IC-38 (Crash Course) Exam PDF

IC-38 (Crash Course) IRDAI EXAM Prepared by : Prasanta Kumar Pani Assisted by : Abhijit Saha Vishwajit Singh Edited by : Biswabhanu Satpathy Version 2....

IC-38 (Crash Course) IRDAI EXAM Prepared by : Prasanta Kumar Pani Assisted by : Abhijit Saha Vishwajit Singh Edited by : Biswabhanu Satpathy Version 2.0, Released on 15/06/2023  Insurance Terminology IRDA Ombudsman Par Product TPA Insurable Interest Insured Consumer Forum Non Par Product PPN Utmost Good Faith Insurer Grace Period Term Plan IGMS Indemnity Sum Assured Lapse Endowment Cash Less Mis-Representation Premium Revival ULIP Reimbursement Claim Nominee Paid Up Whole Life Inpatient Assignment Appointee Mortality Morbidity CPT Contract OCB Training Team Initiative - Only for Training Purpose  Insurance Regulatory & Development Authority of India (IRDA) 1. IRDA - Regulator for Insurance companies in India. 2. In 1993 Malhotra Committee was setup to recommend changes for development of the industry. 3. IRDA Act passed on 1999. 4. IRDA Started operation as a statutory body from April 2000. 5. IRDA has been subsequently renamed as IRDAI in 2014. 6. 24 Life insurance companies under IRDA. 7. Postal Life Insurance is not under Purview of IRDA. 8. IGMS - Integrated Grievance Management System ( Grievance Redressal Mechanism). Concept of Life Insurance 1. Known for – Risk Transfer or risk pooling. 2. Purpose – Protection of economic value of an asset. 3. Risk – Dying too early (pre matured death) & Living too long. 4. Insurance is a method of “Sharing the losses of few by Many”. 5. Risk Retention – One decide to bear the Risk and its effects. 6. HLV – Human Life Value is devised by Prof. Hubener helps to know the Insurance need of an individual. 7. Human Life is an Income Generating Asset. 8. Insurance is a legal contract between Insurer and Insured Governed by Indian Contract Act 1872. OCB Training Team Initiative – Strictly for internal trainings  Concept of Life Insurance There are 400 houses in a village, each valued at Rs 20,000. Every year 4 houses got damaged, resulting in a combined loss of Rs. 80,000. Contribution made by each house owner to compensate this loss is Rs. 200. Perils (Flood, Earthquake, Lightening, Fire) 400 house owners are the Individual loss of Policy holders expose to Rs. 20000 is the Contribution (Risk Premium) of similar kind of RISK. SA/Claim amount. Rs. 200 made by all Policy Risk is the probability of occurring Holders to compensate the of the adverse events. combined loss of Rs. 80,000. OCB Training Team Initiative – Strictly for internal trainings  History of Insurance 1. 1st Life Insurance Company in India – Oriental Life Insurance (1818). 2. 1st Indian Life Insurance Comp – Bombay Mutual Assurance Society (1870). 3. 1st Life Insurance Company In world – Amicable Society for perpetual assurance (1706, London). 4. Nationalization of Life Insurance – 1st September 1956. (LIC formed). 5. Origin of Modern Insurance Business – Lloyd’s Coffee House, London. 6. National Insurance Company Limited – Oldest Insurance Company in India from 1906 (which still exists). 7. Nationalization of General Insurance – 1972 (GIBNA Act, 1972). 8. Insurance Act 1938 – 1st legislation to regulate insurance companies in India (w.e.f. 1st July 1938). Contract 1. As per Indian Contract Act 1972 insurance is contract between Insurer and Insured. 2. Contract – Agreement between two or more than two parties. 3. Elements of a valid contract – Offer & acceptance, Consideration, Agreement between the parties (consensus ad idem) , Capacity of the parties, and Legality. OCB Training Team Initiative – Strictly for internal trainings  Principles of Insurance 1. Principle of Utmost Good Faith (Uberimma Fides) - Disclose of all material facts which influences the decision of prudent underwriter at the time of assessing the risk of an individual 2. Breach of Utmost Good faith – Non disclosure and Mis-representation of material facts. 3. Principle of Insurable Interest – For whom you can take Insurance. 4. Insurable Interest (pecuniary / financial) should be present at the time of inception in Life Insurance, at the time of Claim in marine Insurance and In Non life Insurance it should be present at the time of Inception and claim. 5. Insurable interest is present in – Self ( one’s own financial Interest)., Husband-Wife, Parent-Children, Creditor-Debtor, & Employer-Employee. 