Unit - II

LIFE INSURANCE

Life Insurance can be defined as a contract between an insurance policy holder and

an insurance company, where the insurer promises to pay a sum of money in exchange for a premium,
upon the death of an insured person or after a set period.

This Life Cover secures ones family future by paying a lump sum amount in case of an
unfortunate event. In some policies, insurer paid an amount called Maturity Benefit at the end of the
policy term.

Life insurance is a vital protection coverage for family in the event of insured untimely death.
But apart from providing financial assistance, there are many other reasons why a life insurance policy
is important.

IMPORTANCE OF LIFE INSURRANCE

Meet the family’s needs

One of the most important life insurance benefits is that it helps insured to secure his family’s
financial needs, even when insured are not around. If insured have a wife and children or parents who
are dependent on him, it can be difficult for them to be able to sustain and take care of their expenses
in the event of his demise. This is where life insurance plays an important role; the death benefits can
help them take care of their regular expenses like child education, pay off a Home Loan, etc. and have
the financial stability without having to compromise on their lifestyle.

Protect Your Business

Apart, from covering insured family, there are some life insurance policies that provide
coverage to the business. If insured is a business owner, and in case if something happens to insured,
his business partner can purchase a certain portion of his business, and the pay-out will be paid to the
nominee. However, we must know that in this arrangement, the nominee will not get any stake in the
business.

Settle The Debts

During the active working life, insured may avail of a loan to purchase a home, a car, fund for
child’s education, or even to repay debts. However, in case of pass away before paying off the loan,
the debt will directly fall onto family members. Even if the dependents are employed, managing the
loan can be difficult for them. This is why life insurance is required if one have a life insurance cover;
the family can pay off the debt with the sum assured and live a financially independent life.

Support Your Retirement Plan

It is the natural desire for all to have a good retirement fund. One can accomplish this goal by
investing in good life insurance plans. There are some life insurance policies that provide regular
income on a monthly basis.

Get Tax Benefits

Apart from protection, one of the most significant advantages of life insurance is that it helps to
get tax benefits. No matter what type of life insurance policy you buy, you can save taxes. Under
Section 80C of the Income Tax Act, the premium paid for life insurance is eligible for deduction up to
a maximum amount of Rs 1.5 lakh. Also, the death benefit or maturity is exempted from tax under
Section 10(10D).

TYPES OF LIFE INSURANCE

 Term Plan – pure risk cover

 Unit linked insurance plan (ULIP) – Insurance + Investment opportunity
 Endowment Plan – Insurance + Savings
 Money Back – Periodic returns with insurance cover
 Whole Life Insurance – Life coverage to the life assured for whole life
 Child’s Plan – For fulfilling your child’s life goals like education, marriage, etc.
 Retirement Plan - Plan your retirement and retire gracefully

1.Term Life Insurance

Term insurance is the simplest form of life insurance plan. Easy to understand and affordable to
buy. A term insurance provides death risk cover for a specified period. In case the life assured passes
away during the policy period, the life insurance company pays the death benefit to the nominee. It is a
pure risk cover plan that offers high coverage at low premiums. The death benefit is payable as lump
sum, monthly payouts, or a combination of both. There’s no payout if the life assured outlives the
policy term. However, these days there are companies offering Term Plans with Return of Premiums
(TROPS), where insurance companies payback all the paid premium amount in case the life assured
outlives the term period. The benefits from Term Life Insurance are as follows

Affordable

The most amazing feature of a term plan is its affordability. A pure term plan offers life cover
for a specified amount known as the sum assured and for a specified tenure known as the policy term.
In case the life insured dies during the policy term, the life insurance company pays the death benefit
to the appointed nominee.

Easy to Buy

Just like the way you buy clothes, shoes , household things online in an easy manner, the same
way you can buy a term plan too. Buying a term plan is comparatively easier than buying other types
of life insurance products or financial instruments.

Term Plan with Return of Premiums

Some people hesitate to invest in pure term plans as it does not offer any maturity value.But
there is another variant of a term plan known as term plan with return of premium which offers
maturity value equivalent to the return of all paid premiums, if the insured survives the policy term.

