E-Book
September 23, 2013
Pre-recruitment qualification for life agents --
IC-33 Study text: 2011
Foreword
The rapid expansion of the life insurance profession in India over recent years has delivered many benefits. It has
enabled families and individuals to protect themselves against some of life’s most serious risks, and to plan for their
financial security in retirement.
However, the sector does not have an unblemished record. There have been high profile situations where, frankly, the
consumer interest has been a second-tier priority. The task of the IRDA, as Regulator, is to promote and protect the
interests of policyholders.
The future success of the life insurance profession depends, above all, upon the knowledge and integrity of the people
who advise customers – and are their first, and most important, point of contact. At the IRDA, our goal is to see life
insurers increasingly able to attract, motivate and retain outstanding people, committed to providing a ‘needs-based’
approach to financial advice.
The IC-33 Pre-recruitment qualification for life agents syllabus covers the following main topics:
• Understanding insurance
• Providing technical product information
• Providing professional advice
• Understanding claims
• Fulfilling legal and regulatory requirements
• Understanding customer protection and ethics
In order to provide effective advice, a structured approach is required. The process of providing professional
advice normally involves three stages:
1. Conducting the fact-find - Conducting the fact-find requires you to obtain all relevant information about your client before making recommendations. It also allows you to build up a clear understanding of your client’s circumstances.
2. Assessing and satisfying client needs
The second stage of the advice process requires you to identify and understand your client’s needs based on
the information obtained through the fact-find. Once the needs have been assessed, you must consider the
most appropriate means of satisfying those needs.
Making recommendations to the client
3. The third and final stage of the process of giving professional financial advice is the formulation and
presentation of actual recommendations to the client. Recommendations can only be made to the client once
the fact-find has been completed and the client’s needs assessed.
The second aspect of professionalism that makes for success and also (sadly) exposes those who fail to
maintain their professional standards, is the ethical aspect of the service.
The section on ethics and codes of conduct in the IC-33 study text tries to help you think about how the
choices you make impact on your clients as individuals. The evidence shows that client satisfaction is also
good business practice: your clients will stay with you, they will recommend you to friends and colleagues,
and you will become more successful.
Life insurance is a vital and growing part of the Indian economy. It helps people to plan for the future, to
look after their families, and to enjoy peace of mind. Successful agents play a crucial role in enabling the
insurance profession to function smoothly and support its customers. For the right people, it provides an
attractive and fulfilling career. We congratulate you on taking the first step toward becoming a licensed
agent. This study text is demanding but, we hope, it is also enjoyable and interesting. As you will see, as
well as providing the technical information you need to know, we have included a wide range of examples to
‘bring it to life’ and show some of the practical applications. Using this study text alongside the mandatory
fifty hours of classroom training should leave you in a good position for your forthcoming examination. Best
wishes for your study and, should you pass the exam, for a long and rewarding career in our fascinating
profession.
Using this study text
Welcome to the IC-33 Pre-recruitment qualification for life agents study text.
The study text follows the order of the examination syllabus learning outcomes. Each chapter has specific
learning objectives and the syllabus learning outcomes being covered are listed on the individual chapter
title pages.
Contained within the study text are a number of features which we hope will enhance your study:
Key terms introduce the main ideas covered in each chapter
Consider this – questions and points on which to think further
Examples illustrating points made in the text
Case studies will illustrate how life insurance works in practice
In text questions – quick self-test questions
Suggested activities reinforce learning through practical activities
Be aware boxes draw attention to important points or areas that may need clarification
Key points act as a memory jogger at the end of each chapter
Additionally, at the end of each chapter you will find some self-test questions to test your understanding of
the material in this study text.
Be aware
This syllabus and study text are valid for examinations unless otherwise notified by the IRDA. You should therefore
check the IRDA website at www.irda.gov.in regularly for information regarding changes to the syllabus, any changes to
the law and practice and when they will be examined.
6 IC-33/2011 Pre-recruitment qualification for life agents
Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Chapter 10 Chapter 11
Examination syllabus
IC-33
Pre-recruitment qualification
for life agents
These are the key topics that will be assessed during the examination and therefore may not reflect all of
the content from the study text, which contains additional background and reading material to aid learning.
Summary of learning outcomes Number of questions
in the examination*
1. Understand how the insurance market operates 3
2. Understand risk and insurance in the context of the insurance market 3
3. Understand the principles and practices of life insurance 9
4. Understand underwriting for life insurance business 4
5. Understand basic life insurance products 2
6. Understand savings products 5
7. Understand other key financial products 4
8. Understand the key considerations when identifying client’s needs 3
9. Understand the importance of completing a client fact find as part of the
financial planning process
10. Understand what constitutes good client practice and persistency 4
11. Understand insurance procedures for life insurance claims 4
12. Understand how relevant legislation affects client advice 1
13. Understand how insurance regulation affects client advice 2
14. Understand the importance of and the process in place for customer
protection
15. Understand the ethical considerations of a financial adviser 2
* The test specification has an in-built element of flexibility. It is designed to be used as a guide for study and is not a
statement of actual number of questions that will appear in every exam. However, the number of questions testing each
learning outcome will generally be within the range of plus or minus 2 of the number indicated.
