Insurance — Study Notes

INSURANCE
A Complete Study Note

Basics of Insurance | Life Insurance | ULIP | General Insurance & Health Insurance
Includes: Industry Interaction Guide — 20 Questions for an Insurance Company Visit / Interview

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 Insurance — Study Notes

1. Types of Insurance — Basic Classification

Insurance is a contract (called a policy) in which an individual or entity pays a small, certain amount (the
premium) to an insurance company in exchange for a promise of compensation for a specified large, uncertain
financial loss. It works on the principle of risk pooling — many people contribute small amounts so that the few
who suffer a loss can be compensated.

1.1 Broad Classification

At the broadest level, insurance in India (and most markets) is divided into two categories:
• Life Insurance: covers the risk to human life — death, survival to a certain age, disability, or critical
illness. It is long-term in nature and combines protection with, in many products, savings/investment.
• General Insurance (Non-Life Insurance): covers everything other than life — property, health, vehicles,
travel, liability, marine cargo, fire, etc. It is usually short-term (renewed every year) and purely indemnity-
based (compensates actual loss, not a fixed sum, except in health/personal accident which are benefit-based
in part).

1.2 Classification by Purpose / Product Type

• Life Insurance: Term insurance, Whole life, Endowment, Money-back, ULIP, Pension/Annuity plans, Child
plans.
• Health Insurance: Mediclaim/hospitalisation cover, Critical illness plans, Personal accident cover, Top-up
and super top-up plans.
• Motor Insurance: Third-party liability (compulsory by law) and Own Damage (comprehensive) cover for
two-wheelers, cars, commercial vehicles.
• Fire Insurance: Covers loss/damage to property due to fire, lightning, explosion, etc.
• Marine Insurance: Covers goods in transit (cargo) and the ship/vessel itself (hull) against sea and transit
perils.
• Travel Insurance: Covers medical emergencies, trip cancellation, baggage loss during
domestic/international travel.
• Home Insurance: Covers the structure and/or contents of a home against fire, theft, natural calamities.
• Liability Insurance: Covers legal liability towards third parties — e.g., Professional Indemnity, Directors &
Officers (D&O), Public Liability.
• Crop / Agriculture Insurance: Covers farmers against crop loss due to natural calamities (e.g., Pradhan
Mantri Fasal Bima Yojana).

1.3 Life Insurance vs General Insurance — Key Differences

Basis Life Insurance vs General Insurance

Subject matter Life Insurance: human life | General Insurance:

property, health, liability, vehicle, etc.

Nature of contract Life Insurance: contract of assurance (event — death

or maturity — is certain to happen, only timing is
uncertain) | General Insurance: contract of indemnity

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 Insurance — Study Notes

Basis Life Insurance vs General Insurance

(event may or may not happen)

Duration Life Insurance: long-term (5–30+ years) | General

Insurance: usually short-term, renewed annually

Element of savings Life Insurance: many plans combine

savings/investment with protection | General
Insurance: pure risk cover, no savings element

Sum payable Life Insurance: fixed sum assured is paid regardless

of actual loss | General Insurance: amount paid is
restricted to actual loss suffered

Insurable interest Life Insurance: must exist at the time of taking the
policy | General Insurance: must exist both at the
time of taking the policy and at the time of claim

Regulator (India) Both regulated by IRDAI (Insurance Regulatory and

Development Authority of India)

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 Insurance — Study Notes

2. Types of Life Insurance — In Detail

Life insurance products can be grouped based on how they pay out and whether they combine protection with
savings.

2.1 Term Insurance

Pure risk-protection plan with no maturity benefit. If the policyholder dies within the policy term, the nominee receives
the sum assured (death benefit). If the policyholder survives the term, nothing is paid back (unless a Term Return of
Premium/TROP variant is chosen).
• Key features: Lowest premium for the highest cover; ideal for pure income-replacement protection for a
family.
• Best suited for: Young earners, sole breadwinners, people with loans/EMIs or dependents.