Staggered Claims Payout Option

there are term plans which offer staggered claim payout under which partial claim amount is
payable as lump sum and remaining amount payable as monthly/yearly income.Partial Lump sum
amount helps the family to combat the existing financial crisis due to the death of an earning member
where as remaining amount payable as staggered payout in the form of monthly income will help the
family to take care of their monthly financial expenses.

Flexibility in Paying Premiums

Term plans offer flexibility to pay premiums annually, semi annually, quarterly or
monthly. There are term insurance plans which also offer single pay or limited pay premium option
apart from regular pay premium. Such flexibilities allow the policyholder to choose the appropriate
premium payment options as per his budget and convenience.

Offers Rebate

Life insurance companies offer rebate for opting a higher sum assured under term plans. For
non smokers and female lives, the insurance companies offer special discounted premium rates as a
gesture of honor them as a “standard life” with no adverse risk associated with them.

2.Unit Linked Plans (ULIPs)

A unit linked plan is a comprehensive combination of insurance and investment. The premium
paid towards ULIP is partly used as a risk cover (insurance) and partly is invested in funds. One can
invest in different funds offered by the insurance company depending on his risk appetite. The
insurance company then invests the accumulated amount in the capital market i.e. in bonds, equities,
debts, market funds, or a hybrid funds... The benefits from ULIPs are as follows
Benefit of life insurance and market linked returns

ULIPs not only provide financial security to family throughout the policy period, but also helps
to earn market linked returns over long term. A portion of the overall premium is invested in markets
while the other is used to provide life insurance cover..

ULIPs are EEE products

ULIPs are considered one of the best tax-saving instruments since they are EEE or Exempt-
Exempt-Exempt. This means that you are eligible for tax deductions during the investment and earning
stage, as well as during withdrawal. The premiums paid towards ULIPs are allowed for deduction from
the taxable income as per prevailing income tax laws.

Flexibility to invest as per risk appetite

With ULIPs, one have the flexibility to choose fund according to the risk appetite. Most ULIPs
come with a range of equity, debt and balanced funds to choose from, along with the opportunity to
switch funds as per your financial needs.

ULIPs are meant for long-term investment

The real benefits of ULIPs are seen after staying invested in it for a long time, say 15-20 years.
By staying invested for a longer duration, market fluctuations and charges deducted will be
 compensated, and a higher portion of the premium will be diverted into investment avenues which will
enable you to reap maximum returns.

Enjoy the benefits of ULIP by paying just one premium

Unlike a regular premium ULIP where insured need to pay premiums at pre-defined intervals,
in a Single Premium ULIP, you pay premium only at the time of buying the policy. Once that premium
is paid, you enjoy the policy benefits for the entire policy period.

3.Endowment Plans

Endowment plan is another type of life insurance plan, which is a combination of insurance and
saving. A certain amount is kept for life cover – insurance, while the rest is invested by the life
insurance company. In an endowment plan, if the life assured outlives the policy term, the insurance
company offers him the maturity benefit. Moreover, Endowment Plans may offer bonuses periodically,
which are paid either on maturity or to the nominee under death claim. On death, the death benefit is
payable to the nominee.

Here are some of the salient features which you can find in endowment policy –

 An endowment plan is offered for longer tenures which can go up to 30 years

 There are whole life endowment plans too which allow coverage till 99 or 100 years of age

 An endowment policy does not invest in capital markets.

 There are optional riders under endowment insurance plans which help in enhancing the coverage

 Guaranteed additions or loyalty additions are added under many endowment plans

 There are regular premium, limited premium as well as single premium endowment plans. one can

choose any plan as per premium paying capacity

 One can avail policy loans under endowment plans. The loan is allowed against the surrender value of

the plan

4.Money Back Life Insurance

Money back plan simply means that money comes back to the life insured after a specific
interval of time as survival benefit. The money back is guaranteed on the survival of the policyholder.
However, in case of death of the policyholder, the nominee gets the sum assured and accrued bonuses,
if any.

5.Whole Life Insurance

 A whole life insurance policy covers the life assured for whole life, or in some cases, up to the
age of 100 years. The sum assured or the coverage is decided at the time of policy purchase and is
paid to the nominee at the time of death claim of the life assured along with bonuses if any.