6. Principle of Indemnity – Indemnifying the loss or compensated up to the amount of loss. Applicable for non life insurance only. 7. Coercion - Pressure applied through criminal means 8. Section 45 – Indisputability Clause – 3 yrs – to protect the interest of Insrured Person OCB Training Team Initiative – Strictly for internal trainings  Type of Products Dying too early Death Benefit Pure Term Assurance Plan Risk Living too long Survival Benefit Pure Endowment Plan 1. Insurance is an Intangible Product 6. Death Benefit under ULIP Plan – Sum Assured or 2. Transactional Product – Bank Deposits Fund Value whichever is higher. 3. Contingency Products – Life Insurance 7.In ULIP policy – Investment risk is borne by the 4. Wealth Accumulation product – Shares(Equity) Insured. 5.Best time for doing Financial Planning – Once 8.House Holders Insurance – Gold and Silver gets his 1st Salary ornaments are covered. 9. Bonus – Simple & compound Reversionary, Terminal Bonus OCB Training Team Initiative – Strictly for internal trainings  Type of Products Insurance Products Traditional Products Non Traditional Products 1. Pure Term Assurance (Term Plan) 2.Endowment Plan - Both maturity and ULIP Variable Life death benefit is payable 3.Money Back Plan – SA is paid on a Unit Linked Insurance Plan (UK) Universal Life Insurance (USA) regular interval as survival benefit 4. Whole Life Plan. OCB Training Team Initiative – Strictly for internal trainings  Term Plan 1. Only Death benefit, No maturity benefit for customer. 2. Maturity available in case of TROP. 3. Advised for those who has a Low budget. 4. Cheapest and low cost plan available in the market. 5. Can be converted to a Whole life Policy. 6. 3 types of Term Insurance Plan – Level, Increasing and Decreasing term insurance. 7. Mortgage Redemption Insurance (MRI) is a Decreasing Term assurance Policy. Premium will remain constant. 8. It provides financial protection for Home Loan Borrowers. Keyman Insurance 1. Keyman Insurance - The Sum Assured under the policy linked to the Business Profitability by the Key employee till his/her tenure. 2. Premium is paid by the company. 3. In case the insured dies, benefits are paid to the company. 4. Who can be a Keyman – A key person can be anyone directly associated with the business whose loss can cause financial strain to the business. OCB Training Team Initiative – Strictly for internal trainings  Health Insurance 1. Health Insurance deals with Morbidity. Morbidity premium is higher than Mortality premium. 2. Portability – This feature is available for health Insurance policies. 3. Hospitalization of 24 hours as inpatient required to cover the expenses. 4. 15 days to process proposal form 5. 15 days for submission of documents from discharge to claim the expenses. 6. Critical illness policy – Sum Assured paid on diagnosis of disease. Critical Illness Riders – waiting period is 90 days. 7. Employees State Insurance Act (ESIA) – 1948 (For Sickness, Disablement, Maternity & Death of Employee) 8. CGHS- 1954 – Central Govt Health Insurance Scheme. ASHA – Accredited social Health Activist. 9. Impersonation – The person taken health insurance is different from person treated in hospital.(Fabrication) 10. Pre-existing disease – waiting period 48 months. 11. Health Insurance Claim – Covers 30 days Pre-hospitalization and 60 days Post hospitalization cost. 12. TPA – Third Party Administrator helps in Cashless treatment, else have to Reimburse the cost. 13. PPN – Preferred Provider Network. ICD – International Code of Disease. 14. Case paper/Sheet – Maintained at hospital on detailing all treatment done to an inpatient. 15. No Claim Bonus – If a person does not prefer any claim in a health insurance policy. 16. Domiciliary Hospitalization – Minimum 3 days treatment at home required to claim the expenses. 17. CHC (Community health center) – for every 1 lakh population, should have at least 30 beds, 1 operation theatre, X-ray machine, labour room & laboratory facilities with 4 specialists and 21 paramedical & other staff. OCB Training Team Initiative – Strictly for internal trainings  Documents 1. KYC – Know Your Customer 2. Standard Age proof – Passport, Pan Card, Birth Certificate, Baptism Certificate, School leaving certificate, Defense ID card. 3. Non Standard Age proof – Ration card, Horoscope, Voter id card, Village Panchayat certificate, Education proof. 4. The Prevention of Money Laundering Act, 2002 came into effect from 2005. 3 Stages – Placement , Layering & Integration. 5. Money laundering is an offense and punishable – imprisonment from 3 to 7 years and fine up to 5 lakhs. Policy Condition 1. FPR (First Premium Receipt) – The FPR is the evidence that the policy contract has begun. RPR( Renewal) 2. Grace period – 1 month or 31 days (After the due date). 3. Revival – the process to in force the policy which lapsed / terminated due to non payment. 4. Death during Grace Period – Paid total claim amount after deducting the unpaid premium. 5. Lapse – Premium not paid during grace period (Insurance cover Ceases). 