Important notes
• Method of assessment: 50 multiple choice questions (MCQs). 1 hour is allowed for this examination.
• This syllabus and study text are valid for examinations until otherwise notified by the IRDA. Students
should therefore check the IRDA website at www.irda.gov.in regularly for information regarding
changes to the syllabus, any changes to the law and practice and when they will be examined.
IC-33/2011 Pre-recruitment qualification for life agents
Chapter 11 Chapter 10 Chapter 9 Chapter 8 Chapter 7 Chapter 6 Chapter 5 Chapter 4 Chapter 3 Chapter 2 Chapter 1
Examination syllabus
1. Understand how the insurance market
operates
On completion, candidates should
1.1 Describe the basic purpose of insurance and
financial services and their role in the economy
1.2 Describe the benefits of a professional insurance
market
1.3 Describe the structure of the insurance market and
key types of insurance organisations
1.4 Describe the distribution channels used for the
selling of insurance, including e-trading
1.5 Describe the key types of insurance products
1.6 Describe the key roles of professionals in insurance
1.7 Describe the role and functions of an agent in the
insurance market
2. Understand risk and insurance in the
context of the insurance market
On completion, candidates should
2.1 Explain what is meant by risk as it relates to life
insurance
2.2 Explain the difference between peril and hazard as
they relate to life insurance
2.3 Describe the types of risk that can be insured
2.4 Describe how insurance operates as a risk transfer
mechanism
2.5 Describe how insurance operates by the pooling
of risk
3. Understand the principles and
practices of life insurance
On completion, candidates should
3.1 Describe the essentials of a valid contract of
insurance
3.2 Describe the methods of creating an agent/principal
relationship and the duties of each party
3.3 Describe the principle of insurable interest and
explain when insurable interest needs to exist
3.4 Describe what is meant by the principle of utmost
good faith
3.5 Describe what is meant by a material fact
3.6 Describe what is meant by the duty of disclosure
and explain the consequences of non-disclosure of
material facts
3.7 Describe what is meant by the principle of
indemnity
3.8 Explain the key terms and documents used in life
insurance practice
3.9 Explain how life insurance policies are bought and
written
3.10 Explain the relevance of premium payment for valid
cover
3.11 Describe the procedures relating to quotations and
their legal significance
3.12 Describe the procedures relating to proposal forms
and their legal significance
3.13 Describe the structure, functions and content of a
policy form, including the policy schedule
3.14 Describe the procedures relating to policy
conditions
3.15 Describe the procedures relating to renewals and
their legal significance
3.16 Explain how lapses, surrenders and paid up
cancellation clauses operate
3.17 Explain the use of common policy conditions and
exclusions
4. Understand underwriting for life
insurance business
On completion, candidates should
4.1 Describe the methods used to obtain material facts
4.2 Explain the significance of moral and physical
hazard to underwriting
4.3 Describe the key financial and medical underwriting
factors used in life insurance underwriting
4.4 Describe how life insurance cover is priced
4.5 Explain the principles of how premiums are
calculated
4.6 Explain the principles of how bonuses are calculated
4.7 Explain the data required and documentation used
in life insurance underwriting
4.8 Explain the purpose and use of liens in life
insurance
5. Understand basic life insurance
products
On completion, candidates should
5.1 Know the main personal and financial details on
which a client’s protection requirements depend;
age, dependants, income, assets and liabilities
5.2 Know the policy features of protection products
which affect their suitability for a client
5.3 Understand how the tax treatment of protection
products affects their suitability for a client
5.4 Understand how to prioritise and evaluate the
significance of the product features to the client
needs
5.5 Be able to apply the products to satisfy the client’s
needs in particular circumstances
8.3 Know the four main steps in identifying a client’s
real financial needs: distinguishing between the
client’s perceived and real needs, distinguishing
between the client’s current and future needs,
quantifying the client’s needs and prioritising the
client’s needs
8.4 Be able to apply financial planning criteria to
the information collected about a client in order
to identify, quantify and prioritise a client’s real
financial needs
8.5 Be able to apply features of different types of
product to the client’s needs and understand the
role of the financial adviser in recommending
suitable products by which the client can achieve
his or her financial objectives
9. Understand the importance of completing a client fact find as part of the financial planning process
On completion, candidates should
9.1 Know what a fact find is and how to use one
9.2 Know the variety of ways a fact find can be carried
out: in a structured client meeting, by telephone
interview or by corresponding with the client by post
9.3 Know the main client and family information to be
collected
9.4 Know the main planning and objective categories
