Welcome to Webinar on Insurance

1. Welcome to Webinar on Insurance

2. Financial Services • Banking • Shares,Debentures,Bonds • Mutual Funds • Commodities • Derivatives • Insurance

3. Difference between Insurance and other Financial Services • Protection against risk or hazard • Securing an amount or estate for your family • Tax concessions • Social Security • Provide funds for the development of nation

4. Insurance is a contract whereby a certain sum of money is paid on the happening of a contingent event • It is sharing of financial losses of a few out of the contribution of many who are exposed to the same loss • It is spreading the loss of an individual over group of individuals

5. Need for Insurance • Protection of property • Coverage against liability • Savings with tax benefits • Capital formation for the country • Life is full of uncertain events • Creation of Employment

6. What is Insurance • Insurance is a contract whereby the insurer agrees to pay the insured a certain sum of money on the happening of a contingent event • It is a method of sharing the financial losses of a few from a common fund formed out of many • It is a contract of utmost good faith

7. Types of Insurance • Life Insurance • Health Insurance • Pension • Group Insurance

8. Types of Insurance • Non Life Insurance • Marine Insurance • Fire Insurance • Auto Insurance • Others

9. (Types of Insurance) • Marine Insurance • Location Risks • Handling Risks • Operational Risks • Risk of Human Element • Act of God

10. (Types of Insurance) • Fire Insurance • Actual Ignition • Damage of the property which was not in fire • Under accidental circumstances

11. (Types of Insurance) • Auto Insurance • Unlimited liability towards third party injury • Unlimited liability towards the passengers of vehicle • Damage to the vehicle and its accessories • Employees using the vehicle of the owner under Workmen compensation

12. Life Insurance Principles • Insurable Interest • Utmost Good faith • Moral Hazard • Warranty • Indemnity • Subrogation

13. Concepts of Life Insurance • Insurer • Insured • Proposal • Policy • Premium • Evidence (Policy Document)

14. Concepts of Life Insurance • Sum Assured • Proximate Loss • Human Life Value • Annuity • Present value

15. Concepts of Life Insurance • Calculation of Human Life Value • A person aged 30 has Annual salary 2lacs • His personal expenses annually is 1lac • He give for the family 1lac • His earning span is 30 years, so the family requires 30lacs(this is over a period of 30years) • Human Life value= 100000*1-(1/(1+i)^30)/i • I=present bank rate of interest so at 8% it will be 1lac*11.2578=1125780

16. Underwriting • First Line Underwriter • Proposal - Name and Address - Age - Object of Insurance - Family History - Personal History - Declaration and Witness

17. Underwriting • Non Medical General -Basic Education, cap on limits of SA • Non Medical Special - Employees of reputed companies • Professionals • Medical & Special Reports • Financial Underwriting • Acceptance & Communication

18. Nomination • Appointee • Policy Document • Clauses • Green Channel or Across the Counter • Cooling off • Minor & Women Lives

19. Claims • What is a Claim • Types of Claim - Survival Benefit - Maturity Claim - Death Claim - Annuity Claim - Disability Claim

20. Claim • Payment of Full Sum Assured • Payment of Sum Assured in Installments • Payment of Double Sum Assured • Payment of partial Sum Assured • Payment of Annuity for a specified period • Payment of Annuity for a specified period and capital on the happening of contingent event

21. Claims • Claimant Form • Evidence of Burial • Medical Attendant Report • Police inquest report • Claim investigation report • Policy Document or indemnity

22. Plans • Term Assurance • Whole Life policies • Endowment Policies • Money Back Policies • Children policies • Marriage/Educational Policies • Annuity Plans

23. Premium • What is Premium • Mode of Premium - Single - Yearly - Half Yearly - Quarterly - Monthly

24. Premiums • Factors Affecting Premiums - Mortality - Interest - Expenses - Profits Types of Premiums Basic AB Premiums,Rider Premiums,

25. Premiums • Mortatlity Table Out of 1lac persons

26. (Premiums) • Person Aged 30 wants take a term assurance of Rs. 1lacs for 1 year • Premium= Sum Assured * Mortality Rate for 1 year from the table • Premium=100000*0.00117=Rs.117(1999) • Premium=100000*0.00326=Rs.326(1956)

27. Premiums • Person aged 30 wants to take a term assurance of Rs.100000 for 4 year • Premium for 1st year= 100000*0.00117=117 • 2nd year 100000*0.00117=117 • 3rd year 100000*0.00120=120 • 4th year 100000*0.00125=125 Uniform premium=(117+117+120+125)/4=120

28. Premiums • In the same example if it is made endowment that is Rs.100000 will be death cover for 4 years and 1lac will be paid on maturity at the end of 4 years • Term Assurance Premium for 4 years=120 • Endowment premium = 100000/4 = 25000 • Total premium to be paid 25000+120=25120

29. Premiums • Calculation with interest @6% the above example • Term Assurance premium=120 • Endowment premium = 25000/(1.06)^1 • = 25000/(1.06)^2 • = 25000/(1.06)^3 • = 25000/(1.06)^4 • Total Endowment premium =21658 • Net Premium=21658+120+21778

30. Premiums • Expenses loading in premium • First year premium • Renewal premium • Premium Related expenses • Policy Related expenses

31. Premiums • Expenses Loading We arrived at the premium rate for a person Aged 30 for 1lac endowment as 21778 Cost of premium expenses=5% Loading of expense =21778/0.95=22924 Cost of premium including expenses of premium=22924

32. Premiums • Cost of expenses per policy Average expenses per policy=Total Administrative cost/No of policies issued Suppose 200000 policies issued and administrative cost =40000 Average cost per policy=200000/40000=5

33. Premiums • Calculation of loading for the example of person aged 30 Sum Assured 1lac for 5 years endowment • Premium with interest = 21778 • Premium expense is 5% • Administrative expense per policy is Rs. 5 Premium+Interest+expense=(21778+5)/0.95=21929

34. Servicing Concepts • Days of Grace • Paid up Value: Sum Assured*No of years premium paid/Total premium payable • Surrender Value • Loans • Revival • Assignment

35. Bonus • What is Bonus • Why it arises • Types of Bonus - Reversionary Bonus - Guaranteed Additions - Loyalty Bonus - Compounded Guarantee Additions - Cash Bonus

36. Insurance Intermediary • Agents • Brokers • Consultants • Surveyors • Corporate Agents

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