6. Policy Document – 4 Parts (Schedule, Standard Provision, Specific policy provisions, Claim procedure). 7. Loan – upto 90% of Surrender Value. 8. Free look period – Customer can cancel the policy within 15 days from receiving of policy document, if he finds that the term and conditions are not what he wanted. OCB Training Team Initiative – Strictly for internal trainings  Underwriting 1. Risk selection and Risk pricing. 2. Proposal form – Underwriter collects data to assess the risk & is the BASIS OF INSURANCE CONTRACT. 3. Substandard Lives – Risk is higher than standard lives. Extra premium will be charged. 4. Preferred Risk – Where the risk is lower than standard lives. 5. Insurance on Pregnant Women – Acceptance with a Restrictive Clause (Lien). 6. Agents are called as Primary Underwriter. 7. Hazard – Physical, Moral & Occupational 8. Types of underwriting – Medical underwriting and Financial underwriting. 9. Decision on the proposal has to be made within 15 days. 10. Judgmental method & Numerical Method( Rating Method). MWP Act – Married Women's Property Act 1874 1. Trustee will get all benefit of the policy 2. Beyond the control of Creditors, Court attachments and even the life assured. 3. Not allowed Nomination and Assignment 4. Beneficiary under Section 6 of MWP Act - Wife alone or Wife and one or more children jointly or one and more Children. 5. If no special trustee is Appointed – Amount goes to official Trustee of the State. OCB Training Team Initiative – Strictly for internal trainings  Claim 1. Claim is a demand, where Insurer keep their promise. First Step in Claim Process is Intimation. 2. As per IRDA, Death claim will be settled within 30 days from receiving of documents. 3. For Investigated claim – 180 days (In case of Early Death – within 3 years of policy). 4. Delay of settlement – interest on claim amount 2% above bank rate paid to Nominee. 5. Inquest report – Mandatory for accidental death claim. 6. Presumption of Death – Missing for 7 Years (Indian Evidence Act 1872) from the date of court decree. Section 107 &108. 7. Insurer has to ask for any additional documents within 15 days. 8. Death due to suicide is covered after 1 year (365 days). Nomination & Assignment 1. Nomination :- Section 39 of Insurance Act 1938. 2. Nominee can be one or more. 3. Appointee required, if Nominee is Minor. 4. Nominee has no full rights on the whole of the claim. 5. Assignment :- Section 38 of Insurance Act 1938. 6. 2 types of Assignment – Absolute and Conditional. 7. Assignment means Transfer of right. 8. Nomination stands cancelled once policy is assigned. OCB Training Team Initiative – Strictly for internal trainings  Insurance Ombudsman 1. Ombudsman Works in Territorial Limit. Ombudsman’s Limit upto 30 Lakhs. 2. Complaint can made within 1year of rejection of claim by insurer. 3. Complaint has to made in written. There is no fees to file complaints. 4. The award should be made within a period of 3 months (90 days). 5. There are 17 Ombudsman offices in India. 6. Insurer have to honor the AWARD within 15 days. 7.Complaints cannot be made to Ombudsman if the complaint is pending in any Court or Consumer Forum or in arbitration. Consumer Protection Act 1986 (COPA) 1. Consumer Protection Act 1986 (COPA) has been Amended by Act, 2002. 2. Insurance Claim amount up to 1 Crore – District Forum. 3. Insurance Claim Amount more than 1 Cr to 10 Cr – State Commission. 4. Insurance Claim amount above 10 Crore – National Commission. 5. Who buy products for resale purposes in not a consumer. 6. Complaints has to be made within 2 years from the date of dispute. OCB Training Team Initiative – Strictly for internal trainings  Insurance Agents 1. Qualification – 10th for Rural (less than 5000 population) area & 12th for Urban area. 2. Composite agent – Both Life & Non Life License ( 75 hrs of Training required). Rs. 350 Fee. Renewal – 35 hrs of training required. 3. Online training requirement of 25 hours. 4. License Validity is 3 years (issued by IRDA) 5. Appointment letter dispatch – within 7 days. 6. Issuance of Appointment letter – 15 days. 7. Communication on refusal of appointment – 21 days 8. Penalty in contravention of provisions – Max. 10,000. In the case for insurer it is Max 1 Crore. 9. Appointment Authority – Designated Official of the company. 10. CASA agents are not regulated by IRDA. 11. Section 41 – Prohibition of Rebate ( Fine Rs 500/- if agent sharing the commission). 12. Section 42 – Agent code of conduct 13. Fee for renewal of license – Rs 250/-. Lost of License Card – Rs 50. OCB Training Team Initiative – Strictly for internal trainings  Thank You OCB Training Team Initiative – Strictly for internal trainings