2.2 Whole Life Insurance

Covers the policyholder for their entire life (traditionally up to age 99/100), not just a fixed term. Death benefit is paid
whenever death occurs, and some plans also build a cash/surrender value over time.
• Best suited for: Estate planning, leaving a guaranteed legacy/inheritance.

2.3 Endowment Plans

Combine insurance with savings. If the insured dies during the term, the nominee gets the sum assured plus accrued
bonuses. If the insured survives the term, they receive the sum assured plus bonuses as a maturity benefit.
• Best suited for: Disciplined long-term savers who also want life cover, e.g., saving for a child's education
or marriage.

2.4 Money-Back Policy

A variant of endowment where a percentage of the sum assured is paid back to the policyholder at periodic intervals
during the policy term (survival benefits), instead of one lump sum at maturity. The balance sum assured plus bonus is
paid at maturity. In case of death at any time, the full sum assured is paid (survival benefits already paid are not
deducted).
• Best suited for: People who want periodic liquidity along with life cover.

2.5 Unit Linked Insurance Plan (ULIP)

A market-linked plan where part of the premium goes toward life cover and the remainder is invested in equity, debt,
or balanced funds chosen by the policyholder. Covered in full detail in Section 4.

2.6 Child Insurance Plans

Designed to secure a child's future — education, marriage. Many plans have a special 'waiver of premium' feature: if
the parent (policyholder) dies during the term, future premiums are waived by the insurer, but the plan continues and
pays out to the child at the intended milestones.

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 Insurance — Study Notes

2.7 Pension / Retirement (Annuity) Plans

Help build a retirement corpus during the accumulation phase and then pay a regular income (annuity) during the
payout phase. Can be deferred (corpus builds over years) or immediate (a lump sum is paid in and annuity starts right
away).

2.8 Group Life Insurance

A single policy covering a group of people (e.g., employees of a company, members of an association) usually at lower
cost per person, commonly provided by employers as a benefit.

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 Insurance — Study Notes

3. Process of Taking a Life Insurance Policy

3.1 Step-by-Step Process

• 1. Need analysis: Assess how much cover is needed (Human Life Value method: roughly 10–15 times
annual income, adjusted for loans and goals) and which type of plan fits the need (pure protection vs
savings-linked).
• 2. Choosing insurer and plan: Compare insurers on claim settlement ratio, solvency ratio, premium, riders
available, and customer service reputation before selecting a product.
• 3. Filling the proposal form: The applicant discloses personal, financial, health, occupation, and habit
(smoking/alcohol) details truthfully. This is the single most important step legally.
• 4. Medical tests / underwriting: Depending on age, sum assured, and health disclosures, the insurer may
call for medical tests (blood test, ECG, etc.). The underwriter assesses risk and decides the premium, any
loading (extra premium), or exclusions.
• 5. KYC and document submission: Identity proof, address proof, age proof, income proof, and
photographs are submitted (see Section 3.2).
• 6. Premium payment: Premium is paid via the chosen mode — single, monthly, quarterly, or annual.
• 7. Policy issuance: Once underwriting is cleared, the insurer issues the policy document/policy bond,
which is the formal contract.
• 8. Free-look period: The policyholder gets 15–30 days (depending on the mode of purchase) from receipt
of the policy document to review it and return the policy if not satisfied, for a refund (minus certain
deductions).
• 9. Nomination: The policyholder names a nominee to receive the claim amount; nomination can be
updated later.

3.2 Documents Generally Required

• Identity proof: Aadhaar card, PAN card, Passport, Voter ID
• Address proof: Aadhaar card, utility bill, passport, rent agreement
• Age proof: Birth certificate, school leaving certificate, passport, Aadhaar
• Income proof: Salary slips, Form 16, income tax returns, bank statements (especially for high sum assured)
• Passport-size photographs
• Medical reports/test results, if underwriting requires them
• Duly filled and signed proposal form with full and honest disclosure

3.3 Practical / Often-Overlooked Points

• Principle of Utmost Good Faith (Uberrimae Fidei): The proposer must disclose all material facts (health
conditions, habits, family medical history, existing policies) truthfully. Non-disclosure or misstatement is
the single biggest reason claims get rejected later, even years after the policy was issued.
• Insurable interest: The policyholder must have a genuine financial interest in the life being insured (own
life, spouse, children, business partner, key employee, etc.) — you cannot insure a stranger's life.

