E0 $ears polic$ term3

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he has paid for eight $ears. 8he sum assured -s.@3003000=F and accumulated bonus -s.203000=F. What is the paid up value if bonus accumulated and if not bonus accumulated Ans: 21(((( or 2$(((( Que 2. Indowment plan is combination of....... Ans: Pure Term plan and Pure 4ndo/ment plan 0&. .roup Insurance : One policy is bought and covers many individuals, e.g. employer can buy one polic$ and cover all emplo$ees. 8his polic$ is called Master 5olic$ Que 1. /roup Insurance is opted in which case Ans: 4mployee and 4mployer

0'. 9oint Life Policy

: One policy covers 2 individuals. This policy is available for husband B wife or business partners. Que 1. Who can opt for %oint 4ife 5olic$ Ans: Husband @ 8ife or -usiness Partner Que 2. 6uresh has asthama3 but he has taken <oint life polic$. 8here is no need of nominee. Wh$ is it so Ans: -ecause it is Aoint !ife Policy

:;. Industrial Policy

: This policy is for the low income group. The minimum premium is s.)C.< per week. Que 1. -adhesh$am is an auto rickshaw driver3 his income is ver$ less. Which 4ife Insurance polic$ can he bu$ Ans: Industrial Policy

:1. Micro Insurance : A policy for low income group. They can opt for sum assured of C::: to C:::: for 4ife Insurance and D000 to E0000 for Mediacal Insurance. Minimum premium for this t$pe of Insurance is -s. 1D=F per week. 8wo t$pes of agents can sell insurance! 1' Agent who has I-.A license >an immature3 unsound mind and individual with criminal background cannot become agent'

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,' 1/B3 0oFoperative 7anks3 -ural 0orporate Agent3 etc. Que 1. What is the range of sum assured offered in the Micro Insurance Ans: ))) to )))) Que 2. Micro insurance is made specificall$ for people from........ group Ans: !o/ income Que (. ;ow much maximum 6um Assured can be taken under micro insurance for an$ ;ealth polic$ bought Ans: ()))) :4. Insurance History : )/ Indian +ife Insurance egulation was formed in )*)2

,' Insurance Act was formed in 1JE@ E' 4ife Insurance 0orporation was formed in 1JD2 *' Insurance -egulator$ and .evelopment Authorit$ >I-.A' was formed in 1JJJ and was implemented since ,000 D' Married Woman 5ropert$ Act 1@A* 2' AntiFMone$ 4aundering Act was formed in ,00, Que 1. Mr. Avas has passed the I-.A exam in ,010 and got a license but he has not worked. ;e wants to appl$ to renew his license once again3 in which $ear he can appl$ for the same Ans: 2)1( Que 2. 8o ensure that the premiums are paid out of a legitimate source of funds cash is accepted Ans: )))) Que (. Which one of the section deals with the licensing of an agent Ans: Insurance Act 1'(& @ section 02 Que 0. 8he guidelines for annual assumed growth rate are given b$ Ans: I;<A Que . Who has the authorit$ in insurance compan$ to issue=cancel the agents license Ans: <esi%nated Person

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:3. Life -ycle

< )/ 0hildhood (:<)D yrs/ ,' :oung unmarried >1@F,D $rs' E' :oung married >,2FE0 $rs' *' Married with kids >E1FED $rs' D' Married with elder children >E2F*D $rs' 2' 5reFretirement >*2FDJ $r' A' -etirement >20 $rs and above' Que 1. 8he sole focus during a client?s factFfind session was healthcare re)uirements and estate planning. Which main life stage is he most likel$ to fall into Ans: ;etirement Que 2. "or which age group is the 4ife insurance most important Ans: Pre>;etirement Que (. Bne couple want to bu$ a polic$ best suitable for their A $ears kid. Which is the best option for them Ans: #hild Plan9 Term plan9 7oney -ac1 Plan9 .!IP Que 0. 1ow a da$s life expectanc$ is increasing consistentl$ and it is above 20. Although there are man$ challenges to be faced3 how can these challenges be covered Ans: Health Insurance Policy Que . Which is the special feature of (4I5 that handles risk profile of the individual for long term Ans: #apital Appreciation

:=. Investment Priority

: )/ #igh 'riority B (Immediate investment reEuired/ ,' Medium 5riorit$ C >4ittle investment to start with' E' 4ow 5riorit$ C >8hink of investment in future' Que 1. Manish and Manisha is a married couple with one child. 8he$ want to plan for savings3 child education=marriage and their retirement and protection of income. Which should be their lowest priorit$ Ans: 7arria%e Que 2. "or his investment need3 -avi has parked funds in e)uit$. 8he

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returns from this form of investment can be categori#ed as Ans: Hi%h ;is1 Que (. +i<a$3 aged E0 $ears and married3 is the sole bread winner for his famil$. ;e is saving enough with banks. As an agent3 which need $ou prioriti#e first Ans: =inancial ,ecurity ?eed ::. Priority of Life #ycle : )/ 'rotection of self life ,' 5rotection of Income E' 5rotection of 6elf and "amil$'s health *' 5rotection of 0hild Iducation D' 5rotection of 0hild's Marriage 2' Investment to protect the -esponsibilities A' Investment for post -etirement 4ife Que 1. Manish and Manisha is a married couple with one child. 8he$ want to plan for savings3 child education=marriage and their retirement and protection of income. Which should be their lowest priorit$ Ans: 7arria%e Que 2. Mr. 6h$am is ,0 $ears old and has started earning recentl$3 he has no responsibilities over him. Which polic$ should he bu$ Ans: Term Insurance9 .!IP

