Unit 2: Life insurance

Types of claims

• Maturity claim: paid on survival till the end of the term.
• Survival benefit: periodic payments (money-back).
• Death claim: paid to the nominee; early death claim (within 3 years) investigated more closely; Section 45 of the Insurance Act — no policy can be called in question after 3 years on any ground.
• Rider claims: accidental death, critical illness, disability, waiver of premium.
• Surrender value on voluntary discontinuance.
• Settlement time: death claims within 15 days if no investigation (IRDAI master circular 2024); investigation completed within 45 days.

• Beneficial nominees (2015 amendment): parents, spouse, children — nominee gets the beneficial interest, not just as trustee.
• Assignment by endorsement or separate deed, signed and attested, with notice to the insurer.

• Formed on 1 September 1956 by nationalising 245 Indian and foreign insurers under the LIC Act, 1956; listed on stock exchanges in 2022 (government retains a majority stake).
• Structure: central office (Mumbai), zonal offices, divisional offices, branch offices, satellite offices; over 13 lakh agents.
• Objectives: spread life insurance widely, especially in rural areas; mobilise savings for nation-building; provide security at reasonable cost.
• Role: largest life insurer (majority market share by premium), largest institutional investor in India's equity and government securities markets, social security schemes (PMJJBY, Aam Aadmi Bima, pension plans), Bima Sakhi Yojana for women agents.

• Features of life insurance marketing: intangible, long-term, trust-based, "sold not bought", needs analysis.
• Channels: agents, bancassurance, brokers, direct online, corporate agents, POSP, web aggregators.
• Development officers (LIC): recruit, train, motivate and supervise agents in their area; plan and achieve business targets; provide service support; paid salary plus incentives.
• Insurance agents: licensed by IRDAI after training and examination; functions — identify prospects, needs analysis, explain products honestly, collect proposal and first premium, help in claims and policy servicing; code of conduct — disclose material information, no rebating, no misrepresentation, maintain records.