Chapter 8 Insurance

INSURANCE
Background on Insurance
• Insurance protects you against potential

financial losses or liability as a result of
unexpected events
• Its primary function is to maintain your
existing level of wealth
Insurance Sector
• Till August 2000 there were only two nationalised
players: LIC and GIC
• GIC has 4 subsidiaries:
National Insurance
United India Insurance
Oriental Insurance
New India Assurance
• Opened up in August 2000 for private companies.
• Insurance Regulatory and Development Authority
(IRDA) was set up in April 2000 to regulate and
develop insurance industry.
11-3
Types of insurance
Many types of insurance available
• Most popular forms are life insurance, auto
insurance and health insurance.
Benefits from Insurance

Provides for loss of income
Protects your Assets
Financial Planning
Tax Saving
Types of Life insurance
Term Insurance
• Term insurance plans are also
commonly known as protection plans.
This is a pure insurance cover where
only the risk of death is covered for a
specified period.
• LIC Anmol jeevan
• ICICI Pru Pure Protect
Whole Life Insurance
• Whole life insurance policies are very
similar to term insurance plans. This is
a term plan with an unlimited term. As
the name suggests, a whole life policy
is an insurance cover against death,
where the sum assured is payable only
on death, whenever it may occur.
• LIC whole life policy
• LIC jeevan tarang
Endowment Policy
• Endowment policy- insurance is
available for a specified period. The
sum assured, is paid on maturity or on
the death of the insured whichever is
earlier. In this type of life insurance
policy there is both a death benefit or
the maturity benefit.
• LIC Jeevan Anand

• Kotak Surakshit Jeevan
Money Back Policy
• The sum assured is returned as lumpsum
after defined intervals of time. The assured
receives a fixed sum at fixed intervals during
the term of the policy.
• LIC Jeevan Surabhi

• HDFC money back
Child Life Insurance Policy
• policy on the lives of children, who are
not majors. Since the age of child is
below 18 years, the proposal will have
to be made by a parent or a guardian.
• LIC Child future plan

• HDFC Young star Super
Pension Plan
• Pension plan or retirement plan is
useful to save money during a person’s
income-earning days to provide for
regular periodical payments during his/
her retirement days. Pension payments
are also known as annuities and are
paid as long as the recipient is alive.
• LIC Jeevan Nidhi
• ICICI Pru lifetime pension
Health Insurance
• Also known as medical insurance or mediclaim
• Covers expenses incurred on medical treatment and
hospitalisation
• Family floater policies
• Cashless facility
• Pre-hospitalisation and Post hospitalisation benefits
• Health check up
• Tax benefits
Auto Insurance
• Auto insurance protects you from financial loss from
damage or liability resulting from automobile
accidents
• Auto Insurance Policy can be classified as follows:
• Third party auto insurance policy- insures the
party/parties other than the owner in an accident.
The policy include death or injury to a third party and
damage to third party property.
Mandatory for all registered vehicles plying on road.
• Comprehensive auto insurance policy- insures the
owner as well as the third party involved.
Insurance Intermediaries
 Agent: licensed by IRDA , sell insurance policies to
customers
Can sell policies of only one life insurance and one
non-life insurance company
 Surveyors and Loss Assessors: independent

professionals to assess the loss or damage when a
claim is notified under a policy issued.
 Brokers: sell policies of many companies

assess risk on behalf of their clients, provide advice on
risk mitigation, advice optimum policy, carryout the
preparatory work for buying a policy
• Third Party Administrator (TPA)

• licensed by IRDA
• the middleman in the health insurance sector
• serve more than one insurer
• Have a network of hospitals ranging from expensive
hospitals to small nursing homes
• Provide cash less hospitalization services
Bancassurance
Insurance companies tying up with banks
to sell insurance products
Example-
Axis bank- Bajaj Allianz
Union Bank- Star Union Dai-ichi

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INSURANCE

• Insurance protects you against potential

Benefits from Insurance

• LIC Jeevan Anand

• LIC Jeevan Surabhi

• LIC Child future plan

 Surveyors and Loss Assessors: independent

 Brokers: sell policies of many companies

• Third Party Administrator (TPA)

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