:1. >inds of Insurance

: Types of Insurance 1' 4ife Insurance ,' 1onFlife Insurance a' "ire3 b' Marine3 c' Miscellaneous C I' +ehicle3 ii' 8ravel3 iii' ;ealth3 iv' Assets v' liabilities E' Miscellaneous Que 1. Insurance market is divided into Ans: !ife Insurance and ?on>life Insurance Que 2. "ollowing are the t$pes of Insurance. Ans: !ife Insurance9 ?on>!ife Insurance and

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;einsurance Que (. ............. are the clients of reinsurance. Ans: Insurance #ompany :5. ?onus : %"tra amount received with the ,um Assured while claiming the -aturity 0laim or .eath 0laim. 8here are four t$pes of bonus! 1' 6imple -evisionar$ bonus C bonus received over 6um Assure ever$ $ear ,' 0ompound 7onus C bonus received over 6um Assured and previous $ear's bonus ever$ $ear E' 8erminal 7onus C 7onus received over long term policies *' Interim 7onus F E1st March is the date of valuation Insurance sector3 returns for the same are declared in 6eptember An$ claim >.eath=Maturit$' which arises within March to 6eptember are settled with different bonus and it is Interim bonus. Que 1. Which one of the following bonuses is given b$ insurer as an incentive to the insured to for long term! Ans: Persistency -onus: terminal -onus Que 2. Interim bonus is valid till which period Ans: Till declaration of neBt bonus

:6. Loading

: %"tra amount charged over the premium by the company due to various reasons3 e.g. increase in expenses3 bonus given3 unpredictable and uncertain Maturit$ 0laim. Que 1. If the annual premium for a plan is E,000 and a fre)uenc$ loading of *K is added in a )uarterl$ premium what is the amount that needs to be paid. Ans: &(2) Que 2. If bonus is given under a plan the additional premium added is known as Ans: !oadin%

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:7. !LIP

: This are the policies which are linked with ,hare -arket. The person bears the risk for mone$ >capital appreciation or loss'. 1A+ C 1et Asset +alue In (4I5 give and take of mone$ is in the form of 1A+. 8he price used to bu$ 1A+ is called Bffer 5rice and the price at which 1A+ is sold is 7id 5rice. Que 1. A ,D $ear $oungster3 is emplo$ed in a M10 recentl$. ;is salar$ is E0000 p.m.. ;e has no responsibilities to face. Which polic$ can he bu$ Ans: .!IP 5.nit !in1ed Insurance Plans6 Que 2. 6witching is not a rite suggestion in case of (4I5 policies. As this increases Ans: Investment of ;is1

1;. Sa'ing Products

: These are the options where individual can save funds for their future. 1' 7anks C -.3 ".3 6aving Account3 etc. ,' 5ost Bffice 6avings C -.3 ".3 H+53 1603 8ime .eposit etc. E' Mutual "und C .ependant on share market *' 0orporate 7ond C It is a kind of ".3 with fixed interest rate D' 6hare C Market -isk involved 2' Metal C /old3 6ilver3 etc. A' 4ife Insurance Que 1. /autam wants to bu$ Hisan +ikas 5atra or 8ime .eposit3 where should he go Ans: Post 3ffice Que 2. Who manages Mutual "und Ans: Asset 7ana%ement #ompany 5A7#6

11. >inds of Premium : )/ 7et 'remium B There are two parts of the premium one for maturity claim and other for death claim. 0ompan$ invests this premium after deducting the charges. 8he interest received from the investment is deducted from the loading added to premium. 6uch premium is called 1et premium. ,' -isk 5remium C 5remium charged for .eath 0laim.

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E' /ross 5remium C 1et 5remium L 4oading >charges' *' 4evel 5remium C Average 5remium calculated for the complete polic$ term. Que 1. If the sum assured remains the same3 what will be impact of net premium if the age of the polic$holder increases Ans: It remains constant Que 2. 4evel 5remium is calculated based on Ans: ;is1 Premium 14. I (A@S,?I@ ?I : )/ I (A sets all the regulations related to Insurance company and agentFs eligibilit$ and code of conduct. ,' 6I7I >6ecurities and Ixchange 7oard of India' regulates the securities market in India and protects the interests of the investors E' -7I is regulator3 supervisor and monetar$ authorit$ on Indian "inancial s$stem. It also sets guidelines for banking operations Que 1. Who is a regulator3 supervisor and monetar$ authorit$ of the financial s$stem in India Ans: ;-I Que 2. As per the I-.A regulations the decisions on the proposal must to conve$ to the proposer within...... Ans: 1 days Que (. Who act as an intermediar$ b$ offering a trading platform for bu$ing and selling of shares Ans: -ombay ,toc1 4Bchan%e

13. ,ASales

: Online sale of 'olicy Que 1. Which t$pe of sale is done through internet Ans: <irect ,ale Que 2. Which of the following wa$s is easier for a person to take a saving product Ans: Internet 54>sales6

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1=. Mutual

: There are two parties involved in the Insurance contract. ,ame kind of understanding over the terms in the contract. Que 1. 7oth the parties to a contract must agree and understand the same thing and in the same sense which is called M..... Ans: #onsensus ad idem

1:. Free Loo# Period

: 'olicy holder can cancel the policy within )C days after receiving policy document if he=she wishes to. Que 1. Mr. Humar is taken one life insurance polic$ with A70 0ompan$. 7ut he is not satisfied with the polic$ benefits. What Mr. Humar can do under this situation Ans: He can send bac1 the policy document to insurance company /ith in 1 days from policy receivin% date. Que 2. ;ow man$ da$s does the "ree 4ook 5eriod last Ans: 1 days

11. Inflation

: If the price of goods G services increase G value for money fall. Que 1. Anand received post taxation DK return on his fixed deposit in a bank. If his net return is EK3 what can be the reaso Ans: Inflation

