UPMSP Vocational Insurance flashcards

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

Pure risk

A risk where only loss or no loss is possible, such as fire or theft. It is insurable because the outcome is accidental and measurable, unlike speculative risk.

Law of large numbers

As the number of independent, similar exposure units increases, actual losses converge toward the expected loss. This statistical principle lets insurers set reliable premiums.

Insurable interest

A financial relationship in which the insured benefits from the subject's survival or is harmed by its loss. Required at inception for life cover and at loss time for property cover.

Utmost good faith

The duty of both insurer and insured to disclose all material facts relevant to the risk. Breach makes the contract voidable at the insurer's option.

Gross premium formula

Gross premium equals the risk or pure premium divided by one minus the expense ratio. It adds expense loading, contingency margin and profit to expected claims.

Term insurance

A life policy paying the sum assured only if death occurs during the chosen term. It has no maturity or surrender value and is the cheapest form of life cover.

Endowment policy

A life policy paying the sum assured on survival to maturity or on earlier death. It combines protection with savings and costs more than term cover.

Unit-linked insurance plan

A life policy where part of the premium buys units in investment funds whose value follows NAV. The policyholder bears the investment risk, subject to IRDAI lock-in and charge rules.

Section 45 Insurance Act

After three years from issuance or revival, an insurer cannot repudiate a life policy on any ground, including fraud. Within three years, repudiation needs proof of fraudulent suppression.

Personal accident policy

A benefit policy paying fixed sums for accidental death, permanent total or partial disablement and temporary total disablement. It is not indemnity and excludes disease and suicide.

Average clause

When the sum insured is less than the property's value at loss, the claim is reduced in that proportion: sum insured divided by value, multiplied by the loss.

STFI perils

Storm, tempest, flood and inundation. These allied perils are added to a standard fire policy by endorsement for additional premium.

General average

A voluntary sacrifice of cargo or ship for the common safety of the voyage. The resulting loss is shared proportionally by all cargo and ship interests.

Institute Cargo Clauses

Standard marine cargo wordings: Clause A covers all risks, while B and C cover progressively narrower lists of named perils. C is the most restrictive.

Third-party motor cover

Compulsory cover under the Motor Vehicles Act, 1988 for injury, death or property damage caused to third parties. It does not cover the insured vehicle's own damage.

No-claim bonus

A discount in the own-damage motor premium for claim-free years, typically rising from 20% to 50%. Making a claim forfeits or reduces the accumulated bonus.

Pre-existing disease waiting period

The period, commonly two to four years, during which a health policy does not pay for conditions existing before purchase. IRDAI regulates the maximum allowed.

Cashless facility

Health treatment at a network hospital where the insurer or TPA settles the bill directly with the hospital, so the insured pays only excluded or non-covered amounts.

Critical illness policy

A benefit policy paying a lump sum on first diagnosis of a listed condition after a waiting period. It pays regardless of hospitalisation and is not indemnity-based.

Ayushman Bharat PM-JAY

A government scheme giving eligible poor families secondary and tertiary hospitalisation cover of Rs 5 lakh per year, with no limit on family size or age.

PMJJBY

Pradhan Mantri Jeevan Jyoti Bima Yojana, a low-premium life scheme for bank-account holders aged 18 to 50, paying Rs 2 lakh on death from any cause.

IRDAI

The Insurance Regulatory and Development Authority of India, created by the IRDA Act, 1999. It licenses insurers and agents and regulates solvency, products and market conduct.

Section 64VB

The Insurance Act provision that an insurer may not assume risk unless the premium is received in advance or guaranteed within the prescribed period.

Free-look period

A period, commonly 15 days after receipt of the policy, in which the policyholder may return it and receive a refund of premium less charges, as per IRDAI rules.

Subrogation

After paying a claim, the insurer acquires the insured's right to recover the loss from the responsible third party. The insured must not release that party without consent.

Insurance Ombudsman

A grievance-redressal authority for policyholders with complaints within prescribed monetary limits. Its award binds the insurer if the complainant accepts it in time.

Agent licensing

An insurance agent must complete prescribed training, pass the IRDAI examination, obtain a licence and renew it before expiry. Selling without a licence is an offence.

Need-based selling

Sizing cover from the client's income, dependants, liabilities and goals rather than pushing a product. Life cover is often set at 10 to 15 times annual income.

Objection handling

The listen-acknowledge-clarify-answer sequence used to address a prospect's doubts with facts. It must never involve pressure or promises beyond the policy document.

Persistency ratio

The proportion of policies still in force after a given period, such as 13 or 61 months. High persistency earns higher renewal commission and reflects good service.

Loss assessor

A licensed professional who inspects and quantifies a general insurance loss. The surveyor assesses the loss, but the insurer makes the final claim decision.

Contribution principle

When two or more policies cover the same loss on the same interest, each insurer pays a rateable share so total recovery does not exceed the actual loss.