IRDA IC 33 NOTES

1. Proposer The applicant, who wants to buy insurance policy.

2. Proposal form It is an application form to buy insurance policy.
3. Policy holder Who has received FPR/Bond.
4. Insurer Who provides risk cover/insurance.
5. Agent Legal representative of the insurer and mediator
between the policy holder and company. He earns
commission from company.
6. Premium The installment to buy policy.
7. Sum Insured The amount of risk coverage.
8. Maturity The amount payable on the completion of premium
paying term/term of policy.
9. Rider The addition benefit in the policy like death accidental
and critical illness.
10. Under writing It is a process to select and reject the proposal.
11. Under Writer An officer of company who select and reject the
proposal form.
12. Risk & Perils Risk is a menitory loss caused by death accident illness
and perils are natural calamites.
13. Medical Referee Not an Employee of the company gives medical report
and desigion if required in the proposal.
14. IRDA Insurance regulatory development authority 1999.
15. Grace Period It is a facility available with the payment of premium,
30 days for yearly, half yearly, Quartly and 15 days for
monthly installment.
16. Lapse When installment of the policy not paid on the due date
and before the end of grace period.
17. Revival When policy started again at different terms and
condition ( it is applicable when premium is not paid
within 6 months from due date.)
18. Nominee The legal heir who gates benefit of the death claim of
policy holder.
19. Trusty Only Children, wife can be nominee by special law.