15. Healt/ Insurance

: Individual #ealth 'lan covers a single person. 1amily 1loater #ealth Insurance covers whole famil$ >wife3 children3 parents'. /roup ;ealth insurance covers group of people. .ail$ ;ospitali#ation 0ash 7enefit -ider C A certain fixed amount is paid irrespective of actual expenses >I0( expenses given'. members also. We will call these plans asM.. Ans: =amily =loater Health Insurance Plan Que 2. In what situation NWaiting 5eriodO is applicable in a health insurance Ans: Pre>4Bistin% Illness

Prepared By ;- Jyotsna Bhandare

16. Fact Finding

: Identifying the Insurance need of the client by knowing his responsibilities, assets3 marital status3 no. of children3 age3 liabilities3 etc Que 1. In the context of financial planning3 how is the difference between real needs and perceived needs best described Ans: ;eal needs are actual needs and perceived needs are based on a clientCs thou%hts and desires.

17. -/urning

: Ask the client to invest in the e"isting policy again and again or convince client to shift from existing polic$ to new polic$ for earning high commission. Que 1. If the agent recommends the client to terminate an endowment plan and take a whole life in order to earn higher commission its termed as Ans: #hurnin% Que 2. +arun3 aged3 E,3 had a Insurance cover of 103003000=F . ;e was approached b$ an advisor who made some anal$sis and told him that his Insurance need is higher than 103 003000 and suggested that he surrenders the existing polic$ and bu$s a new one. 8his is example of Ans: #hurnin%

5;. Participating Plan

: 0lient has the right to participate in the profit (!onus/ of the company. The Indowment 5lan3 Mone$ 7ack 5lan3 Whole 4ife 5lan are the participating plans. 1on participating plans donot provide this benefit >no bonus eg 8erm3 (4I5' Que 1. .uring a fact finding process the need anal$#ed were income replacement and children?s education. 7ut the customer insists on onl$ a child plan for the time being and asks the agent to give him a child plan. 8he agent should. Ans: Dive a child plan and revisit the client on a later date Que 2. Mr. 6hanth has taken an endowment polic$ of ,0 $ears. ;e has paid premium for 10 $ears and now the polic$ is in force. At this point of time can 6hanth take loan Ans: 7r. ,hanth can ta1e loan /hich should be certain percenta%e of the surrender value of the policy.

Prepared By ;- Jyotsna Bhandare

51. Indisputability #lause section 0 /

: In the first 2 years of the policy, if the insurer comes to know that some material fact has not disclosed b$ the proposer3 it can declare the polic$ to be null and void. Que 1. Which of the following falls under voidable contract Ans: 7isinterpretation Que 2. Indisputabilit$ clause can be enforced b$ the insurance compan$ during the Ans: =irst T/o years of policy

54. ole of Financial ,ervices E Insurance

: >here the Agents help the policy holder to maintain a stable life. They also help the /ovt. for smooth functioning. Que 1. Mrs. 6heela received some amount out of her husband?s death. In such a situation what will be her prime focus Ans: Investment 7ana%ement

53. Indirect -/annels

: These are the channels who sell insurance on behalf of the Insurer (Agents, 7ancassurance3 7roker3 etc. ' Que 1. If a client wants to compare between all financial products then the best person he can approach is Ans: -ro1er

5=. -ode of -onduct for a%ent

F (uties and esponsibilities of Agents as per I (A Que 1. If the license of an agent has been dis)ualified b$ a designated authorit$ in ,010 then the person can appl$ for a license in which $ear. Ans: 2)1 Que 2. If a polic$ holder bu$s a polic$ from the advisor and lodges a complaint3 it should be treated as ! Ans: ,ame for all policies sold by advisor Que (. If the advisor license has terminated then what he has to do Ans: ) hours trainin% to be attended once a%ain alon% /ith rene/al fee ;s. 2 ). Que 0. After how man$ $ears the 4icense of the agent can be renewed

Prepared By ;- Jyotsna Bhandare

Ans: ( years Que . Agent should appl$ for renewal of his license how man$ da$s before the expir$ of his license Ans: () days 5:. P/ases of Insurance History : 1irst 'hase C 5reF4iberali#ation C 1JD2 formation of 4ife Insurance 0orporation 6econd 5hase C 4iberali#ation C 1JJJ I-.A was formed. "oreign .irect Investment in Indain Insurance sector was allowed upto ,2K 8hird 5hase C ,E Insurance companies work in India till date. 7ancassurance and Micro Insurance were also introduced. Que 1. (nder current regulations what is the maximum stake that the "oreign 5artner in Insurance 0ompan$ hold Ans: 2"* 51. Financial Pure ;is1 is# @ : The economic loss is called as 1inancial isk, e.g. if a single person

is income source of famil$ and he dies then famil$ faces financial loss. In 5ure -isk there is no chance of making profit3 i.e. 1o person can earn through Insurance. Que 1. Which of the following -isk is associated with those events which are not in control of an individual and also no possibilit$ of making profit. Ans: Pure ;is1 Que 2. On =th August there was a typhoon. -r.Augustin who had insurance died in typhoon. 7ow how will the insurance company will categories this particular risk ? Ans: !nder t/e category of Pure ris#

55. Insurer collects follo/in% details throu%h Proposal form

: 7ame, Age, Address, -arital ,tatus, >eight, #eight, -edical #istory, who is proposer3 who is life assured. If the proposer is illiterate left hand thumb impression.

