III IC-24 cheat sheet

Mortality table: qx = probability of dying between age x and x+1; lx = number living at age x; dx = lx − lx+1 = lx × qx; px = 1 − qx.

Net single premium (NSP) for a whole life assurance of 1 = Σ v^(t+1) · tpx · qx+t, discounted at the valuation rate; gross premium adds loading for expenses, contingency and profit margins.

Level annual net premium = NSP / annuity due factor äx; annuity due äx = Σ v^t · tpx, with the first payment at time 0.

Risk classification factors: age, sex (where permitted), health and medical history, family history, occupation hazard class, residence, smoking and alcohol habits, sum assured and existing coverage.

Underwriting decisions: standard rates, extra premium (flat or per-mille), lien (deduction from early claims), exclusion clause, postponed acceptance, declined or counter-offer.

Financial underwriting checks that the sum assured is proportionate to income (commonly a multiple of annual income) and to existing life cover, to limit moral hazard and anti-selection.

Non-medical limits: maximum sum assured accepted without medical examination, varying by age and by the insurer's underwriting rules; above them, medical or paramedical evidence is required.

Moral hazard indicators: over-insurance relative to income, recent large cover from several insurers, non-disclosure of material facts, and claims history of the proposer or nominee.

Term assurance: pure protection, pays the sum assured only on death within the term; no maturity benefit unless it is a return-of-premium variant.

Whole life: cover for the whole of life, premium payable for life or limited term; survival to the end of the premium term may make the policy paid-up.

Endowment: pays the sum assured on death within the term or on survival to maturity; combines protection with savings and has a higher premium than term.

Money-back: a percentage of the sum assured is paid at fixed intervals during the term; the death benefit is the full sum assured, with a possible deduction for amounts already paid.

ULIP: premiums are split into risk cover and investment; units are allotted at NAV, with charges for premium allocation, policy administration, mortality and fund management disclosed in the policy.

Annuity: immediate versus deferred; life annuity, annuity certain, and joint life annuity; the accumulation phase builds the fund and the payout phase pays the pension, with options such as return of purchase price.

Riders: critical illness, accidental death benefit, waiver of premium, term rider and hospital cash; they attach to a base policy and cannot exceed its term or sum assured limits.

Policy provisions: free-look period, grace period, revival with interest and evidence of insurability, surrender value, loan against policy, nomination and assignment.

Gross premium valuation reserve = present value of future benefits plus future expenses minus present value of future gross premiums, using prudent valuation assumptions.

Net premium reserve (Zillmer-adjusted) = PV of future benefits minus PV of future net premiums; the Zillmer method allows initial expense recognition by modifying the first-year reserve.

Reserve bases: valuation mortality table, valuation interest rate, and expense assumptions; a lower valuation rate or heavier mortality increases the reserve.

Surplus = assets minus liabilities (reserves); it arises from favorable mortality, interest earnings above the valuation rate, expense savings and lapses or surrenders.

With-profit policies: surplus is distributed as reversionary bonus (simple or compound, added to the sum assured) and terminal bonus (paid on death or maturity).

Asset share = accumulated premiums less expenses and mortality cost, with investment return credited; it is compared with the guaranteed surrender value to judge fairness.

Solvency margin: the excess of admissible assets over required liabilities, expressed as a ratio of required solvency margin; IRDAI prescribes the control level.

Reserving for ULIPs: unit reserves equal the value of units at the valuation date, plus a non-unit reserve for future charges and expenses.

IRDAI (Insurance Regulatory and Development Authority of India) is the statutory regulator for life and general insurance; the Insurance Act 1938, IRDA Act 1999 and IRDAI regulations govern the business.

Registration as an insurer requires minimum paid-up capital (₹100 crore for a life insurer) and compliance with solvency, deposit and investment norms.

Appointed actuary: a Fellow of the Institute of Actuaries of India who certifies the valuation of liabilities, premium rates and solvency, and files the actuarial report with IRDAI.

Distribution channels: individual agents, corporate agents, bancassurance, brokers, direct marketing and web aggregators; each is licensed or registered by IRDAI.

Commission and remuneration for agents are capped by IRDAI regulations, and the benefit illustration must disclose charges and expected returns to the prospect.

Policyholder protection: free-look period, grievance redressal through the insurer, then the Insurance Ombudsman; IRDAI's Integrated Grievance Management System records complaints.

KYC, AML and PMLA obligations: verify identity and address, monitor suspicious transactions and report cash transactions above the prescribed threshold.

Mis-selling controls: suitability assessment, need analysis, disclosure of commission, and the ' duties of the insurer' under the policyholders' interests regulations.

Death claim documents: claim form, death certificate, policy document, nominee's identity and bank proof, and, for early claims, medical or hospital records; an insurer may require an investigation.

Early claim = death within a defined period from commencement or revival (commonly three years); such claims are scrutinized for non-disclosure and suicide exclusion.

Section 45 of the Insurance Act 1938: after three years from issuance, revival or rider addition, a policy cannot be called in question on the ground of fraud or misstatement unless the insurer proves fraud; within three years, misstatement allows repudiation.

Suicide exclusion: the insurer's liability is limited to a refund of premiums if death by suicide occurs within 12 months of commencement or revival (per policy terms).

Nomination: the nominee receives the claim money as a trustee for the legal heirs; a beneficiary nominee under the amended law may receive the amount beneficially.

Assignment: transfer of policy rights, by endorsement or separate deed; conditional assignment versus absolute assignment, and notice to the insurer is essential.

Maturity and survival benefit claims: discharge form, policy document and identity proof; payment by NEFT or cheque to the policyholder's account.

Revival: within five years of the first unpaid premium, on payment of arrears with interest and evidence of insurability; the policy acquires a surrender value after two years' premiums.