contained in a fact-find
9.5 Know how to make suitable recommendations
based on the information collected
10. Understand what constitutes good client practice and persistency
On completion, candidates should
10.1 Know that the financial adviser has a duty, at all
stages of the sales process, to ensure that the client
understands fully all the implications of accepting
the financial adviser’s recommendations, including
any inherent risks
10.2 Understand why it is essential for the status of the
financial adviser and the remuneration method to
be disclosed to the prospective client at the outset
10.3 Know what an adviser must do when he or she does
not have a product that would properly meet the
needs of the client
10.4 Know what steps the adviser must take when the
client rejects the adviser’s recommendations
10.5 Understand why it is unethical to advise a client to
switch between the financial products of different
providers, unless the switch is clearly in the best
interests of the client
10.6 Understand the importance of recommending the
long term nature of a product to a client to avoid
short term cancellations of policies
10.7 Understand the need for an effective complaints
procedure to cover the sale of financial services
products and know the essential features of such a
procedure
6. Understand savings products
On completion, candidates should
6.1 Know the circumstances in which there is a need for
savings and investment advice
6.2 Know the main personal and financial details
on which a client’s savings and investment
requirements depend
6.3 Know the features and benefits of savings and
investment products which affect their suitability for
a client
6.4 Understand how to prioritise and evaluate the
significance of the product features to a given set of
client circumstances
6.5 Understand how the tax treatment of savings and
investment products affects their suitability for a
client
6.6 Understand the relationship between risk and reward
6.7 Understand how inflation affects savings and
investment products
6.8 Be able to apply the savings and investment
products most appropriate to satisfy a client’s
needs in particular circumstances
6.9 Understand how a change in interest rates affects
the future performance of savings and investment
products
6.10 Understand the importance of an emergency fund
and sensible debt management in managing a
client’s circumstances
7. Understand other key financial products
On completion, candidates should
7.1 Know the policy features and benefits of health
products which affect their suitability for a client
7.2 Know the circumstances in which there is a need for
health cover products
7.3 Know the policy features and benefits of annuity
and pension products which affect their suitability
for a client
7.4 Know the circumstances in which there is a need for
annuities and pension advice
7.5 Understand how the tax treatment of other financial
products affects their suitability for a client
7.6 Understand how to prioritise and evaluate the
significance of other financial products to a given
set of client circumstances
8. Understand the key considerations
when identifying client’s needs
On completion, candidates should
8.1 Know the seven typical life-stages of a client and
understand the requirements and constraints at
each of the life stages
8.2 Understand how the following factors can affect
the life stages for individuals; age, marital and
employment status, state of health, ethical
preferences, divorce, separation and bereavement
15. Understand the ethical considerations
of a financial adviser
On completion, candidates should
15.1 Apply a code of ethics
15.2 Understand the professional principles and values
that underline a code
15.3 Describe typical ethical behaviours
15.4 Understand the outcomes that may result from
behaving ethically
15.5 Understand the outcomes that may result from not
behaving ethically
11. Understand insurance procedures for
life insurance claims
On completion, candidates should
11.1 Describe the requirements for a valid life insurance
claim
11.2 Explain why a life insurance claim may be invalid or
only partially met
11.3 Describe the insured’s duties after a loss
11.4 Describe the documentary evidence needed in
relation to life insurance claims
11.5 Describe the methods by which claims can be
settled
11.6 Describe the procedures commonly used to
discourage and detect fraudulent claims
11.7 Explain the consequences of fraudulent claims for
insurers and policyholders
11.8 Explain the difference between a policy that is void
and one that is voidable
12. Understand how relevant legislation
affects client advice
On completion, candidates should
12.1 Know the main legislation that currently affects
financial advice and understand the main terms and
conditions of those acts
12.2 Understand the implications for financial advisers of
failing to comply with key legislation
13. Understand how insurance regulation
affects client advice
On completion, candidates should
13.1 Understand the impact of regulation in the Indian
financial services market
13.2 Describe the role of the Government in regulation,
taxation, economic and industrial policy
13.3 Identify the key participants in the Indian and
international markets
14. Understand the importance of and
the process in place for customer
protection
On completion, candidates should