Prepared By ;- Jyotsna Bhandare

Que 1. When an illiterate person wants to have a polic$..... Ans: an impression of the left thumb is ta1en and third party has to attest it Que 2. 8he underwriter can get the re)uired information >name3 age3 address3 marital status3 weight3 height3 nominee3 etc.' about the proposer Ans: Proposal =orm 56. */e Agent ole : Agent is directly in contact with the proposer, due to this he knows the actual risk faced b$ proposer i.e. his habits3 life st$le3financial status. ;ence agent can submit Agent 0onfidential -eport. Agent is also called 5rimar$ (nderwriter. Que 1. What is the basic role of the Insurance Agent Ans: Primary .nder/riter 57. */e Agent in =inancial Plannin% ole : Insurance agent has information regarding various products available in market. ;e also has information regarding tax benefits which can be availed. ;e can use his knowledge of "inancial solutions and guide the Investor. Que 1. An agent was explaining to his customer the guaranteed benefits of the product. Which one of the following documents he would have used to explain the same Ans: -enefit Illustration <ocument Que 2. Amit P -ashmi are newl$ married. 7oth are working couple. 8he$ want to invest their savings of 1003000 annuall$ to build corpus to make down pa$ment for their house D $ears from now. An adviser sold than a unit link product to meet their re)uirement. 8his results in... Ans: 3pportunity of ne/ business for adviser 6;. ecurring (eposit Plan : 'lans offered by !anks where interest G principal is paid at the time of -aturity. Interest is calculated on )uarterl$ basis in compounded form. 0lient invests the amount on monthl$ basis. Que 1. In 0umulative bank deposit the interest that in normall$ compounded on what basis.

in .nder/ritin%

Prepared By ;- Jyotsna Bhandare

Ans: Quarterly Que 2. With this t$pe of deposit the bank pa$s the principal and the total interest at the end of the term. Ans: #umulative <eposit 61. ,ffect of Interest ;ates : eserve !ank of India decides the interest rates. >hen interest rates drop down people invest less and take more loan3 bu$ more shares3 that means people will invest in I)uit$ and Mutual "unds. 6imilarl$ if interest rates raise then the$ will save in saving instruments and will not take loan and shares. Que 1. Mukesh bu$s shares at lower price and sold at higher price3 the .ifference between the two prices is known as! Ans: #apital Appreciation Que 2. If -7I increases the interest rates then what will be the effect on share prices. Ans: ,hares /ill be less attractive. 64. Annuities : Annuity works in completely opposite manner as that of +ife Insurance as +ife Insurance amount is received after death of individual where as Annuit$ stops when the individual dies. It is also called as 5ension 5lan. 0lient can get the annuit$ in * modes as per their wish monthl$3 )uarterl$3 half $earl$ and $earl$. Que 1. A person wishes to earn a certain amount after retirement3 the amount which is invested $earl$ depends on... Ans: 1. Accumulation Phase9 2. Amount /hich is required9 (. Instruments used for investment Que 2. Which is the best saving option for senior citi#en Ans: Pension Plan Que (. 0ustomer has opted for a D $rs guaranteed annuit$ option. What will happen to annuit$3 if the customer survives for D $ears after the end of guarantee period Ans: Till he dies

Prepared By ;- Jyotsna Bhandare

63. -ommutation

: If a person has taken a annuity plan, before getting his annuities he receives a 1=Erd of invested amount as a commutation and remaining ,=Erd part is used to bu$ annuit$. 8he important factor of annuit$ is annuit$ lasts till death. Que 1. A lump sum withdrawal allowed as commutation in annuit$ plan is Ans: 1:(rd part of Accumulated amount

6=. Identifying -lient ?eeds

: 0ollect all the below given data from the client to identify his needs. 0lientFs assets3 responsibilities3 marital status3 no. of dependants3 income3 insurance cover3 health insurance cover3 present protection3 savings and re)uirement after retirement is the basic information which is collected. .epending on this information agent can suggest the solution. Que 1. In the context of financial planning3 how is the difference between real needs and perceived needs best described Ans: ;eal needs are actual needs and perceived needs are based on a clientCs thou%hts and desires.

6:. Suggestion by Insurance A%ent

: )/ If the client is unmarried and has no dependant members, agent can suggest (4I5 and 8ax beneficial plans. ,' If the client is unmarried and has parents dependant on him then agent can suggest him income protection plan >8erm 5lan' E' If the client is married with kid3 then the agent can suggest a 8erm plan for both husband and wife3 0hild plan for child's secure future and health plan = famil$ floater. *' If the client is in the stage of preFretirement then agent can suggest a ;ealth Insurance 5lan3 5ension 5lan3 and after retirement he can en<o$ Annuit$. Que 1. .uring a fact finding process the need anal$#ed were income replacement and children?s education. 7ut the customer insists on onl$ a child plan for the time being and asks the agent to give him a child plan. 8he agent should. Ans: Dive a child plan and revisit the client on a later date

Prepared By ;- Jyotsna Bhandare

61. Fact Finding Form : This form consist of all the information regarding the client so that agent can suggest correct solution which will satisf$ his needs. 8he details include information regarding personal information3 present insurance cover3 monthl$ income and expenses. Que 1. Which process does the agent follow while fact finding process Ans: Identify client needs9 Quantify the needs and Prioriti2e them Que 2. What is the ob<ective of "act "inding Ans: Identify client needs and %ather the information Que (: 8he fact finding process doesnot include.. Ans: As1 client to surrender previous policy to %et a ne/ policy 65. (ocuments for Insurance : )/ Identity 'roof B (riving +icense, passport, voter id, pan card, government certificate. ,' Address 5roof C .riving 4icense3 passport3 light bill3 telephone bill3 rationcard3 bank passbook3 insurance receipt. E' 1on 6tandard proof C Astrolog$3 self affidavit3 village pancha$at certificate Que 1. Mr. -am 5rakash sta$s in avillage3 and he donot have an$ age proof to be handed over for insurance polic$. Insuarance compan$ had asked him to attach a /ram 5ancha$at 0ertificate as a proof for age. What will be this certificate called Ans: The #ertificate attested by ,urpanch /ill be considered as ?on ,tandard A%e proof but he /ill %et the insurance policy. 66. esponsibilities of : Identify the prospect insurance client, identify client needs, acEuire Insurance a%ent knowledge about various saving products3 provide the solution to the client as per his needs. 0heck whether the information filled in proposal form is accurate. 0ollect all the re)uired documentation e.g. Age proof3 Identit$ card3 Address proof3 Medical report3 the documents re)uired for underwriting. Agent should disclose the commission amount onl$ if the client asks for the same. If the client denies to bu$ a polic$ then he should ask the reason for re<ection.

