Training Report to Be Print 2

7/31/2019 Training Report to Be Print 2

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MEANING OF LIFE INSURANCE

There are three parties in a life insurance transaction: the insurer, the insured, and the

owner of the policy (policyholder), although the owner and the insured are often the

same person.

Another important person involved in a life insurance policy is the

beneficiary. The beneficiary is the person or persons who will receive the policy

proceeds upon the death of the insured.

Life insurance may be divided into two basic classes term and permanent.

Term life insurance provides for life insurance coverage for a

specified term of years for a specified premium. The policy does not

accumulate cash value.

Permanent life insurance is life insurance that remains in force until the policy matures,

unless the owner fails to pay the premium when it is due.

Whole life insurance provides for a level premium, and a cash value table included in

the policy guaranteed by the company. The primary advantages of whole life are

guaranteed death benefits, guaranteed cash values, fixed and known annual premiums,

mortality and expense charges will not reduce the cash value

shown in the policy.

Universal life insurance (UL) is a relatively new insurance product intended to provide

permanent insurance coverage with greater flexibility in premium payment and the

potential for a higher internal rate of return. A universal life policy includes a cashaccount. Premiums increase the cash account. If you want insurance protection only,

and not a savings and investment product, buy a term life insurance policy.If you want

to buy a whole life, universal life, or other cash value policy, to hold it for15years.

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NEED FOR LIFE INSURANCE

You need Life Insurance because typically the need for income continues for

those who are financially dependent on you, but there is no guarantee of your

ability to earn consistently and for the rest of your life. Life insurance can help

you safeguard the financial needs of your family.

This need has become even more important due to steady disintegration of the

prevalent joint family system, and emergence of nuclear families. The need to

protect your family's ever growing needs is why you need Life Insurance.

WHY DO I NEED LIFE INSURANCE?

Thats a common question. Why would you need Insurance? Simply put, Life

brings with it many surprises, some pleasant and some not so and a Life

Insurance Plan ensures that you are better prepared to face uncertainties. How?

In a number of ways:

PROTECTION

You need life insurance to be there and protect the people you love, making surethat your family has a means to look after itself after you are gone. It is a

thoughtful business concept designed to protect the economic value of a human

life for the benefit of those financially dependent on him. Thats a good reason.

Supposing you suffer an injury that keeps you from earning? Would you like to be

a financial burden on your family, already losing out on your salary? With a life

insurance policy, you are protected. Your family is protected.

RETIREMENT

Life insurance makes sure that you have regular income after you retire and also

helps you maintain your standard of living. It can ensure that your post-retirement

years are spent in peace and comfort.

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SAVINGS AND INVESTMENTS

Insurance is a means to Save and Invest. Your periodic premiums are like

Savings and you are assured of a lump sum amount on maturity. A policy can

come in really handy at the time of your childs education or marriage! Besides, it

can be used as supplemental retirement income!

TAX BENEFITS

Life insurance is one of the best tax saving options today. Your tax can be saved

twice on a life insurance policy-once when you pay your premiums and once

when you receive maturity benefits. Money saved is money earned !

BENEFITS OF LIFE INSURANCE

1) Risk cover: -

Life Insurance contracts allow an individual to have a risk cover against any

unfortunate event of the future.

2) Tax Deduction: -

Under section 80C of the Income Tax Act of 1961 one can get tax deduction

on premiums up to one lakh rupees. Life Insurance policies thus decrease the

total taxable income of an individual.

3) Loans: -

An individual can easily access loans from different financial institutions by

pledging his insurance policies.

4) Retirement Planning: -

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What had provided protection against the financial consequences of

premature death may now be used to help them enjoy their retirement years.

Moreover the cash value can be used as an additional income in the old age.

5) Educational Needs: -

Similar to retirement planning the cash values that flow from ones life

Insurance schemes can be utilized for educational needs of the insurer or his

children.

ROLE OF LIFE INSURANCE IN THE GROWTH OF THE

ECONOMY:

The Life Insurance Industry has an enviable track record among public sector

units. It has a Consistent profit and dividend paying record accompanied by a

steady growth in its financial resources. Through investments in the Government

sector and socially- oriented sectors the Industry has contributed immensely to

the nation's development. The industry is recognized as one of the largest

financial Institutions in the country. The ventures initiated by the industry in theareas of Mutual Fund, Housing Finance have done exceedingly well in recent

years. To protect the country's foreign exchange reserves, the reinsurance

arrangement are so organized that maximum retention is made possible within

the country while at the same time protecting interests of the policy holders.

SECTION 45 OF THE INSURANCE ACT, 1938

No policy of life 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 for

insurance or in any report of a medical officer, or referee, or friend of the insured,

or in any other document leading to the issue of the policy, was inaccurate or

false, unless the insurer shows that such a statement was on a material matter or

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suppressed facts which it was material to disclose and that it was fraudulently

made by the policyholder and that the policyholder knew at that time of making it

that the statement was false or that it suppressed facts which it was material to

disclose.

PROHIBITION OF REBATE:

SECTION 41 OF THE INSURANCE ACT, 1938

No person shall allow or offer to allow, either directly or indirectly, as an

inducement to any person to take out or renew or continue an insurance in

respect of any kind of risk relating to lives or property in India, any rebate of the

whole or part of the commission payable or any rebate of the premium shown on

the policy, nor shall any person taking out or renewing or continuing a policy

accept any rebate, except such rebate as may be allowed in accordance with the

published prospectuses or tables of the insurer.

Any person making default in complying with the provisions of this section shall

be punishable with a fine which may extend to five hundred rupees.

LIFE INSURANCE IS INSURANCE AS WELL AS INVESTMENT

It is the special characteristic of life insurance that it not only provides security

but is also a form of investment. The insured not only wants to secure his family

from the risk of his death, but also wants to invest in the long term insurance

plan. Both these elements are possible in life insurance because the insurance

company promises to pay a fixed amount on the death of the insured, or on his

attaining a certain age.

Element of Protection: Life insurance is the best way of securing against

financial risks. The member of the family insures his life to provide affixed

amount security to his family in case of death and his family been secured

against any financial strain.

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Financial problems not only arise on untimely death of the earning member, but

also when the earning member becomes old and his energy to work reduces and

so does his source of income also reduce. At this stage, he wants to retire and

lead a peaceful life. And if he has no source of income at this time he shall have

to depend on others, which is a very pitiable stage in old age. That is why; a

rational man always saves for his old age, so that he doesnt have to depend on

others for maintaining himself. In such plans, insurance holds the prime position

due to the following reasons-

1) He makes savings in the form of life insurance. To pay a regular

premium he has to save necessarily. Though premium takes a form

of compulsory expense yet for depositing regular premiums he has

to develop a habit of saving.

2) The saving also remains secure in life insurance. The savings kept

in a bank account can be withdrawn anytime for expenses, but the

amount paid as premium can be received from the insurance

company only on attaining a certain age..

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