Alteration playing a very important and meaningful role in Life insurance policy. It allows alteration in the policies that have been issued. Some of the alteration may be very simple, like change in address, mode in payment of premium or also can be change in Nomination. some changes may be to make a participating policy , non participating policy or to break one policy into two or more policies of smaller SA . These may affect the premiums due, but do not affect the risk of the insurer. other requests can be for significant changes , like in the plan or term or both , change in SA, etc . the governing principal followed in these matters is that alteration in existing policy may be allowed if the risk does not increase . If the risk is likely to insurance. if the risk is likely to increase , a proposal for the fresh policy may be made for the consideration of the underwriter . Most insurers refuse alteration for increase of Sum Assured, Increase in term, Any change in the first year of the policy, except change of address.
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What is’ Flexibility ‘in life Insurance?
ULIP provide a lot of flexibility to the policyholder. The option of switching is one provision that gives the flexibility. Policyholders are also allowed to make a lump sum additional contribution at any time. The risk cover will remain the same ,but the amount going into the fund for investment will change .Top –up is the expression used to refer to the policyholder increasing the contribution for investment .There could be a Top-up change. The IRDA regulation /guidelines stipulate that top-up is allowed only if the top-up amount is more than 25% of the regular premium paid-up to date; the life cover will increase by 1.25 times the excess top-up amount. There will also be a lock-in period of three years for each top-up amount, except during the last 3 years of the policy.
Policyholder may also be allowed to redirect the current premium into any fund, in any proportion, irrespective of the fund in which the earlier premiums have been invested. The facility allows the policyholder to take advantage of the market conditions, without exercising the switching option.
What do you mean by ‘Income Tax Act’ in life insurance?
Any sum received under a life insurance policy, including policy, including the bonus addition is exempt from income tax. That means that income tax does not have to be paid on policy claim and surrender amount .this is subject to the premium being not more then 20% of the sum assured on any policy during any year
The tax laws in India have always encouraged people to save through life insurance or other instruments, by providing relief from tax liabilities. The details provided when the course was being written. These could change at any time, through budget provision or otherwise. Knowledge of tax provisions is essential for an agent as it affects the benefits available to the policyholders under a policy. the wealth tax act exempts life insurance policies totally provided premiums are payable for a period of ten year or more .commuted values of pensions are exempt from income tax.
What is ‘Endorsement ‘in life insurance?
In a preprinted policy form, the standard policy circumstances and privileges are printed. If any of them need alteration, in keeping with the terms of receipt, endorsement are attached to the policy. If a condition in the pre-printed policy is not applicable, the same will be cancelled by rubber stamping , the same will be cancelled by rubber stamping the clause accordingly .if individual policies are printed by computer , such endorsement and cancellation may be avoided .
During the currency of the policy, alteration may be effected in age, plan or term, S.A, mode of premium payment, etc. Separate endorsement will be placed on and kept attached to the policy document, to indicate such changes. Nomination made subsequent to the issues of the policy are to be made on the back of the policy itself as endorsement .assignment can also be made on the back of the policy .
Importance of Social and Rural sectors in life insurance
The government of India , ever since nationalization of the life insurance business in 1956 has been concerned with the question of providing life insurance cover for people in the rural areas and in the weaker sections of society .The LIC of India had developed plan specifically for these person. After the private insurance started operating , this is trust has been ensured through the enactment of appropriate provisions in the laws .
The rural sector has been defined as the places or areas classified as ‘ rural’ while conducting the latest decennial population census .people in the rural areas are largely engaged in agriculture pursuits such as cultivation , agriculture labor , work in livestock , forestry , fishing , hunting .The social sector is defined as including the unorganized sector. the information sector will include the small scale ,self employed workers typically at a low level of organization and technology , with the primary objective of generating employment and income , with unwritten and informal employers .
Write about Nomination in life insurance?
Nomination is a simple way to ensure easy payment of policy moneys in the case of a death claim .As per section of insurance the holder of a policy on his own life , may nominate the person or persons to whom the money secured by the policy shall be paid in the event of his death . This can be made at the time of proposal or at any time during the currency of the policy. A person having a policy on the life of another, cannot effect a nomination. A nomination can be changed by the policyholder by making another endorsement on the policy. if space is not available for an endorsement , nomination can be done on a separate piece of paper and pasted o0n to the policy with the signature of the life assured at the edges where the slip is attached to the policy
What is group insurance & features of group insurance?
In group a large number of individuals are covered under a single policy called the’ master policy’ .The insurance contract is with the body that represent the individuals ,the employer or the association .because the contract is with the body ,that the is the policy holder .the individuals are the beneficiaries . The amount and term of insurance are negotiated by the policyholder and not by the individual beneficiaries .the benefits will be determined on bases that apply uniformly to all the individuals .the premium will be paid to the insurer by the policyholder ,who may or may not , collect the same from the individual concerned .if the individuals contribute the premium, that may be either full or partial .if the premium is collected from the individual concerned by an employer the premium may be deducted from their salary .the group insurance policy does not have a fixed term .the terms and the coverage can be renegotiated at the time of renewal.
Entry into or exit from the group must be for reason other than the availability of insurance cover under the scheme.
A member who leaves the group may continue to derive benefits like Pension, from the group cover, as per the condition of the policy
The premium under a group insurance policy will change from year to year
The premium may also change according to the mortality experiences of the group
Axis Mutual Fund has announce 5 April 2011 as the record date for the statement
For economic development, investments are necessary .Investment are made put of saving.A life insurance company is a major instrument for the recruitment of saving of people , particularly from the middle and lower income group . these savings are channeled into investment for economic expansion .the insurance act has strict provisions to ensure that insurance funds are invested in safe avenue, like government bonds .all good life insurance companies have huge funds ,accumulated through the payment of small amount of premia of individuals. These funds are in ways that contribute substantially for the economic development of the countries in which they do business.
A life insurance company’s funds are collected by way of premiums. Every premium represent a risk that is covered by that premium apart from investment , business and trade benefits through insurance .without insurance trade or commerce will find it difficulties to face the impact of major disasters like fire, earth quake , floods etc.
Which documents used in connection with life insurance?
The life insurance contract is long term one. Transactions may be few and far between. If the premium are paid without any default and no charges in address or nominations etc ; Are made the policy file may not be opened till the claim arises after, may be , thirty years .in the absence of the proper documentation . It may not be possible to know the dues and the rights or even the inentities of the person concerned. We use the documentation in life insurance like:
1 Proposal Forms: Proposal is the first documentation in insurance .this is to be completed by the proposer in his handwriting and signed in the presence of witness. It contains the declaration.
2 Personal Statement: The personal statement is to be completed along with the Proposal. This asks for particulars about the state of the health of the person proposed to be insured, his family history, his personal habits, medical consultation and illnesses.
3 First Premium Receipt: This will state that the proposal for insurance has been accepted and that the premium has been received.
4 Policy Document :It is the evidence of the contract .it is prepared to reflect the term of the contact
5 Endorsements: if u wants any modification in terms of contract so u can add endorsement.
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