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ADVANCED FINANCIAL

UNDERWRITING

I Roy :::: Faculty Member :::: 05-09-2023


GROUND RULES

 Physical & Mental Presence

 No Mobiles

 Interaction & Participation

 Questions : 3 Categories

I Roy :::: Faculty Member :::: 05-09-2023


SESSION OBJECTIVES

At the end of the Session, the participants shall be equipped to appreciate:

 the nuances and critical aspects of Financial Underwriting


 The distinctive aspects when it comes to assessment of Employer-Employee Schemes,
Partnership Insurance, keyman Insurance
 The aspects associated with HUF Insurance and MWP Act AND
 the finer aspects of ‘ Insurance Contract’ and ‘Section 45’.

I Roy :::: Faculty Member :::: 05-09-2023


ASSESSING THE INSURANCE RISK
Insurers assess the risk to be undertaken, broadly, on TWO parameters:

‘Medical Underwriting’: wherein the ‘Clinical / Physical Health’ along with the habits,
family-history, lifestyle aspects of the proponent are critically scrutinised and evaluated
AND

‘Financial Underwriting’: wherein the Financial Health of the Proponent is evaluated with
respect to the Premium Paying Capacity, permissible Coverage and allied aspects.

I Roy :::: Faculty Member :::: 05-09-2023


FINANCIAL UNDERWRITING: ROLE AND PURPOSE

Financial Underwriting is the ‘PROCESS’ of determining the amount of Insurance Cover that
is justified for a person with regards to his / her income and needs.
The ‘ROLE’ of Financial Underwriting is to make sure that the amount of Insurance applied
for by an individual is justified based on the potential economic loss that will be suffered in
the event of death. If the amount applied for exceeds the potential economic loss, it will
lead to adverse selection OR anti-selection.
The overall ‘PURPOSE’ of Financial Underwriting is to:
 Ensure that the insured or the beneficiary is not put in a better financial position by the
occurrence of the insured event
 Minimise the ‘Moral Hazard Risk’
 Minimise the probability of Lapsation or Surrender [ i.e. Appropriate insurance &
affordable premium]

I Roy :::: Faculty Member :::: 05-09-2023


WHAT DOES GOOD FINANCIAL UNDERWRITING ENSURE ?
Good Financial Underwriting accomplishes the following objectives:

 Insurance granted is commensurate with the income and the need of the Applicant [i.e.
reduces Anti-selection]
 Minimises / eliminates fraudulent Claims
 Minimises ADVERSE CLAIMS EXPERIENCE due to ANTI-SELECTION
 Minimises early Lapsation / Surrender
 Ensures Insurable Interest
 Verifies Insurance Needs

I Roy :::: Faculty Member :::: 05-09-2023


INSURABLE INTEREST AND INSURABLE VALUE
A person has unlimited Insurable Interest on his own life.
However, the Insurance Company retains the right to assess the need of insurance and can
decide to either:
 Issue Life Insurance Policy for the requested amount OR
 Suggest a policy for a reduced amount OR
 reject the request for policy in the proposed / requested form
The insurer must question the purpose of insurance when no obvious insurable interest
exists.
Insurance that covers non-existent financial loss also implies lack of insurable interest.
Insurable Value is the measure of the financial loss and obligations created by the insured’s
death [i.e. Maximum Death Benefit which can be acceptable].

I Roy :::: Faculty Member :::: 05-09-2023


KEY PRINCIPLES OF FINANCIAL UNDERWRITING
The following are the KEY PRINCIPLES of Financial Underwriting:

 Always establish need for granting insurance and amount: DOES IT MAKE SENSE?
 Ensure that the insured is not ‘WORTH MORE DEAD THAN ALIVE’.
 Underwriter to ‘RULE SPECULATION OUT OF INSURANCE’
 Relate to past financial trends and prevailing economic conditions

I Roy :::: Faculty Member :::: 05-09-2023


KEYMAN INSURANCE
A predominant reason to purchase life insurance on the life of a Key Person is to
indemnify the Company against the loss of the Key Person whose skills and
contribution are critical to the company.

The common challenges faced by the underwriters while assessing a proposal on a key
person are :
To qualify the proposed insured as a Key Person
To quantify the potential financial loss to the company on the death of this insured
According to the Indian Law, there is no clear definition available of a key person.

I Roy :::: Faculty Member :::: 05-09-2023


KEYMAN INSURANCE
But, the following aspects can help in qualifying the proposed insured as a key person.
a. Age: A person who is a very young (say, 19 years) or very old (say, 59 years) who is
nearing retirement, will not be a good fit as a key person.
b. Level of expertise: High level of technical expertise or management skills can make a
person indispensable. Hence qualification and experience vis-à-vis exposure in different
fields has significant importance.
C. A successful track record: The person should have a successful track record in the area of
his expertise to be qualified as a key person.
d. Earning trends of the company over a period of time: It will be easier to evaluate the
value of a key person with a good earning trend rather than an unstable earning trend.

I Roy :::: Faculty Member :::: 05-09-2023


KEYMAN INSURANCE
Number of Key persons in a company
The fewer the number of a key persons, the easier it is to confirm the criticality of the
person to the company.
Keyman insurance is linked with the profitability of the company. Therefore, the
amount of cover granted can be broadly arrived at by using the following guidelines:
3 times the average gross profit of the company for the last three years (gross profit
means profit before depreciation and taxation).
5 times the average net profit of the company for the last three years.
10 times the total annual compensation package for the keyman which includes
salary, bonus and all other perquisites.

I Roy :::: Faculty Member :::: 05-09-2023


KEYMAN INSURANCE
The total permissible amount of the keyman insurance for a company will be the
minimum of the amount arrived at on the basis of the stated three methods.

If there are more than one Keyman in the company, the overall limit will be governed
by the same principle, and the sum assured granted to the various key persons will not
exceed the overall limit arrived at by the above methods.

According to the current regulations, only Term Assurance plans are allowed for
Keyman Insurance.

I Roy :::: Faculty Member :::: 05-09-2023


PARTNERSHIP INSURANCE
In a Partnership Business, when a Partner dies the legal heirs of the deceased partner
may not be interested in continuing the partnership. The remaining partners will have
the option to purchase the deceased partner’s share on the terms and conditions spelt
out in the Partnership Deed. This would require sufficient funds.
The need for Partnership Insurance is seldom felt until a partner dies and the money
required to be paid out has to be recovered from the partnership funds. In the
absence of partnership insurance, the surviving partners may be compelled to sell
some of the assets or may have to close down the business. Hence, it becomes
advantageous to have a life insurance cover on the lives of all the partners. The
proceeds of the insurance policy can be utilised for settling the account of the
deceased partner without disturbing the working of the Firm.
I Roy :::: Faculty Member :::: 05-09-2023
PARTNERSHIP INSURANCE
Amount of cover:
The amount of cover on each partner will depend on the amount of the purchase
money required to be paid to the heirs in the event of death. This can be determined
by the contribution to the share capital, share of profit up to withdrawal and the
goodwill of the individual partner.
To minimise the anti-selection, it is advisable to consider partnership insurance on the
lives of all the partners simultaneously.

I Roy :::: Faculty Member :::: 05-09-2023


EMPLOYER-EMPLOYEE SCHEME
This is a type of ‘Business Insurance’.
The salient features of this scheme are given below :
Progressive Employers are keen to retain the services of heir experienced executives
and employees.
The employer as a “Proposer “takes life insurance policy on the life of a designated
employer, where the benefits are payable to the employee.
No Maturity Benefit accrues to the Employer under the Policy.

I Roy :::: Faculty Member :::: 05-09-2023


M W P ACT: HINDU UNDIVIDED FAMILY
The MWP Act was passed by the Indian Government in 1874.
Section 6 of MWP Act provides that a policy effected by any married man on his own
life for the benefit of his wife or children shall be deemed to be a Trust for their
benefit. [ shall not be subject to the control of the L A or his Creditors].
An HUF consists of a Karta, coparceners and members.
Under the MWP Act, the beneficiary of an insurance policy can be :
o Wife alone; OR
o One or more children (both natural and adopted); OR
o Wife and one or more children jointly

I Roy :::: Faculty Member :::: 05-09-2023


BASIC FINANCIAL DOCUMENTS
The basic Financial Document requirements for all cases include completely / duly
filled Proposal Form, Agent’s Confidential Report, Financial Questionnaire, etc.
As the Sum Assured increases, additional income documents are required to be
submitted to justify the higher cover.
The financial documents required to be submitted vary for different groups of people
and business classes.
[for details, refer to Pg 113-116 of IC-22]

I Roy :::: Faculty Member :::: 05-09-2023


WHAT IS MONEY LAUNDERING ?

Appears to
Illegally Conversion originate from
obtained money Legitimate
Source

Drugs / Arms Trafficking


Criminal Activity Terrorism
Extortion
I Roy :::: Faculty Member :::: 01-06-2023
MONEY LAUNDERING
• Money is the root cause of many evils such as corruption, Black Marketing,
Smuggling, Drug Trafficking, Tax Evasion, etc.

• The word ‘LAUNDERING’ is generally used for cleaning dirty clothes, the term
Money Laundering refers to the conversion or “laundering” of money which is
illegally obtained, in order to make it appear to originate from a legitimate source.

• In ‘Money Laundering’, illegally acquired cash is moved through Financial Systems


so that it appears to be legally acquired.

I Roy :::: Faculty Member :::: 01-06-2023


MONEY LAUNDERING
• ‘Money Laundering’ is the process of concealing the source of money obtained by illicit
means.

• Money Laundering, at its simplest, is the act of making money that has come from
Source ‘A’ [Illegal source(s)] look like it has come from Source ‘B’ (legal source /
activity).

• Money laundering is a universal phenomenon and have origins from the havala and
hundi systems of South Asia.

I Roy :::: Faculty Member :::: 01-06-2023


STAGES OF ‘MONEY LAUNDERING’

 PLACEMENT: Cash is introduced in to the Financial System by some means.

 LAYERING: Carrying out complex financial transactions with the cash introduced in
the Financial System in order to camouflage the illegal source.

 INTEGRATION: Acquire wealth generated from the transactions of the illicit funds.