Prepared By ;- Jyotsna Bhandare

Que 1. If the client does not wish to proceed with the recommendations right at the moment the agent should Ans: ,hould as1 for the reason for not %oin% /ith the recommendation 67. Fraudulent -laims : If the client buys a insurance policy solely to make economic profit by hiding the necessar$ facts and if the claim arises3 then this claim is called "raudulent 0laim. 1ormall$ claims are of two t$pes! 1. Maturit$ 0laim3 ,. .eath 0laim .eath certificate and claimant's statement are the documents re)uired during .eath 0laims. 8he claim amount will be settled onl$ if the polic$ is in force. If a person is missing for last A $ears then he is considered dead and the death claim is processed. Que 1. A person is presumed to be dead if he is missing or not heard of from for how man$ da$s Ans: $ years Que 2. What is the maximum 8ime in which 8he insurer should settle a claim when all documents are submitted Ans: () days Que (. Mr. Humar?s wife is suffering from blood cancer. .octors lost their hope on her live. Mr. Humar would like to take 4ife Insurance polic$ on wife?s name in order to get monitor$ benefit. Insurance compan$ re<ects this proposal on the grounds ofMM. Ans: !e%ality of obGect or purpose Que 0. Aman has taken a term plan for ,0 $ears. In the Erd $ear he suffered financial crisis due to which he was unable to pa$ premium within grace period and died after 1 month. 8he nominee files a claim and is re<ected because Ans: Policy /as not in force Que . -akesh purchased a life insurance polic$. While writing a proposal form he hide that he practices mountaineering. 6adl$ he died in an accident while climbing Mount Iverest. 8he insurers re<ected the claim. What is the reason for re<ection Ans: ?on > disclosure

Prepared By ;- Jyotsna Bhandare

7;. Insurance Act 1736

: This act has provisions regarding B agent commission, renewal, investment of the premium3 appointment of the emplo$ees3 polic$ transfer3 assignment3 nomination. -egulations for agent3 their commission3 protection of polic$ holder's interests. An agent giving concession in his commission is illegal according to section *1>1'. An$ foreigner can become a agent and earn commission. Que 1. Issuance of a license to a person has been stipulated in.........Act Ans: Insurance Act 1'(& @ section 02

71. Anti Money !aunderin% 2))2

: This is the process in which the illegal money earned is invested in such a way that it is converted to legal earning3 e.g. mone$ invested in 4ife Insurance is easil$ converted into legal income. 8o curb this process of Mone$ 4aundering3 /overnment has passed this Act3 no cash pa$ment will be accepted above -s.D0000=F3 all the amounts above D0000=F will be accepted through che)ue and drafts along with 5A1 card. 8here are three steps of Mone$ 4aundering C 1. 5lacement ,. 4a$ering E. Integration Que 1. ;ow much maximum cash pa$ment is accepted in the Insurance polic$ Que 2. According to AM4 what is the maximum limit for cash premium pa$ment Ans: )))) Que (. Which is the second stage in converting illegal income to legal income Ans: !ayerin% Que 0. What is the second stage in Mone$ laundering Ans: !ayerin% Que . 6tate the no. of stages involved in Mone$ laundering Ans: Three sta%es @ Placement9 !ayerin%9 Inte%ration Que ". When was the AntiFMone$ 4aundering Act passed for Insurance sector Ans: 2))"

Prepared By ;- Jyotsna Bhandare

'2. >.B.-.@-0PA

: Hnow Iour 0ustomer B This means that the insurance company should know the information about their customer. 0ompan$ should ask for the re)uired documents. 0B5A C 0onsumer 5rotection Act C 0ustomer can approach various forums if he has some disputes with the compan$. 8he disputes are heard in following manner .istrict level C ,0 4acs3 6tate levelC 1 0r3 1ational level C 1 0r and above. Que 1. When was the 0onsumer 5rotection Act passed Ans: 1'&" Que 2. 8he Authorit$ of 0B5A is limited to what amount at the district level. Ans: 2)9))9))):>

'(. 3ualification of : If the agent resides in a rural area (population B min C:::/ he should be ):th an Insurance A%ent pass3 D0 hrs training and clearing the exam. -enew license after ever$ E $ears b$ pa$ing -s. ,D0=F. If the agent resides in a urban area >population C above D000' he should be 1,th pass3 D0 hrs training and clearing the exam. -enew license after ever$ E $ears b$ pa$ing -s. ,D0=F. If the agent has composite license he should undergo AD hrs training. 8he important criteria is he should be sound mind3 no criminal background3 and a mature person. Que 1. 7asic )ualifications of agent Ans: Draduate and sound mind Que 2. 7asing on which criteria the )ualification of Agent is determined Ans: <omicile status Que (. After undertaking financial planning exercise3 the prospective client said that he does not have funds for investments. 8o resolve this )uer$3 which skill of an agent would be tested Ans: Handlin% 3bGection Que 0. If the agent has to undergo training for more than D0 hours3 what is it called Ans: #omposite A%ency : #omposite !icense

