IRDAI IC38 (Insurance Agent) Life Insurance Products and Underwriting Syllabus

What is whole life insurance?

A permanent life insurance plan that provides cover for the entire lifetime of the insured (often until age 99/100) and pays the sum assured (plus bonuses, if with-profits) on death; premiums may be payable for life or for a limited period.

What is an endowment plan?

A savings-cum-protection plan that pays the sum assured (plus bonuses, if any) on death during the term OR on survival to the end of the term (maturity)—combining a death benefit with a guaranteed maturity benefit.

How does an endowment plan differ from a whole life plan?

An endowment pays the sum assured on either death within the term or on survival to a fixed maturity date, building a savings element payable at maturity; a whole life plan covers the entire lifetime and typically pays out only on death (no fixed maturity payout).

What is a money-back (anticipated endowment) policy?

An endowment-type plan that pays the survival benefits in periodic instalments (a percentage of the sum assured) at regular intervals during the term, and pays the FULL sum assured (not reduced by survival payments already made) on death within the term.

In a money-back policy, how is the death benefit affected by the survival benefits already paid?

On death the full sum assured is payable regardless of the survival/instalment amounts already paid out—the periodic payments are not deducted from the death benefit.

What is a Unit Linked Insurance Plan (ULIP)?

A ULIP combines insurance and investment, where the premium (after charges) is invested in chosen unit-linked funds (equity, debt, balanced); the policyholder bears the investment risk and the value depends on the Net Asset Value (NAV) of the units.

What is NAV in the context of ULIPs?

Net Asset Value—the per-unit market value of the fund, calculated as (total value of the fund's assets minus liabilities) divided by the number of outstanding units; it determines the value of the policyholder's investment.

Name common charges deducted in a ULIP.

Premium allocation charge, fund management charge (FMC), policy administration charge, mortality charge (for the life cover), and surrender/discontinuance charges (if applicable).

How does a ULIP differ from a traditional (e.g., endowment) plan in investment terms?

In a ULIP the investment risk is borne by the policyholder and returns are market-linked (transparent, via NAV), whereas in traditional plans the insurer bears the investment risk and returns come as guaranteed sums plus non-guaranteed bonuses.

What is an annuity?

An annuity is a series of regular periodic payments made by an insurer to the annuitant in return for a lump sum (or accumulated fund); it is essentially a tool to provide a regular income, primarily used for retirement/pension.

What is the difference between an immediate annuity and a deferred annuity?

An immediate annuity starts paying income right after a single lump-sum purchase; a deferred annuity has an accumulation period during which premiums build up a corpus, and income payments begin at a later (deferred) date.

What is a life annuity vs. an annuity certain?

A life annuity pays for as long as the annuitant lives (ceasing on death); an annuity certain pays for a fixed guaranteed number of years regardless of whether the annuitant survives or dies.

What is an 'annuity with return of purchase price'?

A life annuity that pays income to the annuitant for life and, on the annuitant's death, returns the original purchase price (corpus) to the nominee/legal heirs.

What is a rider in life insurance?

A rider is an optional add-on benefit attached to a base policy for an extra (usually small) premium, providing additional cover for specified contingencies; it cannot be sold standalone and is limited in value (regulatory caps apply, e.g., generally not exceeding the base sum assured for many riders).

What does an Accidental Death Benefit (ADB) rider provide?

It pays an additional sum assured (over and above the base death benefit) if the insured's death occurs due to an accident, usually within a specified period of the accident.

What does a Critical Illness rider provide?

It pays a lump-sum benefit on the diagnosis of any of the specified critical illnesses (e.g., cancer, heart attack, stroke), helping meet treatment and income-loss costs, typically subject to a survival period.

What does a Waiver of Premium (WOP) rider do?

It waives (the insurer pays) all future premiums of the policy on the occurrence of a specified event such as the policyholder's permanent disability or critical illness, keeping the policy and its benefits in force.

What is the purpose of underwriting in life insurance?

Underwriting is the process of assessing and classifying the risk presented by a proposer, deciding whether to accept the risk and on what terms (standard, extra premium, or rejection), so as to charge a fair premium and prevent anti-selection (adverse selection).

What is anti-selection (adverse selection) and how does underwriting counter it?

Anti-selection is the tendency of higher-risk individuals to seek insurance more than lower-risk ones; underwriting counters it by carefully assessing risk and applying appropriate terms/premiums so that high-risk lives do not get standard rates meant for healthy lives.

What are the two broad stages/levels of underwriting?

Field underwriting (done by the agent at the proposal stage, gathering accurate information and avoiding poor risks) and office/centralised underwriting (done by the insurer's underwriters who evaluate all evidence and decide the terms).

List the main sources of underwriting information.

The proposal form, the agent's confidential report, the medical examiner's report, special medical/diagnostic reports, the Moral Hazard Report (MHR), previous policy/claims records, and (for large sums) financial documents and questionnaires.

What is the most important source of underwriting information from the proposer?

The proposal form, which captures personal details, health, habits, occupation, family history and financial information—the basis on which the contract of utmost good faith (uberrima fides) rests.

How are risks generally classified in life underwriting?

Into standard lives (accepted at ordinary rates), substandard lives (higher-than-average risk—accepted with extra premium, lien, or exclusions), preferred lives (lower-than-average risk—possibly discounted terms), and declined/rejected lives (risk too high to accept).

What methods are used to charge for a substandard life?

Charging an extra premium (rating up/age add-on), imposing a lien (reduced claim amount in early years), restricting cover, adding exclusions for specific causes, or postponing/declining the proposal.

What is non-medical underwriting?

Underwriting where the proposal is accepted without a medical examination, relying on the declarations in the proposal form; it is permitted within specified limits of age, sum assured, and other conditions to save cost and time for low-risk cases.

What is the focus of financial underwriting?

Financial underwriting assesses whether the sum assured requested is justified by the proposer's income, net worth and the genuine financial loss the family would suffer (the need), to ensure insurable interest and prevent over-insurance and speculation.

What is the free-look period in a life insurance policy?

A period (currently 30 days from receipt of the policy document for all policies under IRDAI rules) during which the policyholder can review the terms and, if not satisfied, return/cancel the policy for a refund of premium (after deducting proportionate risk premium, medical and stamp charges).

What is the grace period in life insurance and its typical length?

The grace period is the extra time allowed after the premium due date to pay the premium without the policy lapsing—typically 15 days for monthly mode and 30 days for other (quarterly/half-yearly/yearly) modes; the cover continues during this period.

What is a lapsed policy and how can it be revived?

A policy lapses when premiums are not paid within the grace period and it ceases to provide full benefits; it can be revived within the allowed revival period (e.g., up to 5 years from first unpaid premium) by paying all arrears with interest and submitting required health/declaration evidence, subject to the insurer's approval.

What is the difference between nomination and assignment?

Nomination (Sec. 39, Insurance Act) is the policyholder appointing a person to RECEIVE the policy money on the life assured's death—it does not transfer ownership. Assignment (Sec. 38) is the TRANSFER of the title/rights of the policy to another person (assignee), who becomes the owner; assignment overrides/cancels an existing nomination.

What is surrender value, paid-up value, and how do policy loans relate to them?

Surrender value is the amount the insurer pays if the policyholder terminates the policy early (available after the policy acquires value, generally after a minimum premium-paying period). Paid-up value is the reduced sum assured the policy continues with when premiums stop after it has acquired value (paid at maturity/death) instead of lapsing. Policy loans are advances the insurer grants against the policy's surrender value, usually up to a percentage (e.g., 80-90%) of that surrender value.