20. Assignment When policy’s right transferred to anyone, but assignee

can not make fresh nomination.
21. Endorsement It is a part of policy document through which name,
address, mode anything can be changed.
22. Contract It is a contract by law between insurer and policy
holder, the person aged 18 years and above can sign the
contract.
23. Lien It is a clause which is emposed on a policy when the
risk on individual make come down. In this clause sum
assured is reduced for certain years, it is an alternative
to ask higher premium.
24. Utmost Good When proposal form is filled, every material
faith information must be mentioned nothing should be kept
hidden, the breech of Utmost good faith can nullify the
policy.
25. Insurable Exists in the policy when some one text policy and
Interest make nomination for those who are his/her dependent.
26. ULIP It is an unit linked plan and based on the result of share
market growth rate can be shown between 6 to 10
percent.
27. NAV Net Asset Value.
28. Surrender When policy is encashed after 3 years.
29. Ombudsman It is a court where policy holder can file case against
insurer but the case should be up to 20 Laks S.A. and
gates decision in 90 days and insurer has to function on
the award within 15 days.
30. Vesting date Used in child plan, when child becomes major.
31 Term plan It is an income protector plan, S.A. is paid on the death
of policy holder, no maturity, no surrender value.
32. Pure Policy holder has to be alive till the term of policy to
Endowment gate claim otherwise nothing.
Plan
33. Risk Retention No body can retain risk.
34 Risk transfer Transfer of Risk to insurer.
35 Income Tax at 80 (c)- Relaxation and taxable income upto one laks. 80
1961 (D), 15000/- for health policy.
36. IRDA/SEBI/RBI IRDA Regulates insurance sector makes law for agent.
SEBI- Sebi regulates equity markets and protects the
benefit of interest. RBI- RBI regulates the banking
sector.
37. Physical hazards External risk to human life, physical structure, height,
weight, habits and occupation.
38. Moral hazards Carelessness to life, character, criminal activities,
dishonesty or bankrupt.
39. Micro insurance Minimum S.A. 5000/-, Maximum 50000/-, for low
income group, weekly premium collection.
40. E-Sales Online Selling of policy.
41. Human life Maximum S.A. on human life is 20 times of annual
value income.
42. History of Insurance act came inforce in 1938, LIC act in 1956,
insurance. IRDA was established 1999, and money laundering act
passed in 2002.
43. Saving products In post office, Life insurance, Shares, Bonds, Mutual
fund, Gold, Silver.
44. Pooling of risk Accumulation of same risk of same age.
45. Mutual Contracts are done between two sides and both of them
to understand and same idea or consensus.
46. Paid up value When premium is paid for atleast 3 years the policy
starts getting paid up value.
47. Free look If a policy holder is not satisfied with the policy, he can
period/Cooling return the policy to insurer within 15 days of the date of
of period commencement of policy and gates premium with some
deduction.
48. Inflation When the price of goods grows up and rupee’s value
gets down.
49. Health insurance a. Single health policy covers one person.
b. Family health plan covers all family members.
c. Group health plan covers a group.
d. Daily hospitalization based on the expense you
choose in the policy and paid accordingly.
50 Fact finding To know the needs of prospects and advise accordingly,
first to know the needs, quantify them and prioritize
them based on the resources available for investment.
51. Investment First to create emergency/contingency fund then
priority insurance and after death other saving should be
planned
52. Life Cycle Childhood  unmarried boy married man man
with child  man with young child  pre retirement
age post retirement.
53. Insurance Risk coverage on own life, protection of future income,
priority health plan for own and family, for child education
marriage of children for housing & car Loan and last
but not least retirement policy.
54. Churning It is a bad habit to surrender the existing policy to
propose to purchase fresh policy agents do such kind of
activity for earning first year commission.
55 Participating Plan works with the profit of the company like
plan endowment policy, money back policy, whole life plan.
Terms insurance plan is non participating plan.
56. Division of
insurance.
57. Indisputility If the policy has runned at least 2 years the company is
Clause, Section bond to pay the claim and can not repudiate on the
45 of insurance ground of wrong statement.
act 1938
58. Insurance Term plans Endowment, Whole Life, pension, child
Product plan, ULIP.
59. Roll of Financial It benefits individual, society to uplift their financial
Services and position. Insurance provide financial coverage to
insurance society.
60 Code of conduct IRDA has enacted code of conduct for agents to adopt
for Agent to ethical process in selling policy.
61. Phases of First Phase – before liberalization
Insurance Second phase – liberalization when IRDA was found in
History 1999 to regulate insurance industry and allow the
private insurance company with 26% foreign direct
investment. (FDI)
62. Financial The Risk which can cause financial loss like a man is
Risk/Pure Risk earning but dies there is loss of finance, where as pure
risk a risk which can not benefit anyone. It only
compensates loss.
63 Retirement After retirement source of income gates reduced. So
that people should arrange money for this phase. They
can take pension plans etc.
64. Information in Insurer can gate complete information of a proposer
proposal form like name, address, height, medical history, family
history, nominee.
65 FPR/RPR When proposal is accepted and first installment is paid,
 office issues FPR (first premium receipt) since the date
of issue of FPR risk coverage starts. This is the first
evidence of risk coverage. RPR- when renewal