I Roy :::: Faculty Member :::: 01-06-2023


THE VICIOUS CYCLE

I Roy :::: Faculty Member :::: 01-06-2023


POPULAR TECHNIQUES OF MONEY LAUNDERING
• Hawala: Receiving any money in cash from abroad or sending it outside India without
RBI’s permission.

• Structuring Deposits: Breaking the large amounts into small amounts to avoid
scrutiny of the Regulators or Law Enforcement Agencies.

• Masking Deposits: Third-Party cheques.

I Roy :::: Faculty Member :::: 01-06-2023


MONEY LAUNDERING

• As per IMF estimates, the aggregate size of money laundering in the world could be
between 2% to 5% of the world’s GDP.
• Drugs, Smuggling, Organized Crime account for over 3/4th of all ‘Money Laundering’.
• The largest portion of laundered funds are processed through Banks (i.e. around 55%).

I Roy :::: Faculty Member :::: 01-06-2023


EFFECTS OF MONEY LAUNDERING
• Serves as an important mode of Terrorism Financing.
• Threat to the Banking System of the country.
• Threat to Economic and Political Stability.
• Risks to Insurance Companies in Laundering of money
(i) Reputation Risk
(ii) Legal Risk
(iii) Operational Risk (failed internal processes, people and systems & technology)
• All risks are inter-related and, together, have the potential of causing serious
threat to the survival of the Insurance Company.

I Roy :::: Faculty Member :::: 01-06-2023


PREVENTION OF MONEY LAUNDERING ACT

• In order to combating the menace of Money Laundering, India has joined the ranks
of Nations worldwide and enacted the legislation ‘Prevention of Money Laundering
Act, 2002’ applicable to entire India.

• PML Bill was introduced in the Lok Sabha on 4th August, 1998, and was passed on
17th January, 2003, but implemented only from 2005.

I Roy :::: Faculty Member :::: 01-06-2023


WHO IS GUILTY UNDER PML ACT ?

• According to Section 3 of Prevention of Money Laundering Act, 2002:

“….whosoever directly or indirectly attempts to indulge or knowingly assists or


knowingly is a party or is actually involved in any process or activity connected with
the proceeds of crime and projecting it as untainted property shall be guilty of offence
of money laundering.”

I Roy :::: Faculty Member :::: 01-06-2023


P M L ACT, 2002

• The Act aims to:


 Prevent, combat and control Money Laundering.
 Confiscate and seize the property obtained from laundered money.
 Deal with any other issue connected with Money Laundering in India.

I Roy :::: Faculty Member :::: 01-06-2023


OBLIGATIONS OF BANKS AND FIs UNDER PML ACT

Obligation of Banks and Financial Institutes and Intermediaries (Sec.12 to Sec.15) :-

• Maintain the records of all transactions (Single or Series) [i.e. nature and value].
• Maintain the records of the identities of clients.
• Information of transactions to be communicated to FIU- IND on monthly basis.
• Such records to be maintained for a period of five years from the ‘Date of
Transaction’.

I Roy :::: Faculty Member :::: 01-06-2023


FINANCIAL INTELLIGENCE UNIT (INDIA)
 A Central National Agency which acts as interface between Financial Sector and Law
Enforcement and Intelligence Agencies.

– Collects information,
– Analyzes information,
– Disseminates the information,
– Co-ordinates efforts to combat ‘Money Laundering’,
– Conducts Research and Analysis.

I Roy :::: Faculty Member :::: 01-06-2023


FOREIGN ACCOUNT TAX COMPLIANT ACT
What is FATCA?

The Foreign Account Tax Compliance Act (FATCA) is Tax Information Reporting regime,
which requires Financial Institutions (FIs) to identify their U.S. Accounts through
enhanced Due Diligence Reviews and report them periodically to the U.S. Internal
Revenue Service (IRS) or in case of Inter-Governmental Agreement(IGA), to appropriate
Government Authority.

I Roy :::: Faculty Member :::: 01-06-2023


COMMON REPORTING STANDARD (CRS)
What is CRS?

Common Reporting Standard (CRS) is a Global Level uniform standard for automatic
exchange of Financial Account Information. CRS, an initiative of G-20 countries and
Organisation for Economic Co-operation and Development (OECD), is similar to FATCA.

Under this standard, jurisdictions would obtain financial information from their
Financial Institutions (FIs) and exchange that information with other jurisdictions on an
automatic Annual Basis.

I Roy :::: Faculty Member :::: 01-06-2023


DOMAIN OF FATCA AND CRS

Who will be covered under the purview of FATCA and CRS?

FATCA Legislation will affect both individual and non-individual customers who are
treated as ‘U.S. persons’ for U.S. tax purposes. The FATCA Legislation will also affect
certain types of entities with Beneficial Owners/ Controlling Persons from U.S. An
account having U.S. indicia like U.S. place of birth, U.S. address etc. does not necessarily
mean that the account would be reported.

With respect to CRS, the coverage would extend to Account Holders/ Beneficial Owners
or controlling persons of entities, being Tax Residents of any of the Signatory Countries.

I Roy :::: Faculty Member :::: 01-06-2023


SOURCES OF DETAILED INFORMATION

Where can the customer find detailed information on FATCA/CRS?

FATCA and CRS Regulations, Notices and other related topics are available on the below
websites:
IRS website
https://www.irs.gov/Businesses/Corporations/Foreign-Account-Tax-Compliance-Act-FATCA

OECD website
http://www.oecd.org/tax/exchange-of-tax-information/

Income Tax Website


http://www.incometaxindia.gov.in/pages/communications/notifications.aspx

I Roy :::: Faculty Member :::: 01-06-2023


RESIDENCY RISK UNDERWRITING

Earlier, there were 7 Groups…. but, now that has been reduced to 5.
RESIDENT GROUP I
• Number of countries :18.
• No ‘Residence Extra’ subject to :
Endowment Type Single Premium Plans
ASA< SINGLE PREMIUM PAID
Maximum Policy Term of 15 years
Maximum SA of ₹10 lakh
• All Pension Products without any Life Cover can be allowed without any limit
without charging Residence Extra to NRIs but not to FNIO.

I Roy :::: Faculty Member :::: 05-09-2023 35


REVISED RESIDENTS’ GROUPS

RESIDENT GROUP II
• Number of countries: 39*
• No ‘Residence Extra’ subject to :
• Endowment type Single Premium Plans
ASA< SINGLE PREMIUM PAID
Maximum Policy Term of 15 years
Maximum SA of ₹ 25 lakh.
• All Pension Products without any Life Cover can be allowed without any limit
without charging residence extra to NRIs but not to FNIO.

I Roy :::: Faculty Member :::: 05-09-2023 36


REVISED RESIDENTS’ GROUPS

RESIDENT GROUP III


• Number of countries: 7
• Allowed cover with a Residence Extra of ₹ 3 per %o for a TRSA of ₹ 150 Lakh.
• Riders allowed: Only AB Rider
• Table Nos. 822, 823 & 825 Plans are not allowed.
• HIV Report is essential.

I Roy :::: Faculty Member :::: 05-09-2023 37


REVISED RESIDENTS’ GROUPS
RESIDENT GROUP IV
• Number of countries: 53
• With a Residence Extra of Rs. 2 %0 for a TRSA of ₹ 250 Lakhs
• Residence Groups III & IV can be allowed Cover without charging any Residence Extra as
follows:
Under Table Nos. 816, 817, 818 with
1. Single Premium Mode Only
2. maximum policy term of 15 years, and
3. subject to restriction of SA applicable to respective group
• All Pension Products without any Life Cover can be allowed without any limit without
charging Residence Extra to NRIs but not to FNIO.

I Roy :::: Faculty Member :::: 05-09-2023 38


REVISED RESIDENTS’ GROUPS
RESIDENT GROUP V

• Number of countries : 121.


• NMS is applicable.
• Allowed cover without charging any Residence Extra.
• Riders allowed to NRIs along with Basic Plan:
New Term Rider, PWB Rider and AB Rider.
• Riders allowed to FNIOs along with basic plan: Only AB Rider & New Term Rider &
PWB Rider only in case of proposals on Minor lives .
• Mail Order Business: Minimum Basic SA : ₹ 10 Lakhs (in the multiples of ₹ 1 Lac).
• Maximum insurance cover (TRSA) allowed ₹ 300 Lakh.
• Juvenile lives & Housewives falling under groups IV & V only.
• Proposals from Libya, Syria & Ukraine to be postponed.

I Roy :::: Faculty Member :::: 05-09-2023 39


INSURANCE FRAUDS AT N B STAGE
‘Fraud’ is legally explained as a deliberate act of somebody to deceive a victim for
unfair and unlawful gain or to deprive the victim of a legal right. It can be a civil or a
criminal matter.
‘Fraud’ may not be done always for monetary gain but for various other reasons getting
something done by making a false statement.

Insurance Fraud is neither defined in the Insurance Act, 1938 nor in the Insurance
(Laws) Amendment Act, 2015. There is no reference to various types of insurance
frauds : Internal or External Sources.

However, this does not deter the Insurers from adopting and implementing various
preventive and control measures to deal with frauds in insurance.

I Roy :::: Faculty Member :::: 05-09-2023


INSURANCE FRAUDS AT N B STAGE
Frauds in Life Insurance can be:
 Fraudulent Selling of Life Insurance Policies.
 Deaths in suspicious circumstances.
 Deaths reported during the 1st year of the Policy.
 Phantom Policies, etc.
There are two broad categories of insurance frauds:
SOFT FRAUDS: These are opportunistic frauds where the quantum of loss is exaggerated
(the principle of indemnity is defeated : making a fortune out of misfortune).

HARD FRAUDS: In this type of frauds, there is no loss or damage to life, but still a claim is
made under the policy.

I Roy :::: Faculty Member :::: 05-09-2023


INSURANCE FRAUDS AT N B STAGE
Frauds at NB Stage are essentially ‘Underwriting Frauds’.
‘Underwriting’ is the acceptance of the Proposal submitted by the insured subject to
certain Terms and Conditions including Premium Rate.

Frauds committed during this process are called ‘Underwriting Frauds’.