14.1 Describe the importance of and need for customer
protection in the financial services market
14.2 Know the internal process by which customers may
seek redress against advisers
14.3 Know the process by which customers may seek
redress against a company
14.4 Understand the key elements of handling customer
complaints effectively
11
Contents
1: How the insurance market operates
A What is insurance? 1/2
B Role of financial services and insurance 1/4
C Benefits of a professional insurance market 1/5
D History of insurance 1/7
E Insurance organisations and roles 1/9
F Insurance distribution 1/11
G Insurance products 1/13
H Role and functions of an agent 1/14
Appendix 1.1: Insurance companies active in India (January 2011) 1/19
2: Risk and insurance
A Concept of risk 2/2
B Components of risk 2/3
C Insurable risks 2/6
D Risk transfer 2/8
E Pooling of risks 2/8
3: Part 1 – Insurance principles
A Essentials of a valid contract of insurance 3/4
B Insurable interest 3/7
C Utmost good faith 3/9
D Material facts 3/11
E Indemnity 3/12
3: Part 2 – Insurance practices
F How insurance policies are bought and written 3/18
G Key documents 3/19
H Key insurance terms 3/25
I Relevance of premium payment and valid cover 3/32
12 IC-33/2011 Pre-recruitment qualification for life agents
4: Insurance underwriting
A The process of insurance underwriting 4/2
B Obtaining the required information 4/4
C Moral and physical hazard 4/6
D Financial, medical and non-medial underwriting 4/8
E Human Life Value (HLV) 4/9
F Liens 4/11
G Pricing and calculating the premium 4/12
H Calculating bonuses 4/17
I The agent’s role in underwriting 4/18
5: Basic life insurance products
A Protection needs 5/3
B Life insurance products 5/5
C Taxation and inflation 5/12
D Prioritising protection needs 5/13
6: Savings products
A The need for savings/investment advice 6/2
B Factors that determine the savings needs of an individual 6/3
C Features and benefits of savings products 6/5
D Types of savings products 6/7
E Tax and inflation implications for savings products 6/9
F Implication of interest rates on savings products 6/11
G Prioritising savings needs 6/12
7: Other key financial products
A Other financial needs 7/2
B Types of products, their features and benefits 7/3
C Tax and inflation implications for financial products 7/11
D Prioritising needs and applying financial products to needs 7/12
Contents 13
8: Identifying client needs
A Who is your client? 8/2
B The typical life stages of a client 8/4
C Factors that affect the life stages 8/9
D Client needs: real and perceived 8/11
E Communication, questioning and listening skills 8/12
F Gathering client information including family information 8/15
G Understanding priorities – a summary 8/15
H Confirming assumptions and agreeing objectives 8/15
9: The fact-find and financial planning
A What is a fact-find? 9/2
B Using a fact-find 9/4
C Assessment and analysis 9/8
D Applying product features and benefits to a client situation 9/10
E Making recommendations 9/11
10: Good client practice
A The duties and responsibilities of an insurance agent 10/2
B Requirements of the client 10/3
C Agent remuneration and upfront disclosure methods 10/3
D Recommending suitable policies 10/4
E The long-term benefits of retaining policies and avoiding short-term cancellations (persistency) 10/8
F Client’s rights and complaints procedures 10/9
G Building long-term relationships with clients 10/10
11: Claims
A Requirements for a valid claim 11/2
B Why a claim may be invalid 11/5
C Duties after death and documentary evidence 11/6
D Settling claims 11/7
E Fraudulent claims 11/9
F Void and voidable contracts 11/10
14 IC-33/2011 Pre-recruitment qualification for life agents
12: Legislation and client advice
A Insurance Act 1938 12/2
B Indian Life Assurance Companies Act 1912 12/5
C Life Insurance Corporation Act 1956 12/5
D Insurance Regulatory and Development Authority (IRDA) Act 1999 12/5
E Prevention of Money Laundering Act (PMLA) 2002 12/6
F Married Women’s Property (MWP) Act 1874 12/8
G Other key Legislation 12/9
13: Regulation and client advice
A The role of the Government 13/2
B Key Indian and international insurance bodies 13/4
C Duties, powers and functions of the IRDA and other regulators 13/6
D IRDA (Licensing of Insurance Agents) Regulations 2000 13/7
14: Customer protection
A The importance of customer protection 14/2
B IRDA (Protection of Policyholders’ Interests) Regulations 2002 14/3
C Typical complaints 14/6
D Handling customer complaints effectively 14/8
E The role of the Insurance Ombudsman 14/10
F Grievance Redressal Cell of the IRDA 14/12
G A typical complaint 14/13
H Renewal of licence 14/14
15: Ethics and code of conduct
A What do we mean by ethics? 15/2
B Typical unethical behaviour 15/3
C The business benefits of ethics 15/4
D Typical ethical behaviours 15/5
E Ethical frameworks including ethical codes 15/6
F Underpinning professional responsibilities 15/7
G Evaluation, monitoring and discipline 15/8
H Code of conduct prescribed by the IRDA 15/9
Statutes i
Index iii
IC-33 Study text: 2011
Foreword
The rapid expansion of the life insurance profession in India over recent years has delivered many benefits. It has
enabled families and individuals to protect themselves against some of life’s most serious risks, and to plan for their
financial security in retirement.