6. Child Plan

Child plan helps to build corpus for child’s future growth. Child plans help to build funds for
child’s education and marriage. Most of the Child Plan provides annual installments or one time
payout after the age of 18 years.

In case of an unfortunate event, the insured parent passes away during the policy term - immediate
payment is payable by the insurance company. Some child plans waive off the

Benefit of Child Plan: Helps in fulfilling your child’s dream.

7. Retirement Plan

Retirement plan helps to build corpus for your retirement. Helping you to live independently
financially and without worries. Most of the child plans provide annual installments or one time payout
after the age of 60 years.

In case of an unfortunate event, life assured passes away during the policy term - immediate payment
is payable to the nominee by the insurance company. Death benefit will be higher of coverage or fund
value or 105% of premiums paid. Vesting Benefit will be payable if the life assured survives the
maturity age. In which case, payout will be fund value which has to be utilized for buying an
annuity. Best known for: Long-term savings and retirement planning.

Benefit of Retirement Plan: 

Helps in building corpus for retirement.

Contents and Documents for Life Insurance Policies

Different documents are required to buy different types of insurance plans. These are the basic
documents required to buying insurance and also for making a claim .

 Life Insurance Proposal form duly filled and signed by the proposer or insured
 Photograph of the proposer or insured
 Age proof of the proposer or insured
 Identity proof of the proposer or insured
 Address proof of the proposer or insured
 Medical examination report of the life insured
 Income proof of the proposer
  PAN card of the proposer or insured

Documents Required for Claim

 Death claim form filled and signed by nominee

 Life insurance policy bond
 Death certificate
 Identiy proof of the nominee and legal hiers
 Bank account details of the nominee
 Police FIR if death happened due to an accident
 Post-mortem report, corner’s report, panchnama and other relevant records.

Health Insurance

Health insurance takes care of insured medical expenses and ensures that out-of-pocket
expenses are reduced up to the Sum insured A health insurance policy ensures that one can avail
cashless treatment at a network hospital, typically covering 30 days and 60 days pre and post
hospitalization, respectively, in most of the Health Insurance plans. One can add value to the Base
Health Insurance Plan by complementing them with additional benefits such as Personal Accident
(PA) Cover, Critical Illness (CI) Cover, etc.

One can also invest on one of the popular senior citizen health insurance policies and ensure
comprehensive security for their elderly parents or secure their old age that often brings along several
ailments that require expensive medical treatment

 Medical Bills: Coverage against medicinal expenses incurred, including pre and post
hospitalization

 Pre-existing Diseases: Coverage for any pre-existing disease is provided to you after a certain
waiting period.

 Claim Reimbursement: Coverage for expenses incurred for hospitalization due to a medical

 Tax Rebate: Annual premium paid for health coverage are subject to tax exemption u/s 80D of
ITA, 1961. Tax exemption ranges from Rs. 25,000 to Rs. 75,000.

 Tax benefits are subject to changes in tax laws.

 Other Benefits: As an innovative feature, OPD expenses are now covered under few Insurer
plans and don’t require hospitalization for minimum 24 hours for claim reimbursement.
Standalone OPD plans are also available in the market.

Different types of Health Insurance Plans:

Individual Health Insurance 

 As the name suggests, an individual health plan offers coverage on an individual basis.
However, one can add other members, including spouses, children, parents, etc. by paying an extra
premium.  Moreover, the premium is charged as per every individual’s age, medical history, and
respective sum insured. In individual plans claim filed by one member, it doesn’t affect the sum
insured of the other insured member.

Family Floater Health Insurance 

In a family floater plan, the coverage is offered to all the family members, including spouse,
children, parents, and other dependant members at a single premium. Usually, the premium is based on
the age of the eldest family member. The coverage is almost similar to an individual health plan. The
only difference is that the policy will cover all the family members under a single sum assured. 

Critical Illness Insurance

A critical illness policy covers life-threatening diseases such as cancer of specified severity,
kidney failure, stroke, paralysis, etc. The cost of treatment for such conditions is quite high, and it may
require multiple hospital visits over a long period. Apart from hospitalization, there are various other
expenses, including doctor visits, chemotherapy, etc. The sum insured amount is paid in a lump sum
that can be used to cover all the medical costs. 