I. not furnishing the required information
II. Furnishing improper information by the proposed to the insurer
III. Issue of incorrect policy with Limited Cover subject to restricted terms and
conditions by the insurer
are a few examples of ‘UNDERWRITING / N B STAGE FRAUDS’

I Roy :::: Faculty Member :::: 05-09-2023


IMPLICATION OF SECTION 45
No policy of life insurance effected before the commencement of this Act shall after
the expiry of two years from the Date of Commencement of this Act and no policy of
insurance effected after the coming into force of this Act shall, after the expiry of two
years from the date on which it was effected be called in question by an insurer on the
ground that a statement made in the proposal of insurance or any report of a Medical
Officer, Referee,….or in any other document leading to the issue of the policy was
inaccurate or false, unless the insurer shows that such statement was on a material
matter or suppressed facts which it was material to disclose and the policyholder knew,
at the time of making it, that the statement was false or that it suppressed facts which
it was material to disclose. [i.e. intention to defraud the Insurer]
Provided that nothing in the Section shall prevent the insurer from calling the Proof of
Age at any time if he is entitled to do so….

I Roy :::: Faculty Member :::: 05-09-2023


CONTRACT OF INSURANCE
A] Issue of the Letter of Acceptance does not result in a Binding Contract.
B] Basis of Assessment of Risk : The ‘Proposal’ is not, technically, a ‘proposal – it is the
Basis of Assessment of Risk
C] Acceptance of Risk: The Underwriting Decision of the Insurer is the ‘Proposal’ [i.e.
the conditions of Acceptance].
D] The ‘Letter of Acceptance’ is the counter-offer from the Insurer which the proposer
is called upon to ‘accept’ by payment of requisite premium.
E] Modification of ‘Terms’ or rejection of Proposal [even after the Proposal Deposit /
Premium is tendered by the proposer / insured]
F] ‘Commencement of Risk’ is from the Date of Acceptance [FPR is issued]

I Roy :::: Faculty Member :::: 05-09-2023


CONTRACT OF INSURANCE
G] ‘Acceptance’ by the Insurer is always subject to the condition that if any adverse
event connected with the Risk has occurred between the Date of Proposal and the
Date of Acceptance, the assurance will be invalid unless intimation of such event is
given to the insurer and the acceptance is re-approved.

H] Duty of Disclosure: The Proposer has the duty to disclose to the Insurer all relevant
facts and information coming to his knowledge until the Date Of Contract [uberrima
fides] otherwise there is good ground for rescission.

I Roy :::: Faculty Member :::: 05-09-2023


I Roy :::: Faculty Member :::: 05-09-2023
Life Insurance
Products
&
Takaful Insurance

02.08.2023

(5.30 PM to 7.00 PM)

I Roy, Faculty Member


National Insurance Academy
Pune 1
GROUND RULES

 Physical & Mental Presence

 No Mobiles

 Interaction & Participation

 Questions : 3 Categories

I Roy :::: Faculty Member :::: 02-08-2023


SESSION OBJECTIVES

At the end of the Session, the participants shall have a broad overview of:
the ‘Traditional Products’ of Insurance and the components / aspects of
Riders
ULIPs
Annuities
New Emerging Products
TAKAFUL Insurance

I Roy :::: Faculty Member :::: 02-08-2023


MARKET POTENTIAL

“By providing financial protection against the major 19th & 20th Century risk
of dying too soon, life insurance became the biggest financial industry of
those centuries.

Providing financial protection against the new risk of living too long may well
become the next century’s major and most profitable financial industry”.

: Peter Drucker (The Economist: 25.9.99)

I Roy :::: Faculty Member :::: 02-08-2023


THE OVERVIEW OF LIFE INSURANCE
1. Types of life insurance plans include Term Life Insurance, Convertible Term
Insurance, Endowment, Unit Linked Policies, Annuities, Whole Life policies,
etc.
2. ‘Estate Planning’ using life insurance in innovative ways, such as premium
financing, can enable one to protect the wealth from significant dilution.
3. Wills, Succession Certificates, Nomination and Assignment of policies are
some of the mechanisms of Estate Planning.
4. The goals of Estate Planning include Transfer of Assets to intended
beneficiaries, Reduction or Elimination of Estate Taxes and Protection of
Beneficiaries from Creditor’s Claims, etc.
5. Organisations can avail of Insurance Plans like Keyman Insurance, Partnership
Insurance, Group Insurance, etc.
5
BENEFITS OF LIFE INSURANCE
Family Protection
Planning for Life Stage Needs Asset Protection

Protection Against Health


Retirement Planning Care Expenses
Benefits of
Life Insurance Mortgage Redemption
Child Education/
Child Marriage

Tax Benefits Liquidity

Safe & Secure Long-term Investments Aid to Thrift

Estate Protection from Creditors


KEYMAN INSURANCE

• Insurance on the life of a Key Person of the Company.

• Indemnify the company against the loss of the key person, whose skills
and contribution is very critical to the company.

• It is a form of Insurance coverage available to elite Business Houses.

• Only Term Assurance Plans with no Surrender Value are available


under Keyman Insurance.

I Roy :::: Faculty Member :::: 02-08-2023 7


KEYMAN INSURANCE
Criteria:
‘Keyman’ must possess qualities like expertise, creativity, knowledge
and ability crucial to the ongoing operation of company
 Insurance coverage is effective as long as the individual meets the
criteria of ‘Keyman’ in the Company

Purpose:
 To provide protection to the Company in recovering from the loss
of a Key person, while maintaining the continuity of Business.

I Roy :::: Faculty Member :::: 02-08-2023 8


KEYMAN INSURANCE

Benefits:

 In case of a death / disability of ‘Keyman’, the Company gets


money to cope up with the loss.

Premium paid by Employer is treated as the Business Expense


under Section 37(1) of the Income Tax Act 1961.

9
KEYMAN INSURANCE
Quantum of Coverage:

• 3 Times the Avg. Gross Profit of the Company for the last 3 Yrs.

• 5 Times the Avg. Net Profit of the Company for the last 3 yrs.

• 10 Times the Total Annual Compensation Package for the Keyman


which includes Salary, Bonus and all other perquisites.

• Total permissible amount will be min.of the amount arrived from


above
10
KEYMAN INSURANCE
Standard Documents:

• Keyman Questionnaire duly signed by Authorized Signatory of the


company and countersigned by the key person
• Bio Data of Key person

• Detailed analysis to explain, how the person to be insured is a key to


the company

• Memorandum of Association/ Article of Association of company

• Audited P&L A/c and Balance Sheet of the proposing company

• Shareholding pattern of the proposing company 11


KEYMAN INSURANCE

Standard Documents:

• Copy of Board Resolution passed by company duly signed and stamped


by the Authorized Signatory having details of the name(s) of the
Key person/s and the corresponding Sum Assured to be applied.

• Copy of Income Tax Returns of the Proposing company.

• Copy of Income Tax Returns of the Life Assured

12
PARTNERSHIP INSURANCE
• All Insurable ‘Partners’ in the Firm, with an agreement which declares
that in case of a death of any partner, the living partners will have the
right to purchase the deceased partner’s share in the Firm.

• All the Partners in a Partnership Firm have an ‘insurable interest’ in


each partner’s life to the extent of the amount of ‘Purchase Money”,
which is needed to be paid on the basis of each Partner’s share.

• In case of a death of any Partner, proceeds will be paid to the Firm.

• For the settlement of share, these proceeds will be paid to the legal
heirs of the deceased Partner by the Firm. 13
PARTNERSHIP INSURANCE
• Criteria:
• Lives of all insurable partners should be insured simultaneously
• Partner’s Sum Assured coverage will depend upon their capital
invested

• Partnership agreement should have a clause that the partnership can


be revoked definitely, if a partner dies

• Difference of age between the partners should not be too large

• Usually, the Maturity Age is up to 75 years.

• On the death of a partner, Capital must be withdrawn. 14


Partnership Insurance
• Requirements:
• Copy of Partnership deed with clause declaring that if the partner
dies, the remaining partners will have the option to purchase the
deceased partner’s share
• Copies of ITR of the Firm for the last 3 years
• Audited P&L and Balance sheet for last 3 years
• The copy of Audited Balance sheet having schedule of partners capital
account
• Letter of Authority in Favour of the Partner to sign the proposal
• Partnership Questionnaire duly signed and stamped by the Authorised
signatory of the parnership firm and countersigned by the Life
assured
15
Group Insurance
• Group of People covered under single policy
• Single Policy is known as Master policy
• Contract between Insurer and Master Policy Holder
• It should be a homogeneous group
• Should not be formed only for the purpose of taking insurance
• Minimum Group size
• Attributes:-
• Low cost
• Evidence of Insurability (Actively at Work)
• Free Risk Cover Limit
• Experience Rating
16
Employer-Employee Insurance
• 03 Pillars of Pension

1. State funded Pension

2. Occupational Pension schemes (Provident Fund, Gratuity,


Superannuation), In which PF & Gratuity are statutory binding

3. Self Funded Pension schemes

17
Employer-Employee Insurance
An employer-employee relationship exists between the Master policy holder
and the Member

Group Term Insurance Products

Group Savings Insurance Products (Superannuation, Gratuity, Leave


encashment etc)

Group Credit Life Insurance Products

Single Premium Group Term Insurance Products

Group Annuity Products ( Life Annuity, Life Annuity with Return of Purchase
Price, Annuity certain for a specific period, Joint Annuity (with or without
return of purchase price)) 18
Salary Saving Schemes
• Employee authorizes their employer to deduct premium from their
salary and remit it to the Insurer

• Employer is the Paying Authority

• Low Administrative cost

• Less chances of Lapsation & No extra charges on monthly mode

• A combined premium notice is served to the employer

• A newly appointed persons of the employer also gets attracted to take


insurance coverage 19
INSURANCE RIDERS
Rider is added to the Base Policy at a nominal cost to enhance Protection & Security

 Accidental Death Benefit Rider

 Premium Waiver Rider

 Term Rider

 Critical Illness Rider

 Income Benefit Rider

 Accelerated Death Benefit Rider

 Disability Benefit Rider

 Guaranteed Insurability Rider


HEALTH INSURANCE : OVERVIEW

The unrelenting rise in the cost of healthcare coupled with the fall of the
old systems of joint families, groups etc., led to the rise in the need for
health insurance.

Health Insurance aims to provide a defence against the hardship caused


due to loss of income as a result of disease, accident, surgery and
hospitalisation.