However, the sector does not have an unblemished record. There have been high profile situations where, frankly, the
consumer interest has been a second-tier priority. The task of the IRDA, as Regulator, is to promote and protect the
interests of policyholders.
The future success of the life insurance profession depends, above all, upon the knowledge and integrity of the people
who advise customers – and are their first, and most important, point of contact. At the IRDA, our goal is to see life
insurers increasingly able to attract, motivate and retain outstanding people, committed to providing a ‘needs-based’
approach to financial advice.
The IC-33 Pre-recruitment qualification for life agents syllabus covers the following main topics:
• Understanding insurance
• Providing technical product information
• Providing professional advice
• Understanding claims
• Fulfilling legal and regulatory requirements
• Understanding customer protection and ethics
In order to provide effective advice, a structured approach is required. The process of providing professional
advice normally involves three stages:
1. Conducting the fact-find - Conducting the fact-find requires you to obtain all relevant information about your client before making recommendations. It also allows you to build up a clear understanding of your client’s circumstances.
2. Assessing and satisfying client needs
The second stage of the advice process requires you to identify and understand your client’s needs based on
the information obtained through the fact-find. Once the needs have been assessed, you must consider the
most appropriate means of satisfying those needs.
Making recommendations to the client
3. The third and final stage of the process of giving professional financial advice is the formulation and
presentation of actual recommendations to the client. Recommendations can only be made to the client once
the fact-find has been completed and the client’s needs assessed.
The second aspect of professionalism that makes for success and also (sadly) exposes those who fail to
maintain their professional standards, is the ethical aspect of the service.
The section on ethics and codes of conduct in the IC-33 study text tries to help you think about how the
choices you make impact on your clients as individuals. The evidence shows that client satisfaction is also
good business practice: your clients will stay with you, they will recommend you to friends and colleagues,
and you will become more successful.
Life insurance is a vital and growing part of the Indian economy. It helps people to plan for the future, to
look after their families, and to enjoy peace of mind. Successful agents play a crucial role in enabling the
insurance profession to function smoothly and support its customers. For the right people, it provides an
attractive and fulfilling career. We congratulate you on taking the first step toward becoming a licensed
agent. This study text is demanding but, we hope, it is also enjoyable and interesting. As you will see, as
well as providing the technical information you need to know, we have included a wide range of examples to
‘bring it to life’ and show some of the practical applications. Using this study text alongside the mandatory
fifty hours of classroom training should leave you in a good position for your forthcoming examination. Best
wishes for your study and, should you pass the exam, for a long and rewarding career in our fascinating
profession.
Using this study text
Welcome to the IC-33 Pre-recruitment qualification for life agents study text.
The study text follows the order of the examination syllabus learning outcomes. Each chapter has specific
learning objectives and the syllabus learning outcomes being covered are listed on the individual chapter
title pages.
Contained within the study text are a number of features which we hope will enhance your study:
Key terms introduce the main ideas covered in each chapter
Consider this – questions and points on which to think further
Examples illustrating points made in the text
Case studies will illustrate how life insurance works in practice
In text questions – quick self-test questions
Suggested activities reinforce learning through practical activities
Be aware boxes draw attention to important points or areas that may need clarification
Key points act as a memory jogger at the end of each chapter
Additionally, at the end of each chapter you will find some self-test questions to test your understanding of
the material in this study text.
Be aware
This syllabus and study text are valid for examinations unless otherwise notified by the IRDA. You should therefore
check the IRDA website at www.irda.gov.in regularly for information regarding changes to the syllabus, any changes to
the law and practice and when they will be examined.
6 IC-33/2011 Pre-recruitment qualification for life agents
Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Chapter 10 Chapter 11
Examination syllabus
IC-33
Pre-recruitment qualification
for life agents
These are the key topics that will be assessed during the examination and therefore may not reflect all of
the content from the study text, which contains additional background and reading material to aid learning.
Summary of learning outcomes Number of questions
in the examination*
1. Understand how the insurance market operates 3
2. Understand risk and insurance in the context of the insurance market 3
3. Understand the principles and practices of life insurance 9
4. Understand underwriting for life insurance business 4
5. Understand basic life insurance products 2
6. Understand savings products 5
7. Understand other key financial products 4
8. Understand the key considerations when identifying client’s needs 3
9. Understand the importance of completing a client fact find as part of the
financial planning process
10. Understand what constitutes good client practice and persistency 4
11. Understand insurance procedures for life insurance claims 4
12. Understand how relevant legislation affects client advice 1
13. Understand how insurance regulation affects client advice 2
14. Understand the importance of and the process in place for customer
protection
15. Understand the ethical considerations of a financial adviser 2
* The test specification has an in-built element of flexibility. It is designed to be used as a guide for study and is not a
statement of actual number of questions that will appear in every exam. However, the number of questions testing each
learning outcome will generally be within the range of plus or minus 2 of the number indicated.