Prepared By ;- Jyotsna Bhandare

'0. Protection of Interest ;e%ulation 2))2

: 'olicy holder can appeal to Ombudsman for grievance redressal. I (A has phone call or mail their complaint. 8he toll free no. is 1DD,DD. I-.A will give the decision in 1D da$s. Insurance compan$ will give the decision in 10 da$s. Bmbudsman will give the decision in J0 da$s. Que 1. As per -egulation for protection of 5olic$holder?s interest ,00, >I-.A'3 Which insurer will have a grievance redressal 6$stem Ans: All Insurers

Policy HolderHs also started a redressal call center >I/00'3 where a polic$ holder can give a

' . ,.*.F.S. C.oldD : !uy 4old through internet. #ere gram of a 4old is treated as units. #ence if a person has 100 I8" units then he has D0 F 100 grams gold. 1 unit I8" Q 0.D gms or 100 gms gold. Que 1. What is the advantage of converting ph$sical gold assets to gold I8"s. Ans: !iquidity Que 2. If we hold 100 units in gold I8"3 It means that how much grams we have in ph$sical Ans: ) %ms or 1)) %ms '". +/ole Life Plan : In this policy premium is paid for the limited term but the policy continues for Whole 4ife. Que 1. If a client has a suret$ that he would survive till 100 $ears. Which plan will the Agent suggest him Ans: 8hole !ife Plan 75. eturn of Premium : In this policy if the policy holder survives for entire term then the paid premiums would be returned. Que 1. 6uresh has ade)uate reserve capital with him and he wishes to protect his income3 moreover he feels that if he does not die then he would need the amount. What t$pe of plan should he opt for Ans: ;eturn of the Premium Que 2. -akesh wants to bu$ a polic$ primaril$ for -isk 0over but at the end of the term he wants to get at least some return. (nder which polic$ he will get

Prepared By ;- Jyotsna Bhandare

these benefits Ans: ;3P Plan

76. Money bac# Plan : In this policy the sum assured is returned to policy holder in regular intervals, i.e. ,DK of sum assured at each interval. Que 1. ;arsh?s polic$ matured3 however he was paid onl$ ,DK of the sum insured in spite of all his premiums been paid on time. 8his indicates that his polic$ is a Ans: 7oney -ac1 Plan Que 2. A customer gets periodic benefits without an$ claim and then when he dies during the term of the polic$3 his nominees gets the sum insured. What t$pe of polic$ is this Ans: 7oney -ac1 Plan 77. )umerical Questions : )/ If a person wants to avail ta" benefit, then he should have sum assured C times of premium he is pa$ing. e.g. if he pa$s 20000=F premium he should have E lacs sum assured. ,' In 4ife Insurance there is option of DK increase ever$ $ear. E' 8he maximum IMI would *0K of the income3 i.e. if a person's monthl$ income is @030003 then the IMI amount will be E,000=F 1)). (eferred Annuity : (eferred annuity is paying a specific premium for certain period and after a certain period start the pension. Que 1. Mr. -amakant is ED $ears old. ;e has bought retirement plan for ,0 $ears. 8his t$pe of pension plan is known as.................. Ans: <eferred Annuity

1)1. Immediate Annuity

: To pay a lump sum amount to the company at one time and start getting pension immediatel$. Que 1. A person is going to retire in E months3 he wants the returns in the form of pension3 which kind of polic$ he should bu$ Ans: Immediate Annuity

Prepared By ;- Jyotsna Bhandare

1)2. .race Period

: It is the e"tra time given by the insurance company after the due date of renewal premium. E0 da$s grace period for $earl$=half $earl$=)uarterl$ premium mode and 1D da$s grace period for monthl$ premium mode. Que 1. What is the extra time given to pa$ the due premium called Ans: Drace Period

1)(. Lapse

: The benefits of the policy ceases if the premium is not paid even after grace period is over. Que 1. Mr. -adhesh$am had bought a polic$ in ,010. .ue to some financial crisis he couldnot pa$ the premium in ,01,. /race period for the premium is also over. What will happen to the polic$ Ans: 5olic$ will lapse. If -adhesh$am dies within the polic$ term then his nominee will not receive an$ polic$ benefit. Que 2. If a person bu$s a Indowment plan with the 0I rider. ;e <ust pa$s the first premium and unable to pa$ further premium. 6uddenl$ he came to know that he has cancer. 1ow he wants to revive his polic$3 what conditions will compan$ appl$ Ans: #ompany /ill conduct medical eBamination and /ill accept the premium /ith late char%es9 and the policy /ill be revived. -ut durin% medical eBamination company comes to 1no/ that he has cancer9 then his policy /ill be reGected. If the client donot disclose the detection of cancer and company revives the policy /ithout eBamination9 then the principle of .tmost Dood =aith applies. After revival if the person dies due to cancer and company comes to 1no/ that the detection of cancer /as hidden durin% revival then the claim /ill be reGected. As company /ill treat this as fraud.

1)0. */ird Party Administrator

: These work for the hospital networks. These are the factor of the #ospital Insurance Market. 85A helps the insured to get cashless entr$ into a tie up hospital and after discharge cashless bill settlement is also done