21
ADVANTAGES OF HEALTH INSURANCE

Advantages of health insurance to individuals include :


a. Doing away the need for building a reserve fund for medical needs
b. Cushion for resources meant for other financial goals
c. Income tax benefits
d. Peace of mind
Advantages of Health Insurance to society include:
a. Mobilisation of resources for economic development of the country
b. Substitute for Government provided social security
c. Investment expertise

22
• Life insurance products mitigate the consequence of
premature death

while

• Pension products mitigate the consequence of living too long


assuring dignified retired life, independent of the charity of
others.
Need for Pension Plans
Increased Longevity
Fear of Over living/outliving the savings
 Large workforce engaged in informal sector
 Large Mortality Protection Gap
Increased or Unexpected cost of living
Improvement in medical facilities but voluminous cost of medical
treatment
New living avenues expected
Nuclear Family Status
Single hood by force or by mentality
Increasing Trend of Divorces in India
Inability to earn at later or in between stage of life/ Early Burn out.
ANNUITY SCHEMES

1. DEFINED BENEFIT SCHEME

2. DEFINED CONTRIBUTION SCHEME


Types of Annuities

• Immediate Annuity

• Deferred Annuity.
Immediate Annuity
Deferred Annuity
Options available to individuals on pension plans

• Annuity payable for life.

• Life annuity with fixed period guarantees.

• Joint life & last survivor annuity.

• Annuity with return of purchase price.

• Life annuity increasing at a fixed rate.


TAKAFUL INSURANCE
• ‘Takaful’ refers to insurance that is offered according to the tenets of Islam
as set out in the Quran.

• b) The key difference between Takaful and conventional insurance lies in the
way the risk is assessed and handled, as well as how the Takaful fund is
managed.

• c) Most of the phenomenal growth for Takaful, to date has taken place in
countries with large Muslim populations, but this is beginning to change. Other
countries are also catching up.

• d) Malaysia was the first country to implement a regulation specific to Takaful


(Takaful Act, 1984).

• e) The key concepts of Islamic Law applied to insurance are Riba, Gharar,
Maysir and Haram 30
TAKAFUL INSURANCE

f) A Takaful Contract should embody the following conditions:

 Specialty condition,
 Partnership condition,
 Investment condition and

Management condition

31
TAKAFUL INSURANCE
g) Takaful models may be separated into three categories:

 Non-profit model
 Al- Mudaraba model and
 Al- Wakalah model

• h) The split of the insurance business into administration /asset management


and risk- carrying function obliges the Takaful operator to maintain strictly
segregated funds:

 Shareholders’ Fund AND


 Participants’ Fund

32
TAKAFUL INSURANCE

i) Administration of Takaful company involves:

 Branch Operations Management


 General Management AND
 Personal Training

33
TAKAFUL INSURANCE

J) Life insurance-based Family Takaful products include:

 Protection Takaful,
 Saving Takaful,
 Education Takaful and
 Medical Takaful

34
35
THE ECONOMICS OF LIFE
INSURANCE

I Roy :::: Faculty Member :::: 02-08-2023


GROUND RULES

 Physical & Mental Presence

 No Mobiles

 Interaction & Participation

 Questions : 3 Categories

I Roy :::: Faculty Member :::: 02-08-2023


SESSION OBJECTIVES

At the end of the Session, the participants shall be equipped to appreciate:

 the basic foundation stone of the concept of Insurance


 its evolution with time in the global perspective as well as in India
 the emerging markets in Life Insurance AND
 the HLV and the CNA aspects which, essentially, illustrates the Financial Planning
associated with Life Insurance.

I Roy :::: Faculty Member :::: 02-08-2023


THE BASICS OF INSURANCE
INSURANCE:
It cannot prevent the occurrence of the ‘PERIL’ or the resultant loss due to the ‘PERIL’ [any
event /incident that may cause a ‘loss’, i.e. fire / flood / earthquake/ lightning/
landslide/….] – it is just a tool to reduce the financial loss to the owner / beneficiary of the
asset insured [protection of the Economic Value of the said ASSET]. The pivotal concept is
that of ‘INDEMNITY’.
RISK:
It is the uncertainty of outcome – if there is a chance that the outcome could be different
expectations, there is a ‘RISK’.
HAZARD:
It is a condition that increases the chances of loss –something that accelerates the ‘PERIL’.
The broad classifications are ‘PHYSICAL’ and ‘MORAL’.

I Roy :::: Faculty Member :::: 02-08-2023


THE BASICS OF INSURANCE
The actual loss arising out of a ‘PERIL’ striking includes a series of aspects:
(a) Repair, Replacement or Reinstatement
(b) Consequential Losses until Repair, Replacement or Reinstatement
Maximum Possible Loss (M.P.L) x Probability of PERIL striking = Probable Maximum Loss (P.M.L)
The various ways of managing / addressing the RISK includes:
 Prevention ‘RETENTION’ and ‘TRANSFER’ may appear to be mutually exclusive,
 Reduction but they are not. Through SYSTEMS OF EXCESS, retentions are
 Retaining possible from what has been transferred to Insurers. These are Risk
 Transfer Financing Techniques – they seek to make good the LOSSES.
Insurance / Reinsurance = ‘Transfer of Risk to Insurer / Reinsurer’

I Roy :::: Faculty Member :::: 02-08-2023


THE BASICS OF INSURANCE

ETHICAL CONSIDERATIONS ARE


AS IMPORTANT AS
FINANCIAL AND TECHNICAL CONSIDERATIONS
IN INSURANCE.

PRINCIPLE OF UTMOST GOOD FAITH

I Roy :::: Faculty Member :::: 02-08-2023


THE BASICS OF INSURANCE
In simple terms, ‘INSURANCE’ is the process of :

 passing / transferring of risk of incurring loss by the Owner [who cannot bear the
Risk] of the asset

 to the other Party [i.e. Insurer] who can bear the Risk

 in return of a consideration [i.e. Premium]

I Roy :::: Faculty Member :::: 02-08-2023


HOW INSURANCE EVOLVED : THE WORLD HISTORY
 Over 5000 years back, the Chinese Traders used insurance as a preventive measure
against ‘PIRACY’. The cargo of each ship would be distributed among other ships so
that if one ship was lost or captured by pirates, the loss would be only ‘PARTIAL’.
 The 1st WRITTEN INSURANCE POLICY was on a Babylonian Obelisk Monument with
the Code of King Hammurabi – the Hammurabi Code was one of the first forms of
written laws. The basic insurance gave the Babylonian Traders the protection against
‘loss of cargo’.
 In 1666, THE GREAT FIRE OF LONDON destroyed more than 13,000 houses.
 To counter such loss-making events in future, FIRE OFFICE, the 1st Fire Insurance
Company was started in 1680.
 Traders in London used to gather in the Lloyd’s Coffee House and agree to share the
losses of goods (due to piracy) or ship-sinking (due to bad weather or other reason).

I Roy :::: Faculty Member :::: 02-08-2023


HISTORY OF INDIAN INSURANCE

In India, formal insurance practice began in the 18th Century. The following chart bears
relevance to the initial insurance companies established in India.
YEAR EVENT
1818 The 1st Life Insurance Company, ORIENTAL LIFE INSURANCE COMPANY, was established in Calcutta [Kolkata].

1829 MADRAS EQUITABLE was established in Madras Presidency [Chennai].


1850 The 1st Non-life Insurance Company, TRITON INSURANCE COMPANY LIMITED was set up.

1870 BOMBAY MUTUAL was started in Bombay [Mumbai].


1874 ORIENTAL was started in Bombay [Mumbai].
1896 BHARAT INSURANCE COMPANY LIMITED was stated in Delhi.
1897 EMPIRE OF INDIA was started in Bombay [Mumbai].

I Roy :::: Faculty Member :::: 02-08-2023


HISTORY OF INDIAN INSURANCE
 The growth of insurance in India required the enactment of the Indian Life Insurance
Companies Act, 1912, as the first statute to regulate Life Insurance business.
 Prior to 1912, India had no legislation to regulate Insurance Business.
 In 1928, the Indian Insurance Companies Act was promulgated to enable the
Government to collect statistical information about, both, life and non-life insurance
businesses.
 In 1938, the Insurance Act, 1938, came into being.
 In 1956, Life Insurance Corporation of India was formed by an Act of the Parliament by
the amalgamation of 154 Indian Insurance Companies, 16 Foreign Insurance Companies
and 75 Provincial Societies [i.e. total of 245 separate entities].
 In 1973, General Insurance Business was nationalised in India and GIC, National Ins. Co.
Ltd., New India Assu. Co. Ltd., Oriental Ins. Co. Ltd. & United India Ins Co Ltd were formed.

I Roy :::: Faculty Member :::: 02-08-2023


WHY IRDA ACT, 1999 ?

• The ‘LPG’ model was accepted by the then Govt. in1991.


• Liberalisation
• Privatisation
• Globalisation

• It was the pre-condition given by IMF / WB to open the Insurance / Banking Sectors in
India.

I Roy :::: Faculty Member :::: 02-08-2023


REGULATOR : THE EVOLUTION

• A major recommendation of Malhotra Committee Report (January 7, 1994) was to


establish an independent Regulatory Authority for the Insurance Sector in India.
• The IRDA Act 1999 was passed.
• Incorporated as a Statutory Body in 2000. [01-07-2000]
• The IRDA Act 1999 allowed Pvt. Players to enter the Indian Insurance Sector besides a
maximum foreign equity of 26% in Pvt. Insurance Company having operations in India.
• The Insurance Bill proposed, by the then UPA Govt. (July, 2013), to raise the FDI Limit
from 26% to 49%.
• The Insurance Bill was passed in the Rajya Sabha (in the regime of the then NDA Govt.)
on 12th March, 2015.
• Periodical amendments on different aspects have been made from time to time.