Important notes
• Method of assessment: 50 multiple choice questions (MCQs). 1 hour is allowed for this examination.
• This syllabus and study text are valid for examinations until otherwise notified by the IRDA. Students
should therefore check the IRDA website at www.irda.gov.in regularly for information regarding
changes to the syllabus, any changes to the law and practice and when they will be examined.
IC-33/2011 Pre-recruitment qualification for life agents
Chapter 11 Chapter 10 Chapter 9 Chapter 8 Chapter 7 Chapter 6 Chapter 5 Chapter 4 Chapter 3 Chapter 2 Chapter 1
Examination syllabus
1. Understand how the insurance market
operates
On completion, candidates should
1.1 Describe the basic purpose of insurance and
financial services and their role in the economy
1.2 Describe the benefits of a professional insurance
market
1.3 Describe the structure of the insurance market and
key types of insurance organisations
1.4 Describe the distribution channels used for the
selling of insurance, including e-trading
1.5 Describe the key types of insurance products
1.6 Describe the key roles of professionals in insurance
1.7 Describe the role and functions of an agent in the
insurance market
2. Understand risk and insurance in the
context of the insurance market
On completion, candidates should
2.1 Explain what is meant by risk as it relates to life
insurance
2.2 Explain the difference between peril and hazard as
they relate to life insurance
2.3 Describe the types of risk that can be insured
2.4 Describe how insurance operates as a risk transfer
mechanism
2.5 Describe how insurance operates by the pooling
of risk
3. Understand the principles and
practices of life insurance
On completion, candidates should
3.1 Describe the essentials of a valid contract of
insurance
3.2 Describe the methods of creating an agent/principal
relationship and the duties of each party
3.3 Describe the principle of insurable interest and
explain when insurable interest needs to exist
3.4 Describe what is meant by the principle of utmost
good faith
3.5 Describe what is meant by a material fact
3.6 Describe what is meant by the duty of disclosure
and explain the consequences of non-disclosure of
material facts
3.7 Describe what is meant by the principle of
indemnity
3.8 Explain the key terms and documents used in life
insurance practice
3.9 Explain how life insurance policies are bought and
written
3.10 Explain the relevance of premium payment for valid
cover
3.11 Describe the procedures relating to quotations and
their legal significance
3.12 Describe the procedures relating to proposal forms
and their legal significance
3.13 Describe the structure, functions and content of a
policy form, including the policy schedule
3.14 Describe the procedures relating to policy
conditions
3.15 Describe the procedures relating to renewals and
their legal significance
3.16 Explain how lapses, surrenders and paid up
cancellation clauses operate
3.17 Explain the use of common policy conditions and
exclusions
4. Understand underwriting for life
insurance business
On completion, candidates should
4.1 Describe the methods used to obtain material facts
4.2 Explain the significance of moral and physical
hazard to underwriting
4.3 Describe the key financial and medical underwriting
factors used in life insurance underwriting
4.4 Describe how life insurance cover is priced
4.5 Explain the principles of how premiums are
calculated
4.6 Explain the principles of how bonuses are calculated
4.7 Explain the data required and documentation used
in life insurance underwriting
4.8 Explain the purpose and use of liens in life
insurance
5. Understand basic life insurance
products
On completion, candidates should
5.1 Know the main personal and financial details on
which a client’s protection requirements depend;
age, dependants, income, assets and liabilities
5.2 Know the policy features of protection products
which affect their suitability for a client
5.3 Understand how the tax treatment of protection
products affects their suitability for a client
5.4 Understand how to prioritise and evaluate the
significance of the product features to the client
needs
5.5 Be able to apply the products to satisfy the client’s
needs in particular circumstances
8.3 Know the four main steps in identifying a client’s
real financial needs: distinguishing between the
client’s perceived and real needs, distinguishing
between the client’s current and future needs,
quantifying the client’s needs and prioritising the
client’s needs
8.4 Be able to apply financial planning criteria to
the information collected about a client in order
to identify, quantify and prioritise a client’s real
financial needs
8.5 Be able to apply features of different types of
product to the client’s needs and understand the
role of the financial adviser in recommending
suitable products by which the client can achieve
his or her financial objectives
9. Understand the importance of completing a client fact find as part of the financial planning process
On completion, candidates should
9.1 Know what a fact find is and how to use one
9.2 Know the variety of ways a fact find can be carried
out: in a structured client meeting, by telephone
interview or by corresponding with the client by post