Prepared By ;- Jyotsna Bhandare

1) . Loc# in Period : In most of the saving instrument there is a certain lock in period, during which investor cannot withdraw the funds. 1' 7ank ". C D $ears C for tax saving ,' I)uit$ 4inked 6aving 6cheme C E $ears C for tax saving E' (4I5 C D $ears C for D $ears *' 8raditional 4ife Insurance C E $ears Que 1. (nder the unit linked saving scheme how man$ $ears is the lock in period Ans: ( years 1)". Fle8ibility : This is the option used by the investors to switch from one investment option to other investment option3 or it is the option for using the funds accumulate3 or it is option for withdrawing the polic$. Que 1. Mr. +ishnu got a <ob recentl$3 he can?t afford to pa$ to pa$ the higher premium as of now but in future once he settles down with his <ob he can pa$ higher premium. Which one will be the best plan Ans: #onvertible Term Plan Que 2. What is purpose of investing mone$ in debt mutual fund Ans: !iquidity Que (. If a person want to maintain emergenc$ funds the best place is a bank or Ans: <ebt 7utual =und Que 0. "lexibilit$ like partial withdrawal and taking premium holida$s is possible with.... Ans: .nit !in1ed Insurance Plan 1)$. ?ond : !onds are similar to the !ank 1(, where the investor gets guaranteed interest on the investment at certain interval. e.g. /overnment 6ecurities 7onds3 0orporate 7onds3 8reasur$ 7ills3 etc. Que 1. 5anka< want to save tax over and above the deduction allowed under section @00 of the income tax act 1J213 which allow deduction from taxable income

Prepared By ;- Jyotsna Bhandare

Ans: Infrastructure -onds Que 2. 8he 0entral 7ank has recentl$ announced the decrease in interest rates. 8he prices of bonds are Ans: !i1ely to decrease 1)&. S/ares : ,tock %"change cannot directly sale the shares. The shares can be bought and sold through brokers. 8here are two main exchanges in India ! 1. 76I C 7omba$ 6tock Ixchange3 ,. 16I C 1ational 6tock Ixchange Investment in e)uit$ share gives the returns in E wa$s! 1' .ividend C 8he part of profit gained b$ the compan$ is distributed to the share holder at regular intervals in the form of dividend ,' 7onus 6hare C When there is accumulation of a huge profit with the compan$ then the bonus share is declared. 8his pro<ects the excellent financial status of compan$ E' 0apital Appreciation C If a share is bought at a low price and sold at a high price then the difference between two prices is called capital appreciation. Que 1. Mr. -amprakash has bought 100 shares of -eliance 0ompan$ for -s. 100=F each. In next two months the share price raised b$ -s. ,00=F. What will be this increase price be stated as Ans: #apital Appreciation Que 2. Amit has <ust got a <ob in M10. ;e bu$s 100 shares of a certain compan$ for investment purpose. After sometime he en)uires about the shares and he came to know that there is rise in his no. of shares. i.e. he owns 1,0 shares instead of 100 shares which he had actuall$ bought. What is this increase in no. of share called Ans: The company /hose shares Amit had bou%ht have %iven the -onus ,hare to the share holder in the form of 1 share for every shares. Que (. Amit had bought ,00 shares of a 9:& compan$. After , months he receives a che)ue with certain amount3 this che)ue is given b$ the same compan$ whose shares he had bought. What can this amount be called Ans: The IJK company has %iven Amit a dividend over shares throu%h

Prepared By ;- Jyotsna Bhandare

the cheque. 1)'. Asset Management #ompany : A-0 invests in shares, bonds, financial market, etc. A-0 appoints a experienced personnel to manage all the funds on behalf of the investors. Que 1. Who manages the Mutual "und 5lans Ans: Asset 7ana%ement #ompany 11). Medical : In medical underwriting the underwriter asks the client to undergo a medical examination so that underwriter would come to know about an$ disease or disorder the client might be facing. Bn the basis of reports of the medical examination and the facts mentioned in proposal underwriter makes the valuation of the health of client. Que 2. If a person bu$s a Indowment plan with the 0I rider. ;e <ust pa$s the first premium and unable to pa$ further premium. 6uddenl$ he came to know that he has cancer. 1ow he wants to revive his polic$3 what conditions will compan$ appl$ Ans: #ompany /ill conduct medical eBamination and /ill accept the premium /ith late char%es9 and the policy /ill be revived. -ut durin% medical eBamination company comes to 1no/ that he has cancer9 then his policy /ill be reGected. If the client donot disclose the detection of cancer and company revives the policy /ithout eBamination9 then the principle of .tmost Dood =aith applies. After revival if the person dies due to cancer and company comes to 1no/ that the detection of cancer /as hidden durin% revival then the claim /ill be reGected. As company /ill treat this as fraud. .nder/ritin% 111. )onAMedical .nder/ritin% : In this type of underwriting there is no need for medical e"amination. !ut due to nonFmedical underwriting there is a possibilit$ of reverse selection. Insurance compan$ takes following precautions! 1' 7$ keeping a control over selection ,' 7$ putting limits over sum assured3 and keeping control over maximum entr$ age

Prepared By ;- Jyotsna Bhandare

E' 7$ keeping control over maximum polic$ term.

114. Persistency

: 'ersistency is related with continuing loyally with the policy throughout the term3 avoid re<ection3 lapsation and surrender. 5ersistenc$ Q no. of policies inforce b$ end of the $ear = total no. of policies inforce at the inception of the $ear Que 1. What is the loss faced b$ the insurer if the persistenc$ is not achieved Ans: ;eduction in Profit

113. Insurance Act 1736 ,ec 0)516

: Ander this section only a person who has legal license of I (A can sell the insurance policies. An$ other person other than this earning through insurance sell is considered illegal.

11=. Insurance Act 1736 ,ec 01516

: Ander this section a licensed agent offering part of his commission to the client either while doing new polic$ or during renewal of the polic$ will be considered illegal. If an$ agent is found doing this kind of behavior his license will be canceled

11:. Insurance Act 1736 ,ec 02

: This section states about eligibility for agent and various criteria regarding registration3 re<ection3 license renewal3 to clear the I-.A exam3 to attend the training for giving exam. Que 1. Which section of the Insurance Act states regarding providing license to the agent Ans: Insurance Act 1'(& @ ,ection 02

111. Insurance Act 1736 ,ec 00

: This section states regarding the renewal commission of the agent. 0ompany has no right to den$ giving the renewal commission to the agent. If the agent dies then the renewal commission is given to the nominee till he is alive >exception for the same is fraud cases'

115. Life Insurance Act 1'12

: To regulate the Insurance !usiness, Insurance Act was passed in )*)2. In India first 4ife Insurance compan$ Briental 4ife started in1@1@.