I Roy :::: Faculty Member :::: 02-08-2023


REGULATOR : ROLE & POWER
• The IRDA was constituted to regulate and develop the Insurance Business in India.
• As a key part of its role, it is responsible to protect the rights of the Policyholders.
[Section 14]

• The primary duties are as under:


 provides Certificate of Registration to Insurance Company
 renews, modifies, withdraws, suspends or cancels the Registration
 frames Regulations on Protection of Policyholders’ interests
 offers Policyholders the right to voice their complaints against Insurers / Insurance
Companies
 takes up the complaints of the Policyholders in its Grievance Redressal Cell
 specifies requisite qualifications, code of conduct and practical training for insurance
intermediaries and agents
 specifies the Code of Conduct for Surveyors and Loss-assessors
I Roy :::: Faculty Member :::: 02-08-2023
REGULATOR : ROLE & POWER
 promotes efficiency in the conduct of Insurance businesses
 promotes and regulates activities of professional organisations connected with insurance
 levies fees and other charges to carry out the purposes of the IRDAI Act
 can call for information from, undertake the inspection of, conduct enquiries and
investigations including the auditing of insurers, insurance intermediaries and other
organisations connected with the business of insurance
 specifies the form and manner which the Books of Account should be maintained and
statements of accounts should be rendered by insurers and other insurance
intermediaries
 Regulates the investment of Funds by Insurance Companies
 Regulates the maintenance of the Margins of Solvency

I Roy :::: Faculty Member :::: 02-08-2023


REGULATOR : ROLE & POWER

 adjudicates disputes between insurers and intermediaries / insurance intermediaries.


 specifies the percentage of premium income of the Insurer to finance Schemes for the
promotion and regulation of certain specified professional organisations.
 specifies the percentage of life insurance business to be undertaken by an insurer in
the rural / social sector.
 exercises any other powers that may be prescribed.

I Roy :::: Faculty Member :::: 02-08-2023


I Roy :::: Faculty Member :::: 02-08-2023
APPLICABILITY

1. These Regulations are complementary to any other Regulations made by the Authority,
which, inter alia, provide for protection of the interests of policyholders.

2. These Regulations apply to all Insurers, Distribution Channels, Intermediaries, Insurance


Intermediaries, other regulated entities and policyholders.

I Roy :::: Faculty Member :::: 02-08-2023


WHAT DO THE REGULATIONS ENVISAGE?

1. To ensure that the interests of insurance policyholders are protected.

2. To ensure that Insurers, Distribution Channels and other regulated entities fulfill their
obligations towards policyholders and have in place standard procedures and best
practices in sales and service of insurance policies.

3. To ensure policyholder-centric Governance by Insurers with emphasis on Grievance


Redressal.

I Roy :::: Faculty Member :::: 02-08-2023


NOW, WE MOVE ON TO A BRIEF DISCUSSION ON
‘EMERGING INSURANCE MARKETS’

I Roy :::: Faculty Member :::: 02-08-2023


SHARE OF L.I. IN HOUSEHOLD SAVINGS: TREND
HOW HAVE WE GROWN SINCE OPENING UP?

INR 36,071 INR 6,92,614


Life Insurance Premium
Crores
CAGR of 15% p.a. Crores
[F.Y. 2000-01]
[F.Y. 2021-22]

19X

I Roy :::: Faculty Member ::: 02-08-2023


HOW HAVE WE GROWN SINCE OPENING UP?

INR 36,071 INR 6,92,614


Life Insurance Premium
Crores
CAGR of 15% p.a. Crores
[F.Y. 2000-01]
[F.Y. 2021-22]

19X

I Roy :::: Faculty Member ::: 02-08-2023


THE VARIOUS EMERGING TRENDS

 Customer Engagement takes Centre Stage.


 Omnichannel Sales and novel ways to connect to customers.
 Providing Customers with SELF SERVICE Options.
 Simple Innovative and differentiated products.
 Life Insurers are adopting intelligent automation.
 Leveraging Alternative Data Sources for Underwriting decisions.
 Detection and prevention of frauds through new methods.
 Life Insurers are transitioning out of legacy platforms.
 Collaborating with eco-system players to speed up the Game.

I Roy :::: Faculty Member ::: 02-08-2023


EMERGING TRENDS IN LIFE INSURANCE

• For FY23, the First-year Premium numbers grew by 17.9% vs. the 12.9% growth
reported in FY22. The FY23 ‘Growth can continue to be attributed primarily to Group
Single Premiums and, more specifically to LIC, a low base, which saw subdued levels
due to the pandemic-induced (Covid-19 second wave) lockdowns.

• Meanwhile, the Private Insurance Companies continue to extend their lead in the
individual non-singe premium segment.

I Roy :::: Faculty Member :::: 02-08-2023


EMERGING TRENDS IN LIFE INSURANCE

Further, the aggregate monthly first-year premium of Life Insurers reported a


continued drop of 12.6% to ₹ 52,081 crore in March, 2023, after a 16.8% decrease in
February 2023. Sequentially, the premiums more than doubled compared to February
2023. The y-o-y decline for the month can be attributed to group premiums (primarily
LIC).

Private Insurance companies continued their Growth Momentum as the Fiscal Year
closed (the Tax Saving options) and non-Par policies were pushed aggressively to HNIs
prior to new Taxation Regime becoming effective from April 2023.

I Roy :::: Faculty Member :::: 02-08-2023


EMERGING TRENDS IN LIFE INSURANCE
Figure 1 : Movement in Monthly First-year Premium (₹ Crore)
MONTH Premium in Premium in Premium in FY 21 vs FY 20 FY 22 vs FY 21 FY 23 vs FY 22
FY 21 FY 22 FY 23 (%) (%) (%)
April 6,728 9,739 17,940 -32.6 44.8 84.2
May 13,739 12,977 24,480 -25.4 -5.5 88.6
June 28,869 30,009 31,255 -10.5 4.0 4.1
July 22,986 20,435 39,079 6.9 -11.1 91.2
August 27,040 27,821 32,856 14.8 2.9 18.1
September 25,366 31,001 36,367 26.5 22.2 17.3
October 22,776 21,606 24,917 31.9 -5.1 15.3
November 19,159 27,177 35,459 -26.9 41.8 30.5
December 24,383 24,466 26,838 -2.8 0.3 9.7
January 21,390 21,957 26,424 3.7 2.7 20.3
February 22,425 27,465 22,848 21.0 22.5 -16.8
March 43,417 59,609 52,081 70.9 37.3 -12.6
I Roy :::: Faculty Member :::: 02-08-2023
EMERGING TRENDS IN LIFE INSURANCE
Figure 2 : First – year Premium Growth of Life Insurance Companies (₹ Crore)
Insurer For Mar For Mar For Mar Mar 2022 Mar 2023 FY21 FY22 FY 23 FY22 FY 23
2022
2021 2023 Growth Growth Growth Growth
Private 15,310.8 17,289.8 23,364.9 12.9 35.1 94,103.4 1,15,503.1 1,38,643.9 22.7 20.0
Individual Single 1,990.6 2,357.4 2,249.8 18.4 -4.6 13,584.2 17,006.3 19,433.5 25.6 13.9
Individual Non- Single 7,735.9 8,665.6 13,653.2 12.0 57.3 43,833.4 53,370.9 66,433.8 21.8 24.5
Group Single 4,455.9 5,089.3 6,347.2 14.5 24.7 30,304.4 37,619.1 43,748.8 24.1 16.3
Group Non- Single 146.7 44.9 26.4 -69.4 -41.3 401.8 401.4 161.4 -0.1 -59.8
Group Yearly Renew. 991.7 1,132.5 1,106.3 14.2 -2.3 5,979.6 7,045.6 8,856.4 17.8 25.7
LIC 28,105.9 42,319.2 28,716.2 50.6 -32.1 1,84,174.6 1,98,759.9 2,31,899.2 7.9 16.7
Individual Single 2,495.8 4,018.3 4,278.2 61.0 6.5 28,822.5 24,805.5 25,623.8 -13.9 3.3
Individual Non- Single 5,046.2 5,501.1 6,078.0 9.0 10.5 27,584.0 30,015.7 33,015.5 8.8 10.0
Group Single 20,294.0 30,052.9 17,749.2 48.1 -40.9 1,21,569.5 1,37,350.4 1,67,235.0 13.0 21.8
Group Non- Single 298.9 2,577.0 460.3 762.1 -82.1 5,598.1 5,249.1 5,180.8 -6.2 -1.3
Group Yearly Renew. (29.0) 170.0 150.5 -685.9 -11.4 600.5 1,339.1 844.0 123.0 -37.0
Grand Total 43,416.7 59,609.0 52.081.1 37.3 -12.6 2,78,278.0 3,14,263.0 3,70,543.0 12.9 17.9
Individual Single 4,486.4 6,375.7 6,528.0 42.1 2.4 42,406.7 41,871.8 45,067.3 -1.3 7.6
Individual Non- Single 12,782.1 14,166.8 19,713.2 10.8 39.2 71,417.4 83,386.6 99,449.3 16.8 19.3
Group Single 24,739.9 35,142.1 24,096.5 42.0 -31.4 1,51,873.8 1,74,969.4 2,10,983.8 15.2 20.6
Group Non- Single 445.7 2,621.9 486.7 488.3 -81.4 6,000.0 5,650.4 5,342.2 -5.8 -5.5
Group Yearly Renew. 962.7 1,302.5 1,256.8 35.3 -3.5 6,580.1 8,384.4 9,700.4 27.4 15.7

I Roy :::: Faculty Member :::: 02-08-2023


EMERGING TRENDS IN LIFE INSURANCE
• For FY23, LIC reported a Growth Rate of 16.7% more than doubled compared to the rate of
7.9% reported for FY22. Meanwhile, the Growth Rate of its Private peers decelerated
marginally to 20.0% from 22.7% last year. The FY23 growth can be attributed to group
single premiums especially by LIC and individual non-Single Premiums, more specifically by
Private companies.
• LIC’s first-year premium fell by 32.1% for March 2023; vs an increase of 50.6% witnessed
in March 2022. The drop can be attributed to a decrease in group premiums as well as
slower growth in individual single premiums. Meanwhile, Private insurers reported a
Growth Rate of 35.1% in March 2023 which is nearly three times the rate reported in
March 2022 (12.9%). The monthly increase can be attributed to Individual Non-Single and
Group Single premiums, which offset the fall in Group Non-Single and Individual Single
premiums.
• Further, it can also be attributed to Private Companies pushing large value Non-par
policies before the end of the Fiscal Year [i.e. 2022-23].
I Roy :::: Faculty Member :::: 02-08-2023
EMERGING TRENDS IN LIFE INSURANCE
Figure 3 : Movement in Premium Type (₹ Crore) of Life Insurance Companies.
Premium Type For Mar For Mar For Mar Mar 2022 Mar 2023 FY21 FY22 FY 23 FY22 FY 23
2022
2021 2023 Growth Growth Growth Growth

Single 29,226.3 41,517.9 30.624.4 42.1 -26.2 1,94,280.5 2,16,841.2 2,56,051.1 11.6 18.1
Non- Single 14,190.4 18.091.1 21,456.7 27.5 18.6 83,997.5 97,421.8 1,14,491.9 16.0 17.5

For March 2023, the Growth Rate of Non-Single Premiums slowed to 18.6% vs. 27.5%
reported in March 2022, while Single Premiums fell by 26.2% in March 2023 vs. an increase
of 42.1% in March 2022. In spite of this fall for the month, Single Premiums continue to
account for a substantial portion of the overall first-year premiums.