premium is paid renewal premium receipt is issued.
66 Loan & Fore Almost conventional policy provides loans, its depends
Closure on surrender value of policy.
FOR CLOSURE – When loan was taken on a policy
but loan and interest were not deposited and total
amount came to equal value of surrender value of the
policy. Then the policy forclosed.
67. Loading Insurer has many expenses and it has only source of
income is premium. So, when expenses added in
premium is called loading.
68 Terminal Bonus Terminal Bonus is paid on the maturity but declared
& Interim Bonus every year. Interim bonus is declared on 31 st March,
Bonus is paid in only participating policy.
69. Role of Agent in Agents know the proposer very well they know their
underwriting habits, life style, financial condition. Agent also give
confidential report to insurer.
70 Role of Agent in Agent should have sound knowledge about the financial
Financial product so that they came suggest need based plan to
Planning customer.
71. Recurring Total amount including investment and interest at the
deposit plan end of term is payable. Interest is paid quarterly and
customer deposit a fixed amount every month.
72. Effect of interest Interest rate is decided by RBI. If interest rate of Bank
rate goes up, share market becomes less attractive. When
interest rate comes down, share market goes up
becomes demanding.
73. Annuities Annuities is different to life insurance, is annuities
payment is stopped when annuitant dies where as in life
insurance payment is maid after death.
74. Commutation It is a provision in annuities plan to get a lump sum
amount before getting pension. one can commuit one
third of the pension fund before start of pension
payment.
75. Identifying Agents should collect all kind of information including
client needs financial needs and suggest the product accordingly.
76. Suggestion by a. Unmarried client with no dependent- ULIP Plan
agents and tax saving scheme.
b. Unmarried with dependents – income protector
plans like term insurance and life insurance on
own life.
c. Married with Children- terms plans for both child
plans, family health scheme.
d. Pre Retirement age – health plan and Annuities
plan.
77 Fact finding Agents collect all information in a form like
sheet physical structure, financial position of a proposer.
78 Responsibility Agent should suggest plan to their clients according
of Agent to their needs and capacity of payment of premium
agent should collect all required paper like age
proof, medical report, address proof, photo. They
should be information all charges and condition of
plan. Agent is asked about commission it should be
disclosed. If a client reject the proposal then agent
should asked the reason. If client is unable to take
new plan, agent should asked for reference like
friends name, relative names etc.
79. Fraudulent When any vital information is kept hidden the claim
claims is fraudulent.
80 Claims Three types of Claims
a. Maturity claims- When paid at the end of the
policy.
b. Survival claim benefits – It is paid in money back
policy at the regular interval.
c. Death Claim- when policy holder dies within the
terms in force policy. Insurer asks for death
certificate for claim payment. Death claim is of
two types – normal claims – when claims is maid
after three years of date of commencement of
policy. In this case no enquiry required. Early
claim – when claim comes within 3 years of
policy (DOC) and death of revival. The enquiry
is required it may take six month or 180 days. In
case of disappearance of policy holder 7 years
term is treated.
81. Insurance Act Registration of Company, decide the ways of
1938 investment license to agent.
82. AML 2002 Cash amount can be paid upto 15000/- payment of
amount more than 50000/- requires Pan
card/cheque/draft.
83. KYC/COPA KYC- (know your customer) is required to know the
/MWPACT customer.
COPA- (Customer protection act) if customer is
unsatisfied with the service of the company, he can
go to a special court. The district level court can take
the case upto 20 laks S.A. where as state court upto
1 crore.
MWPACT- It is special act by which policy holder
can make only wife and children as beneficiary. Any
kind of payment of policy would be made to wife
and child.
84. Qualification for For rural areas- 10th pass. For urban areas – 12th
and insurance pass. The population of rural areas must be less than
agent 5000, 50 hours IRDA Training and pass in PRT. In
every three years draft of Rs.250/- is required to
renew the license. For composite agency – 75 hours
training required.
85 Protection of IRDA has form a customer affair call centers, customer
Policy holders can call on 155255 (Toll free) and mail on email-
interest 2002 complaints@irda.gov.in . IRDA replies in 15 days.

86 ETF GOLD Purchase of Gold through Internet, in this system 1 unit

means ½ grams or 1 grams. If some one has 100 units it
means he has 50 grams or 100 grams.
87. Whole life plan Premium payment is limited to certain period and risk
cover for whole life.
88. Joint life plan This plan is especially for wife husband and two
partners. No nomination required.
89. Return of If the policy holders does not die within the terms of
premium plan policy he gets total premium refund at the end.
90 Endowment plan It is a participating plan in which policy holder gets
maturity and if he dies his nominee gets death claim.
91. Money back Certain percentage of sum assured is paid at a interval
plan within the policy.
92 Term plan S.A. is paid only on death, no maturity payment.
93. Numerical For tax benefit S.A. must be 5 times of annual
premium. In other words premium most be 20% or less
of S.A. example for 60000/- annual premium S.A. must
be 3 Laks.
Maximum EMI for any one is 40% of salary. i.e.
Mahesh’s Salary is 18000/- must not be more than
32000/- for paid up 273333.
Premium should be charged maximum 30% of
premium for riders.