Prepared By ;- Jyotsna Bhandare

116. Life Insurance #orporation Act 1' "

: This act was passed on )* 3une J*C=, because of which +ife Insurance -egulations were formed on 1 6eptember 1JD2. In 1JD23 ,*D companies were merged >1D* Indian companies3 12 "oreign companies and AD "uture "und 6ocieties ' and 4ife Insurance 0ompan$ was formed.

117. Foreign ,8c/ange : Indians cannot buy any +ife Insurance policies from any +ife Insurance or 7ana%ement 5Insurance6 ;e%ulation 2))) 7on <4ife Insurance 0ompan$ outside India. (nder "oreign Ixchange Management Amendment ,00, there is provision made for 6pecial Iconomic &one where in restriction of foreign exchange act ,000 wont be applicable for the premiums paid for /eneral Insurance. e.g. when a Indian Insurer applies for reinsurance from foreign reinsurer. 12). Institute of : Institute of actuaries of India got the membership of international Insurance 1' .evelopment of Insurance in India ,' 8o present the platform for the members of these business to share their thoughts E' 8o present lectures and do research over related topics. *' 8o form s$llabus for clearing examination to become agent3 form Insurance Institute of India and 7roker's Brgani#ation. Que 1. In life insurance business if a person is working in calculating premium rates of insurance products3 then he is mostl$ likel$ a member of Ans: Institute of Actuaries of India 121. edressal of Public Drievance ;ule 1''& : (ue to this rule the Ombudsman office was formed under the Insurance 0ouncil. 8his offices have one representative of each compan$. 8he representative must be should be 0hairman or Bfficial "ew ob<ectives of this rule are F 1' Appointment of Bmbudsman and its offices ,' -egulations for Bmbudsman Bffices and provisions made for rules to be followed b$ members of this office

Actuaries of India Brgani#ation >established in 1J**' in 1JAJ. -eason of formation of I.A.I. F

Prepared By ;- Jyotsna Bhandare

E' -ights of Bmbudsman *' 5rocesses to register complaints and resolving it. 122. *ariff Ad'isory #ommittee : T. A. 0 was formed under Insurance Act )*2; section =K (A/. It states about the regulations for the /eneral Insurance such as3 the terms and conditions applied b$ insurer3 regulations for profit and rates and to take decisions at faster rate. Que 1. Who controls and regulate the rates3 advantages3 terms and conditions that ma$ be offered b$ insurers in the respect of general insurance business. Ans: Tariff Advisory #ommittee 12(. )ational Insurance : 7.I.A. was established in )*;:, The main ob$ective of 7.I.A. is design, Academy 5?.I.A.6 implement and operate insurance training architecture. It includes stud$3 research3 giving advise3 publication and distribution through involvement of officer3 members and staff. 120. -/artered Insurance Institute 5#II6 : 0II was formed in AH by oyal 0harter in)*)2, with over *C::: members and 1D0 countries and is the largest Insurance and financial services professional bod$ in the world. 8his institute involves responsibilities to be followed b$ staff of financial services and agents of insurance to improve the business and professionalism. 12 . Insurance ?ro#ers : I.!.A.I is I (A recogni&ed ape" body for all insurance brokers in India. Association of India Insurance broker have been introduced in to the Indian market b$ I-.A as professional who represent and service the interest of insurance bu$er. Insurance 7roker represents insurance bu$er and not insurance compan$3 though broker is remunerated b$ insurance compan$. 12". -onsumer Affairs <epartment : The main ob$ective of 0onsumer Affair (epartment are to give a special focus to and oversee the compliance b$ insurer of I-.A regulations for protection of 5olic$holders' interests and empower consumer b$ educating them about details of procedure and mechanisms that are available for redressing grievances. 8he I-.A have also issued guidelines

Prepared By ;- Jyotsna Bhandare

for grievance redressal which la$ down specific timeframe and turn around time >8A8' for response3 resolution3 etc. 12$. Integrated Drievance 7ana%ement ,ystem : I.4.-.,. >ill create a gateway for policyholder to register complaint with Insurance companies first3 and if needed escalate to /rievance redressal cell. It works in the interest of polic$holder so that an$ unethical behavior donot take place with the polic$holder. Que 1. As per I-.A regulations I/M6 should be mandator$ set up b$ Ans: -y all Insurer 12&. .rie'ance ;edressal 3fficer : If the policy holder is dis<satisfied with the solution.reply provided by the customer care cell3 or if the customer care cell fails to resolve the grievances in 8A8 the customer can escalate the complaint to next level3 in such cases cutomer can approach /rievance -edressal Bfficer. If a customer wants to cancel the polic$ and Insurer doesnot succeed in processing it. If the person has opted for high 6um assured b$ pa$ing high premium3 but compan$ is unable to produce endorsement. In such cases compan$ has to give decision in 10 da$s. 12'. Life Insurance #ouncil : +ife Insurance 0ouncil was constituted in section =K Aof Insurance Act )*2;. It functions through executive and subFcommittees and include all 4ife insurance companies in India. It develops and coordinates all discussions on behalf of compan$ with the /overnment. 8he ob<ectives of 4I council are F 1' Maintain high standards of ethics and governance ,' 0reate positive image of compan$ and enhance the consumer satisfaction. E'Inhance role and awareness regarding life Insurance. 1(). e'i'al : evive is the process where the lapse policy can be started again. -a"imum limit for renewal is D $ears.

Prepared By ;- Jyotsna Bhandare

Prepared By ;- Jyotsna Bhandare