The share of Single Premiums has moved from 70% for FY21 to 69% in FY22 and FY23.
I Roy :::: Faculty Member :::: 02-08-2023
EMERGING TRENDS IN LIFE INSURANCE
Figure 4 : Movement in Premium Type (₹ Crore) of Life Insurance Companies.
Premium Type For Mar For Mar For Mar Mar 2022 Mar FY21 FY22 FY 23 FY22 FY 23
2021 2022 2023 Growth 2023 Growth Growth
Growth

Individual 17,268.5 20,542.5 26,241.1 19.0 27.7 1,13,824.1 1,25,258.4 1,44,516.6 10.0 15.4
Group 26,148.2 39,065.5 25,840.0 49.4 -339 1,64,453.9 1,89,004.6 2,26,026.5 14.9 19.5

For March 2023, the Group Premiums dropped by 33.9%, similar to the drop witnessed in
February 2023, compared to an increase of 49.4% in March 2022. Meanwhile, Individual
Premiums increased by 27.7% around 1.5 times the last year’s rate at 19.0%. Further, for
FY23, growth in Group Premiums has continued more than the growth in individual
premiums.

Individual Premiums continue to remain smaller in size compared to Group Premiums.


I Roy :::: Faculty Member :::: 02-08-2023
EMERGING TRENDS IN LIFE INSURANCE
Figure 5 : Movement in Sum Assured (₹ Lakh Crore) of Life Insurance Companies.
Sum Assured For Mar For Mar For Mar Mar 2022 Mar 2023 FY21 FY22 FY 23 FY22 FY 23
2022
2021 2023 [Growth] [Growth] [Growth] [Growth]

Private 5.6 5.2 8.0 -7.6 54.9% 40.5 47.3 60.4 16.9% 27.7%
LIC 2.6 1.8 2.7 -29.3% 49.7% 8.9 10.4 12.4 16.3% 18.9%
TOTAL 8.1 9.0 10.7 -14.4% 53.5% 49.4 57.7 72.8 16.8% 26.1%

For FY23, the Private Companies, as well as LIC, have continued to report Growth in
their Sum Assured. Further, given the preponderance of policies geared towards Single
Premium/ Annuity Plans, LIC’s share remains small compared to its Private peers which
focus on Protection Plans. In March 2023, the Sum Assured of Private companies grew
faster as compared to LIC; meanwhile, for the same period last year, both segments
had reported a drop with LIC reporting a bigger fall compared to its Private peers.

I Roy :::: Faculty Member :::: 02-08-2023


ANALYSIS & INFERENCE
• Insurance Demand is positively correlated with economic growth and grows at a
multiple to the GDP. The top line of life insurers is anticipated to remain healthy as it
would be the first full year without any Covid-related restrictions, an increase in non-
par business during Q4FY23, increase in term policies (Protection Plans) while the
demand for Annuity has continued in the near term coupled with cost management.
The final finance bill has revised the tax benefits on all long-term debt mutual funds to
the marginal rate of tax, thereby eliminating the benefits of indexation for new
purchases after April 1, 2023. Additionally, returns from non-linked policies below ₹ 5
lakhs of annual premia continue to remain tax free, hence some incremental flows
from the debt mutual funds could flow into such insurance plans, marginally offsetting
the impact of slowdown in high value policies.

I Roy :::: Faculty Member :::: 02-08-2023


ANALYSIS & INFERENCE
• The Insurance Sector is expected to continue its trajectory after the companies tweak
their Policy Mix to drive Growth. Further, given the Protection Gap and insurance
requirements, the Long-term Growth of the life insurance segment remains intact.

• The growth would also be driven by a supportive Regulatory landscape (ease of doing
business, Bima Sugam, Bima Vahak, Bima Vistaar, consolidating the expense of
management limits), a push to increase insurance coverage, especially in the Rural
populace, product innovations/customisation and allowing Corporate Agents to take
on additional companies.

I Roy :::: Faculty Member :::: 02-08-2023


MARKET SHARE: TREND ANALYSIS

I Roy :::: Faculty Member :::: 02-08-2023


OVER TO:

‘FINANCIAL PLANNING AND LIFE INSURANCE’

I Roy :::: Faculty Member :::: 02-08-2023


DESIRES AND DESIRES….

Children’s education
Dream car A lavish house

Children’s marriage Happy Retirement


Tours n Holidays

I Roy :::: Faculty Member :::: 02-08-2023


WHAT IS FINANCIAL PLANNING??

• A disciplined way to achieve one’s financial


and personal goals.
THE ‘LIFE STAGES’

STAGES OF OUR LIFE

INITIAL PRE- POST-


PRIME EARNING
EARNING RETIREMENT RETIREMENT
STAGE
STAGE STAGE STAGE

I Roy :::: Faculty Member :::: 02-08-2023


DECODING FINANCIAL PLANNING

‘Financial Planning’ is the process of:


1) identifying a person’s financial goals,
2) evaluating existing resources, and
3) designing the financial strategies that help the person to achieve those goals.

I Roy :::: Faculty Member :::: 02-08-2023


WHY MOST PEOPLE AVOID ‘FINANCIAL PLANNING’?

They:
• think Financial Planning is for Rich people

• feel they have already done it

• are going to get pension!

• their kids will take care of them when they become aged.
I Roy :::: Faculty Member :::: 02-08-2023
FOOD FOR THOUGHT !

FUTURE-READY?

I Roy :::: Faculty Member :::: 02-08-2023


CHAMPION !!!!!

I Roy :::: Faculty Member :::: 02-08-2023


WHAT IF NO FINANCIAL PLANNING…?

MIKE TYSON
• Former American World Heavyweight Boxing Champion.
• Youngest man to have won the Boxing World Heavyweight Title.
• Made US $30 Million during his brief and eventful Boxing Career.
Declared bankrupt in 2003 !!!!
REASON:
• Indiscriminate Spending.
• No ‘Financial Planning’.

I Roy :::: Faculty Member :::: 02-08-2023


WINNER !!!!

I Roy :::: Faculty Member :::: 02-08-2023


WHAT IN CASE OF SOUND FINANCIAL PLANNING…?
KAPIL DEV NIKHANJ
• Captained India to its maiden Cricket World Cup Title in 1983.
• His businesses:
• 5% stake in Zicom Electronics
• Invested money in his own Kapil's Eleven restaurant
• and Kaptain's Retreat Hotel.
• Established a company Dev Musco Lighting Pvt Ltd

• Result: He is living comfortably even after retirement.

I Roy :::: Faculty Member :::: 02-08-2023


OUR COMMON ENEMY: INFLATION

• Bank FD with 8%
• In fact, it gives negative (-) 2%, if inflation is 10%.
“Real Return = [Declared Return – Inflation]”

• See the following chart for three persons in different Tax slabs of
10%, 20% and 30%....

I Roy :::: Faculty Member :::: 02-08-2023


GIVE THIS A THOUGHT

You may / may not like it! But retirement is a reality for every
working person.

Mon- Sat: No expenses!


Sunday: ????

After Retirement: ?????????????

I Roy :::: Faculty Member :::: 02-08-2023


THE ‘FINANCIAL PLANNING’ PROCESS

The ‘Financial Planning Process’ consists of the following SIX STEPS:


 Gathering ‘Financial Information’
 Identification of ‘Financial Goals’
 Analysing ‘Financial Preferences’
 Developing a ‘Financial Plan’
 Implementing the ‘Financial Plan’
 Monitoring the ‘Financial Plan’

I Roy :::: Faculty Member :::: 02-08-2023


TAX AND INFLATION IMPACT
(FD 8%, inflation 6%)

8.00%
7.20% 6.40%
7.00%
6.00%
5.60%
5.00%
4.00%
3.00%
2.00% 1.20%
1.00% 0.40%
0.00%
-1.00%
10% 20% -0.40%
30%

I Roy :::: Faculty Member :::: 02-08-2023


COMPONENTS OF FINANCIAL PLANNING

Investment Tax
Planning
Planning
Financial
Planning

Retirement Estate
Planning Planning

I Roy :::: Faculty Member :::: 02-08-2023


WE NEED TO HAVE A PLAN “B”….

Plan A:
Everything goes right,
and your own
investments take care.

Life
Goals
Plan B:
What if something
happens to you?
Life Insurance will take
care.

I Roy :::: Faculty Member :::: 02-08-2023


VALUE OF HUMAN LIFE

• It is not possible to put any monetary value on human life.

• Its value is beyond any measurement.

• However, for the protection of the interests created , some monetary


value needs to be assigned.

I Roy :::: Faculty Member :::: 02-08-2023


“HUMAN LIFE VALUE” CONCEPT
• Concept of Human Life Value
 when the child grows into an adult, he acquires earning power through education,
experience, knowledge….
 it enables the person to satisfy his needs as also the needs of his dependents
 this earning power or productive capacity is called his Human Life Value. His income
keeps his family and his business running.

I Roy :::: Faculty Member :::: 02-08-2023


“HUMAN LIFE VALUE” CONCEPT

• Professor S. S. Huebner of Pennsylvania University, U. S. A. developed


this scientific method of estimating the Human Life Value
• He was the first person to present HLV as a philosophical concept
• It helps to analyze the economic risk faced by the individual

I Roy :::: Faculty Member :::: 02-08-2023


HUMAN LIFE VALUE

• It is now recognized as the accepted method to measure the economic


value of the person
• HLV: The capitalized value of the net earnings of an individual for the
rest of his normal working span
• Human Life can be lost due to premature death, permanent disability ,
retirement, unemployment

I Roy :::: Faculty Member :::: 02-08-2023


HLV & CNA : WHY?