9.3 Know the main client and family information to be
collected
9.4 Know the main planning and objective categories
contained in a fact-find
9.5 Know how to make suitable recommendations
based on the information collected
10. Understand what constitutes good client practice and persistency
On completion, candidates should
10.1 Know that the financial adviser has a duty, at all
stages of the sales process, to ensure that the client
understands fully all the implications of accepting
the financial adviser’s recommendations, including
any inherent risks
10.2 Understand why it is essential for the status of the
financial adviser and the remuneration method to
be disclosed to the prospective client at the outset
10.3 Know what an adviser must do when he or she does
not have a product that would properly meet the
needs of the client
10.4 Know what steps the adviser must take when the
client rejects the adviser’s recommendations
10.5 Understand why it is unethical to advise a client to
switch between the financial products of different
providers, unless the switch is clearly in the best
interests of the client
10.6 Understand the importance of recommending the
long term nature of a product to a client to avoid
short term cancellations of policies
10.7 Understand the need for an effective complaints
procedure to cover the sale of financial services
products and know the essential features of such a
procedure
6. Understand savings products
On completion, candidates should
6.1 Know the circumstances in which there is a need for
savings and investment advice
6.2 Know the main personal and financial details
on which a client’s savings and investment
requirements depend
6.3 Know the features and benefits of savings and
investment products which affect their suitability for
a client
6.4 Understand how to prioritise and evaluate the
significance of the product features to a given set of
client circumstances
6.5 Understand how the tax treatment of savings and
investment products affects their suitability for a
client
6.6 Understand the relationship between risk and reward
6.7 Understand how inflation affects savings and
investment products
6.8 Be able to apply the savings and investment
products most appropriate to satisfy a client’s
needs in particular circumstances
6.9 Understand how a change in interest rates affects
the future performance of savings and investment
products
6.10 Understand the importance of an emergency fund
and sensible debt management in managing a
client’s circumstances
7. Understand other key financial products
On completion, candidates should
7.1 Know the policy features and benefits of health
products which affect their suitability for a client
7.2 Know the circumstances in which there is a need for
health cover products
7.3 Know the policy features and benefits of annuity
and pension products which affect their suitability
for a client
7.4 Know the circumstances in which there is a need for
annuities and pension advice
7.5 Understand how the tax treatment of other financial
products affects their suitability for a client
7.6 Understand how to prioritise and evaluate the
significance of other financial products to a given
set of client circumstances
8. Understand the key considerations
when identifying client’s needs
On completion, candidates should
8.1 Know the seven typical life-stages of a client and
understand the requirements and constraints at
each of the life stages
8.2 Understand how the following factors can affect
the life stages for individuals; age, marital and
employment status, state of health, ethical
preferences, divorce, separation and bereavement
15. Understand the ethical considerations
of a financial adviser
On completion, candidates should
15.1 Apply a code of ethics
15.2 Understand the professional principles and values
that underline a code
15.3 Describe typical ethical behaviours
15.4 Understand the outcomes that may result from
behaving ethically
15.5 Understand the outcomes that may result from not
behaving ethically
11. Understand insurance procedures for
life insurance claims
On completion, candidates should
11.1 Describe the requirements for a valid life insurance
claim
11.2 Explain why a life insurance claim may be invalid or
only partially met
11.3 Describe the insured’s duties after a loss
11.4 Describe the documentary evidence needed in
relation to life insurance claims
11.5 Describe the methods by which claims can be
settled
11.6 Describe the procedures commonly used to
discourage and detect fraudulent claims
11.7 Explain the consequences of fraudulent claims for
insurers and policyholders
11.8 Explain the difference between a policy that is void
and one that is voidable
12. Understand how relevant legislation
affects client advice
On completion, candidates should
12.1 Know the main legislation that currently affects
financial advice and understand the main terms and
conditions of those acts
12.2 Understand the implications for financial advisers of
failing to comply with key legislation
13. Understand how insurance regulation
affects client advice
On completion, candidates should
13.1 Understand the impact of regulation in the Indian
financial services market
13.2 Describe the role of the Government in regulation,
taxation, economic and industrial policy
