III IC-81 flashcards

38 cards. Read the term and the definition here. The deck at the top of this page is optional.

Underwriting

The process of classifying risks into homogeneous groups so each policyholder pays a premium matching the risk brought to the pool, producing a standard, substandard, postponed or declined decision.

Numerical rating method

A system that assigns debit points to adverse factors and credit points to favourable ones; the algebraic total converts to a mortality percentage of standard, such as 175% of standard mortality.

Flat extra premium

A fixed addition per mille of sum assured charged for a stated number of years, used for temporary or non-mortality risks such as aviation, hazardous pursuits or an occupation class.

Moral hazard

Risk arising from the proposer's honesty, intention and financial interest in the cover; indicators include non-disclosure, over-insurance, third-party premium payment and unusual beneficiary arrangements.

Non-medical limit

The maximum sum assured that may be accepted on a proposal without a medical examination, set by age band and subject to the proposer's declaration of health.

Postponement

An underwriting decision deferring acceptance of a proposal where the impairment is temporary or treatment outcome is awaited, allowing reconsideration after a stated interval.

Decreasing term assurance

A term policy whose sum assured reduces over the term, commonly aligned with a mortgage or loan balance; the premium is lower than level term for the initial cover.

Endowment assurance

A contract paying the sum assured on death within the term or on survival to maturity; it combines protection with savings and costs more than term for the same sum assured.

Reversionary bonus

A share of surplus added to the sum assured under a participating policy, declared annually as simple or compound, and payable on death or maturity of the policy.

Terminal bonus

An additional bonus declared at the end of the policy term and paid only on death or maturity, not on surrender, reflecting long-term investment and mortality experience.

Unit-linked insurance plan

A contract where the savings element is invested in funds chosen by the policyholder, who bears investment risk; charges include allocation, administration, fund management and mortality deductions.

Annuity certain

An annuity guaranteeing a fixed number of payments regardless of survival; if the annuitant dies within the guaranteed period, remaining instalments pass to the nominee.

Money-back policy

An endowment variant that pays a percentage of the sum assured at stated survival intervals while the full sum assured remains payable on death, at a premium above an equivalent endowment.

Group term insurance

A single master policy covering many lives, usually one-year renewable term with a common rate and no individual medical evidence, subject to experience rating.

Net premium

The present value of expected benefits divided by the present value of the annuity of premiums, calculated on a mortality table and assumed interest rate without expense loading.

Gross premium

The office premium obtained by adding expense loading, contingency margin and profit margin to the net premium; acquisition costs are typically front-loaded.

Prospective reserve

The present value of future benefits minus the present value of future net premiums at the valuation date; it equals the retrospective reserve on the same valuation basis.

Zillmerised reserve

A reserve adjusted by deducting the unrecouped acquisition cost from the first-year reserve, preventing negative early reserves and spreading the loading over the policy term.

Surplus sources

Gains arising from actual experience differing from assumptions: interest gains, mortality gains, expense gains and surrender or lapse gains, distributed as bonuses in participating business.

Asset-liability matching

Aligning the duration and cash flows of invested assets with the expected claim outflows of liabilities, so that interest-rate movements do not create solvency strain.

Utmost good faith

The mutual duty of proposer and insurer to disclose all material facts; a material fact is one that would influence a prudent underwriter's decision or the premium charged.

Insurable interest

A financial relationship whereby the policyholder benefits from the continuation of the life insured; it must exist at inception of a life policy.

Section 45, Insurance Act

An Indian provision barring repudiation of a life policy after three years from issuance, revival or rider addition, whichever is later, except in cases of fraud.

Free-look period

A period after receipt of the policy document, typically fifteen or thirty days depending on the distribution channel, within which the policyholder may return it for a refund.

Grace period

A period, usually thirty days or fifteen days for monthly mode, after the premium due date within which payment keeps the policy in force without lapse.

Nomination

The right of the policyholder under Section 39 to name a person to receive the policy money on death; the nominee holds it as a trustee for the legal heirs.

Early claim

A death claim arising within a short period, commonly up to three years from commencement or revival, which attracts detailed investigation before settlement.

Claim settlement timeline

The IRDAI-prescribed requirement to settle a claim within thirty days of receiving all documents, or forty-five days where investigation is required, with interest for delay.

Suicide exclusion clause

A policy clause barring payment where death by suicide occurs within a stated period, commonly twelve months from inception or revival; afterwards the full sum assured is payable.

Maturity claim

A payment due on survival to the maturity date, settled against a discharge form and the original policy; delay beyond the prescribed period attracts interest.

Agent licensing

The requirement that an insurance agent hold a valid IRDAI licence, meet qualification and training requirements, and pass the prescribed agent examination before appointment.

Rebating prohibition

A statutory bar under Section 41 of the Insurance Act on offering any share of commission or inducement to a prospect; breach can lead to cancellation of the agent's licence.

Solvency ratio

Available solvency margin divided by required solvency margin; IRDAI prescribes a minimum control level of 150% for life insurers in India.

Retention limit

The maximum amount of risk an insurer keeps on a single life or event; amounts above it are ceded to reinsurers under treaty or facultative arrangements.

Surplus reinsurance

A proportional treaty under which the insurer retains a fixed amount per life and cedes the excess up to a stated multiple of the retention to the reinsurer.

Know your customer

The anti-money-laundering obligation to verify a customer's identity and address, monitor unusual transactions, and report suspicious activity to the Financial Intelligence Unit.

Insurance Ombudsman

A free grievance redressal forum for policyholders with jurisdiction up to a prescribed monetary limit; a decision accepted by the complainant binds the insurer.

Needs analysis

A method of quantifying required cover from income replacement, outstanding debt, education and retirement needs, used to recommend a suitable sum assured.