• Selling techniques for H.N.I.


• Useful to persuade client for life insurance commensurate with his
“worth” and / or “need”
• Clients’ active participation in the process increases the possibility of
closure of sale

I Roy :::: Faculty Member :::: 02-08-2023


HLV : HOW TO CALCULATE

• The present income of an individual to be determined.


• The above is to be reduced by his personal expenses, taxes, etc.
• The “Difference” gives the Net Income for family.
• For expected Rate of Interest, the Present Value of ₹1/- over the remaining
years of Working Span is to be calculated.
• Multiplication by ‘Present Value Factor’ gives HLV.

I Roy :::: Faculty Member :::: 02-08-2023


Formula for calculating HLV
H= ( E-M ) x F

Where,
• Estimated Avg. Annual Future Earning = E
• Estimated Avg. Cost of self maintenance + Taxes = M
• Estimated Working Life Span in “No. of years”
• Present Value Factor of future income for working span at given rate of
interest = F

I Roy :::: Faculty Member :::: 02-08-2023


PRESENT VALUE OF ₹ 1/- PER ANNUM

Time Horizon Rate (8%) Rate (7%)


(Years)
15 8.559 9.108
20 9.818 10.594
25 10.675 11.654
30 11.258 12.409

I Roy :::: Faculty Member :::: 02-08-2023


CALCULATION OF HLV
• AGE : 30 years , Income per month : ₹ 50,000/-

• Annual Income : ₹50,000 x 12 = ₹ 6,00,000/-

• Less Income Tax ₹ 50,000/-

• Less Personal Expenses ₹ 50,000/-


• Income to the family per year [Net] ₹ 5,00,000/-
• Earning Life Span [Superannuation Age (i.e. 60 years) - Present Age]: 30 years
• Total Income for family in 30 Years [ ₹5,00,000 x 30] = ₹ 1,50,00,000/-

I Roy :::: Faculty Member :::: 02-08-2023


CALCULATION OF HLV

• HLV = (E-M)X F
• E = Total Earning = ₹6,00,000
• M = Tax + Personal Maintenance = ₹1,00,000
• Normal Earning Life Span = 30 years
• F = Present value factor @ 7 % for 30 years = 12.409

• HLV = ₹( 600,000 - 100,000 ) x 12.40


• = ₹[ 500,000 x 12.40 ]
• = ₹ 62,00,000/-

I Roy :::: Faculty Member :::: 02-08-2023


‘CAPITAL NEED ANALYSIS’ METHOD

• Analyze the present & future financial needs of the family.


• Determine the monetary value of these needs.
• The difference between the need and available funds represents the
amount of “Risk Cover” required.

I Roy :::: Faculty Member :::: 02-08-2023


NEEDS OF THE CUSTOMER

• Savings

• Creation of a Wealth

• Family Welfare

• Children’s Education
I Roy :::: Faculty Member :::: 02-08-2023
‘CAPITAL NEEDS’ OF THE CUSTOMER

• Marriage of children

• Settlement of children

• Retirement , welfare provision

• Provision for liabilities

I Roy :::: Faculty Member :::: 02-08-2023


PROFILE ANALYSIS
• Sex: Male

• Age: 30 Yrs.

• Wife: 25 Yrs, Daughter: 5 yrs, Son: 3 Yrs

• Income after Tax : ₹ 40,000/- p. m.

• Housing Loan: ₹ 20 lac

• Vehicle Loan: ₹ 2 lac

I Roy :::: Faculty Member :::: 02-08-2023


NEED vis-à-vis PROTECTION

 Insurance for:
• Housing Loan ₹ 20 lac
• Vehicle Loan ₹ 2 lac
• Education ₹ 10 lac
• Marriage ₹ 10 lac
• TOTAL ₹ 42 lac

I Roy :::: Faculty Member :::: 02-08-2023


PROTECTION & SECURITY

• Family requires [in case of death] :


₹ 20,000/- p.m.
• @ 6 % interest, amount required to give ₹ 20,000/ - p.m. =₹ 40 Lac

• TOTAL INSURANCE: ₹ 42 lac + ₹ 40 lac =


₹ 82 lac

I Roy :::: Faculty Member :::: 02-08-2023


“GUARANTEED RETURN” DAYS ARE ‘HISTORY’….
Post-Office Instruments Benchmarked to

PPF 10 yr G- Sec + 0.25%

5 yr G- Sec + 0.25%
MIS

5 yr G- Sec + 0.25%
5-year NSC

10 yr G- Sec + 0.50%
10-year NSC
5 yr G- Sec + 1%
SCSS

I Roy :::: Faculty Member :::: 02-08-2023


FINANCIAL PLANNING vis-à-vis C N A

• What are your ‘Financial Goals’?


• Where are you today in relation to your goals?
• How will you get to your goals (from where you are today)?

I Roy :::: Faculty Member :::: 02-08-2023


C N A & ASSET ALLOCATION

• It’s of paramount importance for ‘Wealth Creation’.


• But as the age goes up (or as the goal nears), the risk assets such as ‘Equity’ needs to be
lowered.

• For instance, if one is 40, one needs to restrict the exposure to Equity between 50-60%.

• Constant balancing is required to keep the original weightage as constant, depending


on mark-to-market values.
• Example: 2007 ‘highs’ and 2009 ‘lows’.

I Roy :::: Faculty Member :::: 02-08-2023


FINANCIAL PLANNING & C N A : THE OUTCOME

• Opportunity for subsequent selling.


• No mis-selling.
• No lapsation.
• Gives a holistic view – an eye opener.
• Satisfaction for you!
• ‘Peace of Mind’ for the Buyer!

I Roy :::: Faculty Member :::: 02-08-2023


THE ECONOMICS OF LIFE INSURANCE

QUESTIONS ARE WELCOME….

I Roy :::: Faculty Member :::: 02-08-2023


I Roy :::: Faculty Member :::: 02-08-2023
CIRCULATORY SYSTEM

The Cardiovascular System is comprised of the following:

HEART

LUNGS and

BLOOD VESSELS

The main roles of this Circulatory System [so called since it circulates the blood continuously] are:

To transport oxygen and other vital nutrients to all tissues of the body AND

To assist in the removal of metabolic waste products via blood

PLEASE REFER TO IC-22 [CHAPTER 14] FOR

COMMON TERMINOLOGY CHART OF THE CARDIOVASCULAR SYSTEM

Blood Pressure is the pressure which the blood exerts on the walls of the Blood Vessels.

SYSTOLIC B P: When Left Ventricle contracts and pushes blood to the Aorta.

DIASTOLIC B P: The pressure within the arteries when the heart is at rest.

CLASSIFICATION SYSTOLIC B P DIASTOLIC B P


NORMAL <120 <80
PRE-HYPERTENSION 120 -139 80 -89
STAGE I HYPERTENSION 140 -159 90 -99
STAGE II HYPERTENSION = or > 160 = or > 100

Hypertension can be classified into several types, namely:


Primary / Essential Hypertension: [85% to 90% cases] where cause of High BP is unknown
Secondary Hypertension: Raised BP which is secondary to some other diseases of kidney,
heart, etc.
Hypertension associated with pregnancy.
Malignant Hypertension or Accelerated Hypertension

Persistent hypertension can result in end-organ damage and create Heart, Vascular or Renal
complications.
There is a Hypertension Questionnaire which provides details of duration, past Readings,
Investigations [ECG, Echocardiography, urine routine, etc] and other complications of heart ,
kidneys and associated Risk Factors
UNDERWRITING IMPLICATIONS:
STATUS / CONDITION U/W DECISION
Controlled B P with or without medication No Additional Loadings.
WITH NO COMPLICATIONS OR ASSOCIATED
RISK FACTORS.
Moderately Raised B P WITH ASSOCIATED RISK Substandard Terms are offered.
FACTORS
Significantly Raised B P WITH COMPLICATIONS Detailed information required before
RELATED TO HEART OR KIDNEY Terms are considered.

Coronary Heart Disease is the most common heart disease and is the largest single cause of
death in the Developed Countries as well as in India. CAD affects the younger population at a
greater frequency in India.

In CAD, the Coronary Arteries become narrowed.


Complications that can arise due to CAD:
Heart Failure
Arrhythmia Or Abnormal Heart Disease
Sudden Cardiac Arrest
Recurrence of Ischaemia or Infarction
The Risk Assessment should include:
Type of CAD
Severity of CAD
Results of Investigations
In case of intervention, details of Angioplasty & CABG done
Assessment of other Cardiovascular Risk Factors
UNDERWRITING IMPLICATIONS
STATUS / CONDITION U/W DECISION
Mild Level of CAD Underwriting Terms possible
Moderate Level of CAD Underwriting Terms possible
Severe forms of CAD Often DECLINED
CAD in presence of Diabetes Always DECLINED due to excessive Mortality

Valvular Heart Disease are characterised by damage to or defect of the Heart Valves.
Narrowed Valve : Stenosis
Incompetent / Leaking Valve: Regurgitation

Valvular Heart Disease can be ‘CONGENITAL’ [since Birth] or ‘ACQUIRED’ [occurring later in
life].

Underwriter needs to assess:

Investigation Reports like ECG, 2D ECHO, etc.


Pre-Treatment and Post-Treatment Hospital Reports
Current Follow-up Reports and Cardiac Status

Depending on the type of Congenital Heart Disease and the prognostic factors, TERMS can
vary from STANDARD RATES to DECLINATURE.
SENSES DISORDER

EYESIGHT DISORDER

CATARACT: Age of onset of cataract formation, cause, degree of Visual Impairment and any
residual complications post-treatment should be looked for. For Life Benefit, NO RATINGS are
usually required.

GLAUCOMA: The degree of Visual Impairment, cause of Glaucoma and effect of Applicant’s
occupation influences the U/W. Ratings are usually for the underlying cause rather than for
Glaucoma itself.

REFRACTIVE ERRORS [Myopia and Hypermetropia]: NO RATINGS are generally required.

For Life Benefit, disorders of the eye, usually, DO NOT ATTRACT UNDERWRITING RATINGS
by themselves, but RATINGS MAY BE APPLICABLE FOR THE UNDERLYING CAUSE.

EAR / HEARING IMPAIRMENT


Ear is an external organ of hearing, balance and equilibrium.

It is divided into 3 parts:


Outer Ear [External Auditory Canal]
Middle Ear [Air Filled Cavity consisting of 3 small bones called ossicles]
Inner Ear [organs of hearing and balance called labyrinths]

Disorders:
Otitis [inflammation]
Acute Otitis Media [Acute Inflammation of the Middle Ear]
Chronic Otitis Media [Permanent perforation in the Ear Drum] : causes conduction defects in
the ear.
Deafness [Loss of Hearing]

U/W considerations include:


Type and Degree of Hearing Loss and whether it is progressive.
Cause: Local OR systemic
Occupation
Any associated complications.

For Life Benefit, disorders of the ear, usually, DO NOT ATTRACT UNDERWRITING RATINGS
by themselves, but RATINGS MAY BE APPLICABLE FOR THE UNDERLYING CAUSE.
NOSE DISORDER AND U/W DECISION
IMPAIRMENT U/W IMPLICATION
Deviated Nasal Septum NO RATING is required
Sinusitis [inflammation of sinuses] NO RATING is required
Nasal Polyp [fleshy outgrowths] Call for Histopathology Reports to rule out
Malignancy if surgery has been done.
DIABETES MELLITUS

This remains a significant risk to life. Underwriter should carefully review Blood Reports and
Medical Records to accurately assess the Excess Mortality Risk in Diabetic Applicants.

The eventual decision can vary from ‘SMALL ADDITIONAL LOADING’ to ‘DECLINE’ depending
on the appended factors:

TYPE OF DIABETES: Base Ratings of Type1 DM are higher than that of Type2 DM
DURATION OF DIABETES: Longer the Duration, higher the Rating of Risk
DEGREE OF CONTROL: Worse the control, higher the risk of developing complications and
higher is the Mortality.
COMPLICATIONS: Presence of complications like RETINOPATHY and EARLY NEPHROPATHY will
require ADDITIONAL LOADINGS.
Complications like STROKE , HEART DISEASES and ESTABLISHED KIDNEY DISEASE will require
DECLINATURE OF RISK.
For other CARDIAC FACTORS [i.e. smoking, etc.]: ADDITIONAL LOADING.

NERVOUS SYSTEM
Common Disorders of Nervous System are:
Vascular Disorders [Stroke Transient Ischemic Attack (TIA), etc]
Infections [i.e. Meningitis, Encephalitis, Polio, etc.]
Structural Disorders [i.e. Brain and Spinal Cord Injury]
Functional Disorders [i.e. Epilepsy]
Degeneration [i.e. Parkinson’s Disease, Alzheimer’s Disease, etc.]

Common Investigations for Nervous System assessment:


CT Scan or CAT Scan [ Computed Tomography Scan]: shows detailed images of any part of the
body
EEG [Electroencephalogram]: records brain’s continuous electrical activity.
MRI [Magnetic Resonance Imaging]: detailed images of organs and structures within the
body.
EMG [Electomyography]: Evaluates and diagnoses disorders of muscles.
PET [Positron Emission Tomography]: measures metabolic activity of cells.
ANGIOGRAM: X-Ray of arteries and veins to detect leakage in or narrowing of vessels.

UNDERWRITING STROKES:
STATUS / DEFICIENCY U/W DECISION
Isolated events without major Risk Factors SUBSTANDARD TERMS
Severe Stroke with Co-morbid Conditions USUALLY DECLINED
UNDERWRITING EPILEPSY:

STATUS / DEFICIENCY U/W DECISION


No attacks for last 2 to 4 years FAVOURABLE TERMS POSSIBLE
FEBRILE EPILEPSY NO ADDITIONAL RATING if UNDERLYING CAUSE IS TREATED

ENDOCRINE SYSTEM

This is the network of glands in the body that make the hormones that help cells ‘talk’ to each other.
They are responsible for almost every cell, organ and function in the body. If the Endocrine System is
not healthy, one might have problems developing during puberty, getting pregnant or managing
stress. It can also cause Weight Gain or lead to weak bones, lack of energy, etc because too much
sugar stays in the blood instead of moving to the cells where it is needed for energy.

Endocrine Glands release the substances that make the bloodstream.

Endocrine Glands create and release hormones that control almost all processes of the body.:
metabolism, growth and development, control the emotions, mood, sexual functions and sleep.

GASTRO-INTESTINAL SYSTEM

The Digestive or Gastro-intestinal [GI] System is a group of organs which are responsible for the
process of digestion.

The parts of the Digestive Tract are:

Mouth

Pharynx & Esophagus

Stomach

Small Intestine

Large Intestine

Rectum and Anus

The main accessory glands are: Salivary Gland, Liver, Gall Bladder and Pancreas.

The common Digestive System diseases are:

Heartburn [feeling of burning behind the chest-one due to reflux of stomach acid]

Nausea [Unpleasant sensation in stomach and tendency to vomit]

Hematemesis [Vomiting with blood]


Dysphagia [Difficulty in swallowing]

Diarrhoea

Constipation

Jaundice

COMMON INVESTIGATIONS:

Laboratory Tests [Blood Tests, Liver Function Tests, CBC Picture],


X-Ray Tests [Barium Swallow, Barium Enema]
Ultrasound of the abdomen and pelvis
C T Scan
Gastrointestinal Endoscopy
Liver Biopsy

UNDERWRITING BENCHMARKS

DEFFICIENCY U/W DECISION


GASTRO ESOPHAGEAL REFLUX Not associated with Extra Mortality if Endoscopy reveals Hiatal Hernia
DIORDER [GERD] without complications
GASTRITIS Depends on underlying cause, treatment and any complications
PEPTIC ULCER Depends on whether treated medically or needed surgery
INFLAMMATORY BOWEL These are chronic diseases and a Treating Physician Report stating
DISEASE (IBD) DURATION AND SEVERITY, DATE OF LAST ATTACK, DETAILS OF
INESTIGATIONS DONE and COMPLICATIONS WITH CURRENT MEDICAL
STATUS are required for further assessment of Risk.
IRRITABLE BOWEL SYNDROME If no other co-morbid situation, NO RATINGS are usually applicable.
(IBS)
POLYPS Call for additional information
HEMORRHOIDS (i.e. PILES) No Mortality Concerns
CARCINOMA OF ESOPHAGUS, An Attending Physician Statement [APS] and Tumor Questionnaire
STOMACH, COLON AND filled by the treating oncologist would be critical in accurate risk
RECTUM assessment.
GALL BLADDER STONES AND No additional Mortality Risks
INFLAMMATION
HEPATITIS AND CIRRHOSIS OF Hepatitis A and E are milder ones while B, C and D are likely to
LIVER become ongoing and chronic.
Cirrhosis of Liver is a chronic Liver Disease characterised by
degeneration of cells – it is an irreversible condition and, generally,
NO TERMS are offered.

RENAL / URINARY SYSTEM

The components of the Urinary System are:

Kidneys
Ureters
Urinary Bladder AND
Urethra

Protein should not normally appear in urine in detectable quantities.

Some of the tests for Kidney Disease are:


URINALYSIS [collect urine over a 24 hr period so that TOTAL CREATININE CLEARANCE can be worked
out]
SERUM CREATINININE and BUN [Blood Urea Nitrogen] TEST are primary Blood Tests known as Renal
Function Tests [RFT]
IMAGING TESTS are also helpful with Ultrasound and KUB[Kidney, Ureter, Bladder] giving idea of the
presence of stones.
UNDERWRITING ASPECTS
DEFICIENCY / AILMENT U/W DECISION
KIDNEY STONE After removal of stone(s), underwriter to consider
underlying disorders as they may have increased
risk of Mortality [though, deaths occurring directly
from calculi are relatively low]
URINARY TRACT INFECTIONS [UTIs] Occasional history of UTI which has been treated
with antibiotics has no impact on Mortality.
POLYCYSTIC KIDNEY DISEASE Highly SUB-STANDARD TERMS may be available
[Average Age of Death is 50 Yrs]
RENAL CELL CARCINOMA Survival Rate is very low if it has spread to the
lymph nodes.

RESPIRATORY SYSTEM

The components of the Respiratory System are:

UPPER RESPIRATORY TRACT

Nose, Pharynx and Larynx

LOWER RESPIRATORY TRACT

Trachea, Bronchial Tree, Lungs, Diaphragm

UNDERWRITING ASPECTS

Evaluate Medical History

DEFICIENCY / AILMENT U/W DECISION


Mild Asthma [Asthma Questionnaire] Negligible Mortality
Risk
Moderate to Severe Asthma Vary from SUBSTANDARD LOADINGS TO
DECLINATURE
Bronchitis Occasional Attacks which resolves with
treatment does not attract any Ratings.
However, for Chronic Bronchitis, the terms can
vary from MILD RATINGS to DECLINATURE.
Emphysema Same approach as Chronic Bronchitis
COPD [Respiratory Questionnaire] Significant impact
on Mortality [MILD RATINGS TO DECLINATURE]
Tuberculosis [TB Questionnaire] Pulmonary TB with HIV
Negative has minimal Mortality Risk.

Extra-pulmonary TB and Vertebral TB have high


Morbidity.

BLOOD DISORDERS

Blood is the life-maintaining fluid that circulates through the heart, arteries, veins and capillaries.
Human Blood has 22% solid and 78% water.

The components of blood are:

Plasma [the liquid component of the blood],

Blood Cells [RBC (erythrocytes), WBC (leukocytes) and platelets (thrombocytes)],

Chemical substances [Carbohydrates, Proteins and Hormones] and

Gases [Oxygen, Carbon Di Oxide and Nitrogen]

COMPLETE BLOOD COUNT [CBC]

COMPONENT NORMAL VALUES


WBC 4.3 to 11.3
RBC 4.9 to 5.9
Haemoglobin Male: 13to 18
Female: 11 to 16
Mean Corpuscular Volume [MCV] 80 to 96
Platelet Count 1,50,000 to 4,50,000

Anaemia is a condition in which the number of RBC or the amount of haemoglobin is low.

Causes: Blood Loss due to excessive bleeding


Inadequate production of RBC
Excessive destruction of RBC

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