13.3 Identify the key participants in the Indian and
international markets
14. Understand the importance of and
the process in place for customer
protection
On completion, candidates should
14.1 Describe the importance of and need for customer
protection in the financial services market
14.2 Know the internal process by which customers may
seek redress against advisers
14.3 Know the process by which customers may seek
redress against a company
14.4 Understand the key elements of handling customer
complaints effectively
11
Contents
1: How the insurance market operates
A What is insurance? 1/2
B Role of financial services and insurance 1/4
C Benefits of a professional insurance market 1/5
D History of insurance 1/7
E Insurance organisations and roles 1/9
F Insurance distribution 1/11
G Insurance products 1/13
H Role and functions of an agent 1/14
Appendix 1.1: Insurance companies active in India (January 2011) 1/19
2: Risk and insurance
A Concept of risk 2/2
B Components of risk 2/3
C Insurable risks 2/6
D Risk transfer 2/8
E Pooling of risks 2/8
3: Part 1 – Insurance principles
A Essentials of a valid contract of insurance 3/4
B Insurable interest 3/7
C Utmost good faith 3/9
D Material facts 3/11
E Indemnity 3/12
3: Part 2 – Insurance practices
F How insurance policies are bought and written 3/18
G Key documents 3/19
H Key insurance terms 3/25
I Relevance of premium payment and valid cover 3/32
12 IC-33/2011 Pre-recruitment qualification for life agents
4: Insurance underwriting
A The process of insurance underwriting 4/2
B Obtaining the required information 4/4
C Moral and physical hazard 4/6
D Financial, medical and non-medial underwriting 4/8
E Human Life Value (HLV) 4/9
F Liens 4/11
G Pricing and calculating the premium 4/12
H Calculating bonuses 4/17
I The agent’s role in underwriting 4/18
5: Basic life insurance products
A Protection needs 5/3
B Life insurance products 5/5
C Taxation and inflation 5/12
D Prioritising protection needs 5/13
6: Savings products
A The need for savings/investment advice 6/2
B Factors that determine the savings needs of an individual 6/3
C Features and benefits of savings products 6/5
D Types of savings products 6/7
E Tax and inflation implications for savings products 6/9
F Implication of interest rates on savings products 6/11
G Prioritising savings needs 6/12
7: Other key financial products
A Other financial needs 7/2
B Types of products, their features and benefits 7/3
C Tax and inflation implications for financial products 7/11
D Prioritising needs and applying financial products to needs 7/12
Contents 13
8: Identifying client needs
A Who is your client? 8/2
B The typical life stages of a client 8/4
C Factors that affect the life stages 8/9
D Client needs: real and perceived 8/11
E Communication, questioning and listening skills 8/12
F Gathering client information including family information 8/15
G Understanding priorities – a summary 8/15
H Confirming assumptions and agreeing objectives 8/15
9: The fact-find and financial planning
A What is a fact-find? 9/2
B Using a fact-find 9/4
C Assessment and analysis 9/8
D Applying product features and benefits to a client situation 9/10
E Making recommendations 9/11
10: Good client practice
A The duties and responsibilities of an insurance agent 10/2
B Requirements of the client 10/3
C Agent remuneration and upfront disclosure methods 10/3
D Recommending suitable policies 10/4
E The long-term benefits of retaining policies and avoiding short-term cancellations (persistency) 10/8
F Client’s rights and complaints procedures 10/9
G Building long-term relationships with clients 10/10
11: Claims
A Requirements for a valid claim 11/2
B Why a claim may be invalid 11/5
C Duties after death and documentary evidence 11/6
D Settling claims 11/7
E Fraudulent claims 11/9
F Void and voidable contracts 11/10
14 IC-33/2011 Pre-recruitment qualification for life agents
12: Legislation and client advice
A Insurance Act 1938 12/2
B Indian Life Assurance Companies Act 1912 12/5
C Life Insurance Corporation Act 1956 12/5
D Insurance Regulatory and Development Authority (IRDA) Act 1999 12/5
E Prevention of Money Laundering Act (PMLA) 2002 12/6
F Married Women’s Property (MWP) Act 1874 12/8
G Other key Legislation 12/9
13: Regulation and client advice
A The role of the Government 13/2
B Key Indian and international insurance bodies 13/4
C Duties, powers and functions of the IRDA and other regulators 13/6
D IRDA (Licensing of Insurance Agents) Regulations 2000 13/7
14: Customer protection
A The importance of customer protection 14/2
B IRDA (Protection of Policyholders’ Interests) Regulations 2002 14/3
C Typical complaints 14/6
D Handling customer complaints effectively 14/8
E The role of the Insurance Ombudsman 14/10
F Grievance Redressal Cell of the IRDA 14/12
G A typical complaint 14/13
H Renewal of licence 14/14
15: Ethics and code of conduct
A What do we mean by ethics? 15/2
B Typical unethical behaviour 15/3
C The business benefits of ethics 15/4
D Typical ethical behaviours 15/5
E Ethical frameworks including ethical codes 15/6
F Underpinning professional responsibilities 15/7
G Evaluation, monitoring and discipline 15/8
H Code of conduct prescribed by the IRDA 15/9
Statutes i
Index iii
Posted by Pardeep Singh.