Hospital Daily Cash Benefit Plans

The type of medical plan offers a lump sum amount for each day of your hospitalization. The
sum assured is fixed at the outset and would remain fixed irrespective of the expenses incurred.  So, if
your plan offers Rs. 5000 per day of hospitalization, you will get the amount for each day of your
hospitalization even if your daily hospital expense comes out to be Rs.1000 or Rs.1500.

The insured can utilize this amount to meet additional expenses that are not covered by their basic
health insurance plan. You can buy a daily hospital cash plan as a rider or as a standalone cover.

Senior Citizen Health Insurance Plans

These plans are designed for people above the age of 60 years. Elderly people are more
vulnerable to serious illnesses, and the cost of treatment for such diseases is also expensive. Therefore,
it is better to buy a senior citizen plan for your elderly parents to ensure adequate medical coverage in
their post-retirement years.  

Group Health Insurance

Group health insurance is usually provided by an employer or a company to its employees. The
coverage is offered for a limited sum insured, and the policy features are also not that extensive.
However, the coverage can be extended to other family members in the same policy by paying an extra
premium. But this will depend on employer.

Documents for buying a Health Insurance Policy

 Health insurance proposal form filled and signed by the proposer

 Identity proof of the proposer
 Age proof of the insured
 Address proof of the proposer
 Medical examination report
 Income proof
Documents for claim a Health Insurance Policy

 Pre authorization claim form for cashless hospitalization

 Health card issued by the insurance company
 Identity proof of the insured’claim form, filled and signed by the policy golder
 Discharge summary or certificate
 Medical bills and reports.

Sales promotion and Methods

Sales promotion is a marketing strategy where the product is promoted using short-term
attractive initiatives to stimulate its demand and increase its sales. This strategy is usually brought to
use in the following cases – To introduce new products, To sell out existing inventories, To attract
more customers.

A sales promotion is any undertaking by an organization designed to increase sales or encourage the
use or trial of a product or service. Sales promotions take many different forms, but they all focus on
persuading a target audience to become customers of a business.

Objectives of sales promotion

Sales promotion secures the following objectives:

1. Bridge between advertising and personal selling

Sales promotion consists of those activities other than personal selling, advertising and publicity. It
serves as a bridge between personal selling and advertising.

2. Introduction of new products

Sales promotional devices help introduce new products in the market. They induce buyers to purchase
a new product. Free samples are distributed or money or merchandise allowance is offered to the
dealers to stock and sell the new product.

3. Attracting new customers

Sales promotion aims at wooing new customers. Sales promotional devices at consumers level include
Coupons, product samples, giving demonstration about the product, organizing contests, refund offers,
offering free trials etc. These stimulate customers to make purchase promptly on the spot.

4. Inducing present customers to buy

Sales promotion induces present customers to buy more of the product. Sales promotion methods work
faster than advertisement. Moreover, sales promotion materials make the salesman’s effort more
productive. It enables the consumer to know more about the product, its ingredients and uses.

5. Increasing sales during off season

Some products are seasonal in nature. After the season is over, they are not demanded any more. Sales
promotion is used to retain customer’s interest in the product during off-season. Short term incentives
offered to the buyers stimulate sales.
6. Encouraging business buyers

Wholesalers and retailers purchase goods for resale. Promotional activities are undertaken to attract
retailers and wholesalers to stock the products more. Display and advertising allowances are granted to
dealers to compensate them for the space given for the display of manufactured products. Premiums
are offered for purchasing above a particular level.

7. Improving the public image of the firm

Huge amounts are now being spent on determining appeals for arresting the attention of the prospects
towards the product. Consumer’s dissatisfaction about a particular brand can be removed by aggressive
sales promotion programmes. Sales promotional devices make products popular among customers.
Ultimately, they enhance the public image of the firm.

Methods of Sales Promotion

Incentives used to stimulate purchasing such as coupons, product placements, and buyer
programs are some of the methods we use in sales promotion to promote our products and services and
encourage purchasing. Few more methods of sales promotion are as follows

Coupons:

Coupons such as 50% off, save ₹100 on purchase of 500, buy one get one free are frequently used
to attract customers towards the products of your brand.

