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Unit 1: Evolution and Meaning of Insurance




          the Indian insurance sector. This committee was also in charge of recommending the future path  Notes
          of insurance in India.
          The Malhotra Committee attempted to improve various aspects of the insurance sector, making
          them more appropriate and effective for the Indian market.




              Task  Visit an old insurance firm and collect some data on the changes it has seen since its
            infancy and prepare a slideshow on the same.
          The recommendations of the committee put stress on offering operational autonomy to the
          insurance service providers and also suggested forming an independent regulatory body.
          The Insurance Regulatory and Development Authority Act of 1999 brought about several crucial
          policy changes in the insurance sector of India. It led to the formation of the Insurance Regulatory
          and Development Authority (IRDA) in 2000.

          The goals of the IRDA are to safeguard the interests of insurance policyholders, as well as to
          initiate different policy measures to help sustain growth in the Indian insurance sector.
          The Authority has notified 27 Regulations on various issues which include Registration of
          Insurers, Regulation on insurance agents, Solvency Margin, Reinsurance, Obligation of Insurers
          to Rural and Social sector, Investment and Accounting Procedure, Protection of policy holders’
          interest etc. Applications were invited by the Authority with effect from 15th August, 2000 for
          issue of the Certificate of Registration to both life and non-life insurers. The Authority has its
          Head Quarter at Hyderabad.




             Caselet     Insurance Companies introduce Premium
                         Payment Plans

                  imited premium payment policies seem to be the rage currently. Many insurance
                  companies have already introduced limited premium payment products, while
             Lmany more are on the anvil, according to industry sources.
             Conventional life insurance policies require investors to pay their premiums till the year
             of maturity, whereas in limited premium payment products, the premium is paid for a far
             shorter period of time. Of course, the amount paid would be far higher in the latter case
             than in the former. For investors, there is also the matter of falling value of the currency
             in the future years that needs to be kept in mind while shelving out such huge amounts.
             SBI Life Insurance announced a new limited premium payment product last week, named
             Sanjeevan Supreme. This product comes with the twin aspects of limited premium payment
             and money back. Investors pay a premium for a period of 6 to 10 years. In return, they get
             guaranteed money back in equal instalments at regular intervals and accumulated bonuses
             while remaining fully covered for life insurance during the policy term. The policy is
             open to persons from the age of 18 to 75. The sum assured (SA) begins from a minimum of
             ` 50,000 to a maximum of ` 5 crore.

             There are four options to the plan. Under Plan A, the term of the policy is 15 years. For the
             first 6 years of the policy, investors pay the premium. Then there is a 4-year period when
             investors do not pay any premium (technically known as growth/deferment period).
                                                                                 Contd....



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