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 What is Insurance?
Ans: Insurance is the arrangement in which risk suffered by a few members is shared by many. The concept of insurance is related to the protection of the economic value of assets.
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What is Premium?
Ans: Premium is the sum amount paid by the insured to the insurance company for a given period of time which is in consideration for transferring insured risk to the insurance company.
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Why we need Insurance?
Ans: To get financial relief against uncertain losses we need Insurance Cover.
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What is Life Insurance?
Ans: A contract between an insured (customer) and insurer (Company) wherein the life insurance company guarantees the payment of a stated amount of money on the death of the insured.
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What is the need for Life Insurance?
Ans: Life insurance provides financial security in the event of uncertainty or due to inability to earn because of physical disability
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What are the types of Life Insurance Policies?
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Ans: Different types of Life Insurance Policies are: |
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1) Term Insurance: |
Term insurance plans provide death risk-cover. Term assurance policies are only for a limited time only, claim for which is paid to the family of the assured only when he dies. In case the assured survives the term of policy, no claim is paid to the assured. |
| 2) Whole Life Insurance: |
Premium is collected from the insured for the whole life or till his retirement, and the same is paid to the insured family only after his death. |
| 3) Endowment Insurance: |
This insurance policy is for a fixed period say for 15, 20, or 30 years. In such policies the insurance company pays the claim in case of untimely death of the insured person or on his survival of the policy period. |
| 4) Money Back Insurance: |
This policy is opted by people who want periodical payments. This policy is generally issued for a particular period of time, and the sum assured is paid in a periodical period to the insured. |
| 5) Annuities and Pension: |
A person who opts for annuity insurance agrees to pay a specified sum of capital to the insurance company (lump sum or in intervals) and in return the insurance company promises to pay the insured a series of payments until the death of the insured. |
| 6) ULIP (Unit Linked Insurance Plans): |
ULIP is life insurance that provides for the benefits of protection and flexibility in investment. The investment is denoted as units and is represented by the value that it has attained called as Net Asset Value (NAV). |
| 7) ULP (Universal Life Insurance): |
This product is a combination of Term Insurance with a savings component added to it, the savings components are invested in tax deferred accounts instruments that typically earns interest at rates comparable to prevailing money market interest rates. |
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What is Variable Insurance Policy?
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A variable life insurance policy is one of the most flexible types of life insurance coverage available. The variable life insurance policy is a variation of whole life insurance. This means it is considered to be a permanent type of life insurance that is never going to expire as long as the premiums are paid.
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What is a Rider?
Ans: A rider is the additional benefit attached to the policy.
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What are the types of riders available?
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Ans: Types of Riders available: |
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1) Waiver of Premium: |
Waiver of Premium is the most common life insurance rider. By adding this rider to your policy, your monthly premium payments will be waived if you become disabled and your policy will remain in force. |
2) Accidental Death and Dismemberment: |
Accidental Death and Dismemberment, often referred to as AD&D, will multiply your death benefit, usually double or triple. |
| 3) Accelerated Death Benefit: |
The Accelerated Death Benefit rider will pay you some or all of your life insurance benefit if you are diagnosed with a terminal illness or require long term care, or permanent confinement in a nursing home. |
| 4) Disability Income Rider: |
The policy owner can secure a regular monthly income from the insurance company if he becomes totally and permanently disabled with a Disability Income Rider. |
| 5) Guaranteed Insurability: |
The Guaranteed Insurability rider allows you to purchase additional insurance or convert a term policy at any time in the future. With this rider you can increase or decrease your coverage amount. |
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What is surrender value?
Ans: When a policyholder decides to discontinue and terminates the policy, the insurance company offers to pay cash value on the cancellation of the policy contract. This amount is called as “surrender value”.
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What is transfer or assignment?
Ans: Transfer or assignment is the process of transferring one’s transferable interest in life insurance policy to another person.
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Difference between Nominations vs. Assignment.
| Nomination |
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Assignment |
| Nomination is appointing some person to receive policy benefits only when the policy has a death claim. |
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Assignment is the transfer of rights, title and interest of the policy to some person. |
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| By nominating someone, the right, title and interest of the insured over the policy is not transferred. |
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The insurer is bound to pass over the benefits, claims and interests to the assigned person. Even during the time the insured is alive. |
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| It can be changed or revoked several times. |
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Normally assignment is done once or twice during the policy period. Assignment can be normally revoked after obtaining the "no objection certificate" from the concerned Assignees. |
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Define: Proposer, Beneficiary, Nominee
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Proposer: The person who proposes to enter into a contract of insurance with a life insurance company to insure him or another life on whose life he has insurable interest. |
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Beneficiary: The person named in the policy as the recipient of insurance proceeds upon the death of the insured. |
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Nominee: The person designated by the policyholder to receive the proceeds of an insurance policy, upon the death of the insured. |
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What is Mortality?
Ans: Mortality is incidence of death in a population. It is measured in various ways. Mortality rate is typically expressed in units of deaths per 1000 individuals.
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What is Morbidity?
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Ans: Morbidity is an incidence of ill health. It is measured in various ways, often by the probability that a randomly selected individual in a population at some date and location would become seriously ill in some period of time. |
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What is Standard Age Proof?
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Ans: Standard age proof can be classified as mentioned below |
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Municipal Birth Certificate/Certified extract from municipal or other records made at the time of birth. |
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School or college certificate or authenticated extract from the School or college records if the date of birth is stated therein. |
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Passport |
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Marriage Certificate |
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What is Non Standard Age Proof?
| Ans: It has been decided to classify non-standard age proofs into three categories as shown: |
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Permanent Account Number (PAN) |
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Driving License issued by RTO |
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Election (Voter) Identity Card |
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Ration Card |
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What are Premium Allocation Charges?
| Ans: These charges are usually charged at the inception of the policy, they are a percentage appropriated towards charges from the premium received. |
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What are Fund Management Charges?
| Ans: These charges are charged after the deduction made on the money invested, these charges are charged on regular basis. FMC is levied as a percentage of the value of assets and shall be appropriated by adjusting the net asset value. |
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Who is an Actuary?
| Ans: An insurance professional skilled in analysis, evaluation and management of statistical information is an Actuary. They evaluate the insurance companies’ reserves determine rates, rating methods and also determine other businesses and financial risk. |
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What is Reinstatement of policy?
| Ans: Reinstatement allows a previously terminated policy to resume active coverage. Depending on the circumstance of the termination, such as failure to pay the premium, the insured person may be required to compensate the insurer before reinstatement occurs. |
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What is Reversionary Bonus?
| Ans: The Bonus declared by the insurance company which is attached to the policy and paid on the death or on maturity is referred to as a Revisionary Bonus. |
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What is underwriting?
Ans: The process of evaluating risks for insurance and determining in what amounts and on what terms the insurance company will accept the risk.
Medical Underwriting: It is an insurance term referring to the use of medical or health status information in the evaluation of an applicant for coverage (typically for life or health insurance). As part of the underwriting process, health information may be used in making two related decisions: whether to offer or deny coverage; and what premium rate to set for the policy.
Financial Underwriting: Financial underwriting is primarily used to make sure that the person who is being insured qualifies for an amount of insurance that does not exceed their insurable interest. The insurable interest means that there is a firm reason behind the amount of life insurance that is being applied for. |
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What is HLV?
| Ans: A method of determining Life Insurance needs by considering a person's income, expenses, remaining years of earning capacity, and depreciation in the value of the dollar over time. |
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What is lock in period?
| Ans: Lock in period is the time frame for which the insured has to keep his policy in force by paying regular premiums. |
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What is Paid- up value?
| Ans: Paid-up Value is the reduced amount of sum assured paid by the Insurer, in case the Insured discontinues payment of premiums. This is applicable only when the Insured has paid the premiums in full for the first three years. |
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What is death benefit?
| Ans: The amount on a life insurance policy or pension that is payable to the beneficiary when the insured passes away. |
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How much do I insure myself for?
| Ans: One of the simplest rules is to assume that insurance is a replacement for your lost earning capacity. Calculate your total income for the years that you expect to work. Assuming that the prevailing interest rate is 8%, you need to insure your life for at least 12 times your current annual income. Assuming that a family needs Rs. 100 annually for household expenditure and the rate of interest would be at 8%, and then the breadwinner needs to have a life insurance policy of approximately Rs. 1200. If the insurance amount were to be put in the bank by the family, the family would get a comfortable Rs. 96 p.a., which would at least let the family maintain the current life style. |
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What do you mean by highest NAV guaranteed in a policy?
Ans: Supposing a policy starts today and is guaranteed to give highest NAV in next 7 yrs.’ and we can control how money moves to debt and equity, it’s pretty simple.
In the beginning, let’s assume a NAV of Rs 10, and the Asset allocation is 100% in equity and 0% in debt. Now suppose, the market moves up and NAV goes up to Rs 15 by the end of the first year, at this point, try to understand what Insurance company has to provide – they have to make sure, that they provide at least Rs 15 as the return after 6 yrs. . Now in order to achieve this, all they have to do is keep X amount in debt instruments which will mature in next 6 years and provide Rs 15 at the end of 6 yrs., so assuming the debt return at 7%, they need to put around Rs 10 in Bonds, so that the maturity of the bond is Rs 15 at the end of 6 yrs. .
=>10*(1.07)^6
=> 15.007
They can now invest the rest Rs 5 in Equity as Rs 10 is allocated to Debt. So, now they’ve made sure that whatever happens to the market, they get Rs 15 for sure at the end of 6 yrs. |
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Do I get tax benefit on life insurance policy?
| Ans:Yes you can enjoy a Tax benefit under sec 80 D up to Rs 15000/- in Health Plans. |
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What is the coverage under Motor Insurance Policy?
Ans: There are two different parts under Motor Insurance policy in which one part covers damage to own vehicle of insured and second part covers legal liability to third party.
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Is the Motor Insurance policy compulsory?
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Ans: Yes, as per Motor vehicle Act the cover for Third Party is mandatory as without third party coverage the person cannot drive his vehicle on the road. |
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What is NCB?
Ans: NCB is No Claim Bonus earned on the policy if the there are no claims made in that policy year. NCB is the discount provided on own damage premium which is paid by insured to the insurer.
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If I sell the car then am I eligible for the same NCB?
Ans: Yes, the only condition is that the car which you have purchased should be of same class as per the previous year’s policy.
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What is a cover note?
Ans: A cover note is a temporary Insurance document establishing proof of Insurance with which you can register your vehicle. A cover note is valid for 60 days from the date of its issuance and is replaced by an Insurance policy.
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What is the claim process under Motor Accident?
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Ans: First and most important step is to intimate the insurance company against the loss. Then after the different documents which are required to file the claim such as Copy of claim, intimation given to insurer with xerox copy of policy and premium receipt, duly filled Claim Form, Driving License, Registration Certificate of Vehicle, Estimate of repairs from repairer and stamped receipt, Bills and Cash Memo of repairs, verification of road tax, Police Panchanama/FIR, Permit and Fitness Certificate and any other documents that deem feet for the situation should be provided. |
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What is the coverage available under Health Insurance Policy?
Ans:Health Insurance policy covers Hospitalisation expenses.
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What are the items which are non payable under Health Insurance Policy?
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Non relevant investigation charges. |
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All non-medical expenses. |
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Service charges and registration charges. |
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Charges which is bearable by the insured i.e. co-payment |
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What is the Tax deduction under Health Insurance Policy?
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Ans: Premium paid for the Health Insurance Policy is deducible under 80D. The amount of relief available is Rs. 15000/- |
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Does everyone who purchases a Health Insurance Policy need to undertake a Medical test?
Ans:No, Individuals aged up to 45 years need not go through the Medical test and for those more than 45 years of age it will vary depending upon the Insurance Company.
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Who is TPA? What is their role in Health Insurance?
Ans: TPA’s is the Third Party Administrator appointed by the Insurance Company for settlement of claims and also keeping records of claims.
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How can we claim under Health Insurance Policy?
Ans: Health insurance policy has two procedures for claims i.e. Cashless and Reimbursement. Under the cashless process a person needs to contact the network hospital where the person will get help from the TPA person over there. In case of Reimbursement the insured pays first towards hospital expenses and then submit the documents after discharge to the insurance company.
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What is the first important step that needs to be taken incase of claim?
Ans: If a person gets hospitalized due to some emergency, the insured needs to intimate the insurance company or the appointed TPA within 48 hours on their provided customer care number or just send a mail for intimation.
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What is deductible/excess?
Ans: This refers to the amount, which the insured has to bear in all cases and this amount is first, deducted from the total assessed payable claims amount before determining the insurance company's liability.
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What is a Travel Insurance policy? Whom it is made for?
Ans: Travel insurance gives travelers coverage for unforeseen problems, from a cancelled flight, loss of passport to serious illness or in rare cases the financial default of the travel supplier. This policy is suitable for people who are going abroad, people travelling across the country, students going abroad for further studies.
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What are the different policies available under Property damage?
Ans: There are different policies with different coverage such as Standard Fire and Allied Perils policy covers damage to the property against Fire and allied perils, marine Insurance policy covers Properties in transit, Marine Hull which covers vessels, Burglary policy against burglary risk and Engineering Policies which provide different covers for covering Plant and machinery.
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What are Liability Policies?
Ans: Under Liability policies the liability to insured against third party gets covered. Example of different policies is Commercial Liability Policy, Product Liability Policy, Professional Indemnity Policy etc.
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What are Engineering Insurance policies?
| Ans: Engineering Insurance is used for the protection of construction works, as well as the erection and operation of machinery. Example of engineering policies is Erection All Risks (EAR) Insurance, Contractor’s All Risks (CAR), Machinery Breakdown (MB), Boiler and Pressure Plant (BPP), Contractor’s Plant and Machinery (CPM) and Electronic Equipment Insurance (EEI) etc. |
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