Insurance and Financial Marketing: Principles, Products and Ethical Selling
Insurance and Financial Marketing Awareness tests insurance principles, products and regulation, plus the marketing process used by advisers. Expect questions on life and non-life insurance, LIC products, IRDAI rules, underwriting, claims, prospecting, need analysis, objection handling and KYC.
Core rules
- Life insurance is a contract of utmost good faith and insurable interest; indemnity does not apply to life, because the sum assured is paid on death or maturity.
- LIC was established in 1956 and is headquartered in Mumbai; IRDAI regulates insurers.
- Common life products are term, endowment, money-back, ULIP and annuity; riders add cover but are not separate policies.
- Marketing follows prospecting, need analysis, presentation, objection handling, closing and service. The 4Ps are product, price, place and promotion.
- KYC and AML checks are mandatory before accepting premiums.
Worked example
A property worth ₹8 lakh is insured for ₹6 lakh under a policy with an average clause. A loss of ₹3 lakh occurs. Claim = (sum insured / actual value) × loss = (6/8) × 3 = ₹2.25 lakh. Without the average clause, the claim would be considered up to the sum insured, subject to policy terms.
Traps that cost marks
Confusing nomination with assignment; treating surrender value as paid-up value; calling ULIPs pure protection; promising guaranteed returns not stated in the policy; and ignoring exclusions. In marketing questions, the ethical answer is usually the one based on disclosed need, not maximum commission.