Premiums:

These low-cost items were given to customers at a discount or for free to build loyalty and
fascinate customers. Logo pens, keychains and coffee mugs are typical examples of it.

Incentives:

Incentives builds the customer’s excitement. Thus, marketers conduct contests, lucky draws and
provide rebates to their loyal customers to retain them with their product. This also attracts the new
customer group toward their product.

Product Samples:

Providing samples of your new product with other famous products of your company also increase
the sales of your products.

Sponsorship:

This is what in which a company pays a fee to put their name and logo on a physical site.

Product Placement:

We have seen in many realities shows a mug having a logo of a particular drink name is kept in
front of celebrities, that is a product placement method of sales promotion and this method brings
recognition for their brand.

Loyalty Programs:
 It is also known as buyer programs. In these programmes, companies award their customers for
the purchases.

Point- of- Purchase Displays:

We see almost everywhere particular corner are made displaying the products of a specific
brand. They are usually placed in high traffic areas and encourages impulse buying.

Finding Prospective customers for insurance

Direct Requests

Directly asking the clients and prospects to recommend to their relaticves and friends and
colleagues .

Partnerships:

Establishing partnerships with other businesses and maintain relationship to recommending

their services to our clients

Network Developent:

Maintain a network of people who could recommend to any prospects who need the line of
insurance

Referral groups:

These are the groups who suggests the products to others in their routine life

Incentives:

By presenting an incentive to the clinets and aksing them to suggest the insurance policies to
their belonging groups

Advertising:

By creating awareness to the public by broadcasting an advertisement about a policy

Freebie Distribution:

Disturbuting pens, pencils notebooks, waterbottles etc….which contains the symbol and lable
of policies

COUNSELLING

Counselling is a relationship between the counsellor and counsellee characterized by trust and
openness, in a one to one, or a small group relationship, whereby the counsellee is helped to work
through his interpersonal and or intrapersonal problems and crisis.

He is also helped to mobilize his inner and outer resources and to find new options in facing
life. Along with this, counselling also helps the client to discover and develop his God given
potentialities and lead an integrated life and make his contribution for the welfare of his fellow men.”
Types of Counselling:

The following are the types of counseling:

1. Directive Counselling:

Under directive counselling the counsellor issues certain instructions to the counsellee or he is
directed to do certain things e.g.: he is asked to behave in a particular manner, asked to abstain from
alcohol or drug, asked to respect his colleagues and superiors.

2. Non Directive Counselling:

Under non directive counselling counsellor does not issue directions but observe the behaviour
and attitude of the counsellee towards his work and his colleagues and superiors and subordinates. If
he errs then counsellor comes to his rescue and corrects him realizing him that he was wrong. He will
not issue him any instructions or will not direct him.

3. Cooperative Counselling:

This is a kind of counselling that can be done through extending full cooperation to the
counsellee and makes him realize his mistakes relating to his behaviour and attitudes so that he himself
will be back on the track and improve himself. It is winning the heart of the counsellee through
cooperation. His confidence will be won by the counsellee and he in turn will extend his cooperation
and become self disciplined.

Helping customers in filing the insurance forms

Insurance advisors utilize their knowledge of insurance polices and companies to evaluate,
recommend, and sell plans to customers or businesses based on their needs.

He job involves communicating with customers with customers to assess their current situation,
researching products to match the customer’s needs, processing paperwork and ensuring existing
customer information is up to date.

There are two situations at which the help is required to the clients

Helping the clients buy insurance:

To buy an insurance policy clients are required to fill up a proposal form stating all their
relevant details. The details contained in the form then form the baiss of the insurane contract.

Help in claim settlements:

Help to file a claim at the time of claims. Since the advisor is well versed with the
technicalities of insurance and knows the claim process, it is his duty to help clients get the settlement
of their claims.
 Extending Post Insurance Service To Customers
Customer service and the customer experience is becoming an important competitive
advantage in the insurance industry. To establish a successful relationship between insurers and
customers, companies must focus on meeting consumer demands during each phase of the customer
journey.

 Actively communicate during the consultation phase:

 Personalize across channels in the purchase decision phase:
 Balance humans and technology during the support and service stage: