Recent Insurance News of Importance

1. IRDA releases India Insurance Vision 2025

  • The Industry has a potential to reach 8250 billion by 2025

  • Life Insurance Industry to grow at 12% CAGR to reach $ 160 to 175 billion,and nonlife to grow at 22% CAGR to reach Gross Written Premium of $ 80 billion.

2. LIC launched 2 new plans in March 2015

  • Jeevan Sangam, a participating, non-linked, savings cum protection, single premium plan wherein the risk cover is a multiple of single premium

  • The proposer has the option to choose the maturity sum assured

  • The single premium will depend on the age and maturity amount chosen

  • The second product, Children’s Money Back Plan, is a participating non linked money back plan

  • Designed to educational, marriage and other needs of growing children

  • Provides risk cover for the child for the term and also Periodic payments on surviving to the end of specified duration

3. Pradhan Mantri Suraksha Bima Yojana

  • Accidental death and disability cover of Rs 2 lakh.

  • Available to people in age group 18 to 70 with a bank account

  • Premium is Rs 12 per year debited to the bank account

  • Anybody who has a savings account in the banks that offer this scheme. and who are exposed to the risk of accidental death or disability

4. Pradhan Mantri Jeevan Jyoti Bima Yojana

  • A life insurance cover of Rs 2 lakh to dependents in the event of the policyholder’s death.

  • Available to people in the age group of 18 to 50 with a bank account

  • Premium is Rs 330 per annum debited to the bank account.

  • People continue to have risk cover upto 55 subject to payment of premiu

5. Pradhan Mantri Jan Dhan Yojana

  • A savings account with no minimum balance. The Rupay ATM-cum-debit card comes with in-built accident and life covers of Rs 1 lakh and Rs 30,000 respectively.

  • No separate premium

  • Meant for anyone belonging to the economically weaker sections of society. All future welfare and subsidy schemes are likely to be linked to bank accounts

6. Atal Pension Yojana is an Annuity Scheme substituting for SWALAMBAN launched 2010-11, in which there were confusions about pension after 60. Features of the new National Pension Scheme (NPS) are

  • Focus is on individuals in unorganized sector who join NPS and are not members of any statutory Social Security scheme.

  • Pension amounts of 1000/2000/3000/4000/5000 starting after attaining the age of 60, the monthly pension depending on contribution

  • Entry age is 18 – 40. Minimum contribution period is 20 years

  • Fixed pension guaranteed by government

  • Government to contribute 50% of annual premium or maximum Rs.1000 pa for the first 5 years ( 2015-16 to 2019-20)

  • Existing subscribers of SWALAMBAN migrated to APY

7. LIC’s New Plan Jeevan Pragati launched in January 2016

  • This is a non-linked, with-profits Endowment Assurance plan. The main feature of this Jeevan Pragathi plan is the ‘sum assured on death’ (part of death benefit) automatically increases after every five years during the term of the policy.

  • Basic Sum Assured (payable on maturity) : Rs. 1,50,000/- to maximum no limit

  • Policy Term : 12 to 20 years

  • Age at entry for Life Assured : 12 years (completed) to 45 years (nearer birthday)

  • Maximum Age at Maturity for Life Assured : 65 years

  • Minimum Accident Benefit Sum Assured is Rs 10,000

  • Maximum Accident Benefit Sum Assured is an amount equal to the Basic Sum Assured subject to the maximum of Rs 1 cr.

8. LIC’s JEEVAN SHIKHAR Plan

Participating, non-linked, saving cum protection single premium plan

risk cover is ten times of Tabular Single Premium.

  • The proposer will have an option to choose the Maturity Sum Assured.
  • The premium payable shall depend on the chosen amount of Maturity Sum Assured and age at entry of the life assured.
  • The plan will be open for sale for a maximum period of 120 days from the date of launch.
  • Minimum Entry Age : 6 years (completed) to 45 years (nearer birthday)
  • Sum Assured on Death : 10 times of tabular single premium
  • Minimum Maturity Sum Assured : Rs. 100,000/-
  • Maximum Maturity Sum Assured : No Limit (Maturity Sum Assured shall be in multiple of Rs. 20,000/- only.)
  • Policy Term : 15 years
  • Premium payment mode : Single premium only

In case the age at entry of the Life assured is less than 8 years, the risk under this plan will commence from one day before the policy anniversary coinciding with or immediately following the age of 8 years.

  • For those aged 8 years or more at entry, risk will commence immediately from the date of acceptance of risk.

  • Other Terms relating Life Insurance Policies for reference (Source: LIC of India website)

  1. Accident Benefit

Provides for payment of an additional benefit equal to the sum assured in installments on permanent total disability and waiver of subsequent premiums payable under the policy.(This is an additional benefit to the insurance value covered by premium payments)

  1. Annuity Plans

These plans provide for a “pension” ( or a mix of a lumpsum amount and a pension ) to be paid to the policy holder or his spouse. In the event of death of both of them during the policy period, a lumpsum amount is provided for the next of kin.(Now pension schemes are based on such policies. People contribute monthly some amount upto certain age and thereafter they get some amount every month life long)

  1. Assignment

Assignment means legal transference. A method by which the policy holder can pass on his interest to another person. An assignment can be made by an endorsement on the policy document or as a separate deed.(whenever loan is taken against insurance policies, NSCs etc the surrender/maturity value is assigned in f/o lender through endorsement or separate deed which are then registered with the insurance companies, post office etc)

  1. Beneficiary

The person(s) or entity(ies) (e.g. corporation, trust, etc.) named in the policy as the recipient of insurance proceeds upon the death of the insured.(when the policy holder survives beyond the premium payment period he is the first person eligible to receive the maturity value. He can also nominate some other person as beneficiary to receive the maturity proceeds after his death when it happens before the maturity proceeds become due for payment)

  1. Endowment Policy

The assured has to pay an annual premium which is determined on the basis of the assured’s age at entry and the term of the policy. The insured amount is payable either at the end of specified number of years or upon the death of the insured person, whichever is earlier.

  1. Exclusions

Specific conditions or circumstances for which the policy will not provide benefits.

  1. Family Insurance.

A life insurance policy providing insurance on all or several family members in one contract, generally whole life insurance on the principal breadwinner and small amounts of term insurance on the spouse and children, including those born after the policy is issued

  1. Fire Insurance

Coverage for losses caused by fire and lightning, plus resultant damage caused by smoke and water.

  1. Flood insurance

Coverage against loss resulting from the flood peril, available at low cost under a programme developed by the Central government.

  1. Franchise Insurance

A form of insurance in which individual policies are issued to the employees of a common employer or the members of an association under an arrangement by which the employer or association agrees to collect the premium and remit them to the insurer.

  1. Guaranteed Insurance Sum (GIS)

A lump sum purchase price is given to purchase future pensions under the Jeevan Akshay Plan of Life Insurance Corporation of India. This amount is referred to as GIS. The monthly pension that is payable one month after payment of first premium is calculated on the basis of the age at entry.This amount is referred to as GIS.

  1. Group Life Insurance

Life insurance usually without medical examination, on a group of people under a master policy. It is typically issued to an employer for the benefit of employees, or to members of an association, for example a professional membership group. The individual members of the group hold certificates as evidence of their insurance

  1. Indemnity

Legal principle that specifies an insured should not collect more than the actual cash value of a loss but should be restored to approximately the same financial position as existed before the loss.

  1. Insurable Interest

A condition in which the person applying for insurance and the person who is to receive the policy benefit will suffer an emotional or financial loss, if any untouched event occurs. Without insurable interest, an insurance contract is invalid.

  1. Insurability

All conditions pertaining to individuals that affect their health, susceptibility to injury and life expectancy; an individual’s risk profile.

  1. Insured

The person whose life is covered by a policy of insurance.

  1. Keyman Insurance Policy

A life insurance policy taken by a person on the life of another person who is or was his employee/connected to his business in any manner whatsoever.

  1. Lapsed Policy

A policy which has terminated and is no longer in force due to non-payment of the premium due

  1. Limited Payment Life Policy

Premiums need to be paid only for a certain number of years or until death if it occurs within this period. Proceeds of the policy are granted to the beneficiaries whenever death of the policy holder occurs. Again, this policy can also be of the “with profits ” or “without profits” type.

  1. Loyalty Additions

The loyalty addition is given upon the maturity of the policy, and not before. It’s a small percentage of the sum assured. Broadly speaking, loyalty addition is the difference between the performance, of the insurance company and the guaranteed additions. It is LIC s effort to further share its surplus after valuation with the policy holders, as LIC is a non-profit organization.

  1. Life Assured

The person whose life is insured by an individual life policy is called life assured.

  1. Maturity

The date upon which the face amount of a life insurance policy, if not previously invoked due to the contingency covered (death), is paid to the policyholder.

  1. Maturity Claim

The Payment to the policy holder at the end of the stipulated term of the policy is called maturity claim.

  1. Money Back Policy

Unlike endowment plans, in money back policies, the policy holder gets periodic “survivance payments” during the term of the policy and a lumpsum amount on surviving its term. In the event of death during the term of the policy, the beneficiary gets the full sum assured, without any deductions for the amounts paid till date, and no further premiums are required to be paid. These type of policies are very popular, since they can be tailored to get large amounts at specific periods as per the needs of the policy holder.

  1. Nomination

An act by which the policy holders authorises another person to receive the policy moneys. The person so authorised is called Nominee.

  1. Premium

The payment, or one of the regular periodic payments, that a policy holder makes to an insurer in exchange for the insurer’s obligation to pay benefits upon the occurrence of the contractually-specified contingency (e.g., death).

  1. Salary Saving Scheme

This scheme provides for payment of premiums by money deduction from the salary of the employees by one employer.

  1. Surrender Value

The value payable to the policy holder in the event of his deciding to terminate the policy before the maturity of the policy.

  1. Survival Benefit

The payment of sum assured to the insured person which has become due by installments under a money back policy.

  1. Whole Life Policy

Premiums are paid throughout the life time of life assured. This can be with profits or without profits (A “with profit” policy is eligible for various bonuses declared by LIC every year, while a “without profits” policy does not have this privilege)

  1. With-Profit policy

Policies entitled to bonus, which is paid at the time of claim-death or maturity one with profit policies.

  1. Without-Profit policy

These policies are not entitled to particiapte in bonuses.

Terms Relating to General Insurance (Source: The New India Insurance website)

  1. Cargo Insurance

Type of insurance that protects the shipper/owner of the goods against financial loss if the goods are damaged or lost while in transit in between place of commencement and destination.

  1. Comprehensive

A loosely used term signifying broad or extensive coverage of insurance(For instance in vehicle insurance comprehensive policy covers damages even when the vehicle is driven by other than the owner whereas third party insurance excludes damages due to use of vehicle by third party)

  1. Cover Note

A cover note is a document issued in advance pending the issue of the policy,

and is normally required if the policy cannot for some reason or other be issued straight away. Cover notes can also be issued during the course of negotiations to provide cover on a provisional basis. A cover note is not a stamped document but is honored, all the same , by all parties concerned.

  1. Credit Insurance

A form of guarantee to manufacturers and wholesalers against loss resulting from default on the part of debtors (Another sort of credit insurance for bank loans were in vogue till recently but since has been discontinued on the advice of IRDA)

  1. Double Insurance

If the insurance policy is taken from more than one underwriter where period of insurance, subject matter of insurance and sum insured are same, then this is called double insurance.

  1. Employers liability

Legal liability imposed on an employer making him or her responsible to pay damages to an employee injured by the employer’s negligence. Generally, replaced by ‘workers compensation’, which pays the employee whether the employer has been negligent or not.

  1. Ex Gratia

A payment made where there is no legal liability

  1. Fidelity Bond

A form of protection which reimburses an employer for losses caused by dishonest or fraudulent, acts of employees.

  1. Financial Loss Insurance

Insurance of legal liability for financial loss not involving bodily injury or loss of or damage to property

  1. Floater Policy

A policy under which protection follows moveable property, covering it wherever it may be

  1. Gross Premium

The premium paid by the policyholder.

  1. Indirect Loss (Or Damage)

Loss resulting from a peril, but not caused directly and immediately thereby.

For example: Loss of property due to fire is a direct loss, while the loss of

rental income as the result of the fire would be an indirect loss.

  1. Marine

Pertaining to the sea or to transportation: usually divided as to ‘ocean marine’and ‘inland marine’; the insurance covering transportation risks

  1. Marine Insurance

A form of insurance primarily concerned with means of transportation and communication, and with goods in transit

  1. Ombudsman

An authority established either by the company or the Government for the quick redressal of grievances

  1. Policyholder

A person who pays a premium to an insurance company in exchange for the insurance protection provided by a policy of insurance. The person (or persons) whose risk of financial loss from an insured peril is protected by the policy.

  1. Policy Term

The period for which an insurance policy provides coverage

  1. Product Liability Insurance

Protection against financial loss arising out of the legal liability incurred by a manufacturer, merchant, or distributor because of injury or damage resulting from the use of a covered product

  1. Property Insurance

Insurance providing financial protection against the loss of, or damage to, real and personal property caused by such perils as fire, theft, windstorm, hail, explosion, riot, aircraft, motor vehicles, vandalism, malicious mischief, riot and civil commotion, and smoke

  1. Proposal

A person interested in taking out insurance has to make an offer by means of a proposal. This is an application for the cover required, or for obtaining quotations of the premium chargeable

  1. Rider

Usually known as an endorsement, a rider is an amendment to the policy used to add or delete coverage

  1. Workers Compensation

A system of providing for the cost of medical care and weekly payments to

injured employees or to dependants of those killed in the course of or arising out of their employment in industry in which Absolute Liability is imposed on the employer, requiring him or her to pay benefits prescribed by law

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