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 Insurance — Study Notes

• Grace period: A window (typically 15 days for monthly mode, 30 days for other modes) after the premium
due date during which the policy stays in force even if the premium is not yet paid; missing it can lapse the
policy.
• Policy lapse and revival: If premiums stop being paid beyond the grace period, the policy lapses and cover
stops. Most insurers allow revival within a fixed window (often 2–5 years) by paying overdue premiums
with interest and, sometimes, fresh health declarations.
• Suicide clause: In most life policies, if the insured dies by suicide within 12 months of the policy start (or
revival), the nominee typically receives only the premiums paid (minus charges), not the full sum assured;
after 12 months, the full death benefit applies.
• Riders/add-ons: Optional covers like Accidental Death Benefit, Critical Illness, Waiver of Premium, and
Disability Benefit can be attached to a base policy for extra premium — students should note these increase
cover but also increase cost.
• Surrender value: If a savings-linked policy is discontinued before maturity, it may acquire a surrender
value after a minimum number of premiums are paid (commonly 2–3 years); surrendering early usually
means a significant loss compared to the premiums paid.
• Tax benefits (India): Premiums paid generally qualify for deduction under Section 80C (up to the overall
limit), and maturity/death benefits are usually tax-free under Section 10(10D), subject to conditions on
premium-to-sum-assured ratio — this is a frequently tested exam point.
• MWP Act policies: A life policy can be taken under the Married Women's Property Act, which legally
ring-fences the claim amount for the wife and children, protecting it from claims by the policyholder's
creditors.
• Portability is not applicable to life insurance: Unlike health insurance, a life policy generally cannot be
'ported' to another insurer — switching means buying a fresh policy (and undergoing fresh underwriting,
possibly at an older age and higher premium).

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 Insurance — Study Notes

4. ULIP (Unit Linked Insurance Plan) — In Detail

4.1 What is a ULIP?

A ULIP is a life insurance product that combines insurance protection with market-linked investment in a single
plan. Part of the premium paid goes toward providing life cover, and the remaining amount is invested in funds of
the policyholder's choice — equity funds, debt funds, or balanced/hybrid funds — similar to a mutual fund. The
investment portion is represented in the form of 'units', and the value of these units (Net Asset Value, or NAV)
fluctuates with market performance.

4.2 How Premium is Utilised (Break-up)

• Mortality charge — the cost of providing the life cover
• Premium allocation charge — deducted upfront before the balance is invested, usually higher in initial years
• Fund management charge — an annual charge for managing the invested fund
• Policy administration charge — for administering the policy
• Remaining amount — invested in the chosen fund(s) in the form of units

4.3 Key Features

• Dual benefit: Life cover plus market-linked wealth creation in one product.
• Fund choice and switching: The policyholder can choose the mix of equity/debt/balanced funds based on
their risk appetite, and can usually switch between funds a limited number of times per year free of cost.
• Transparency: Insurers are required to disclose all charges clearly, and the policyholder can track the
NAV and fund value regularly.
• Lock-in period: A mandatory lock-in of 5 years applies in India — the policyholder cannot withdraw the
invested amount before this period (partial withdrawals are allowed after 5 years, subject to conditions).
• Top-up premiums: Policyholders can pay additional lump-sum amounts (top-ups) over and above the
regular premium to invest more, within regulatory limits.
• Tax treatment: Premiums qualify for Section 80C deduction; maturity proceeds are tax-free under Section
10(10D) provided the annual premium does not exceed the prescribed threshold relative to the sum assured
(this rule was tightened for high-premium ULIPs from Budget 2021 onward, so it is a good discussion point
in class).

4.4 ULIP vs Traditional Life Insurance (Endowment)

Basis ULIP vs Endowment Plan

Nature of returns ULIP: market-linked, variable | Endowment:

fixed/guaranteed bonuses declared by insurer

Risk ULIP: investment risk is borne by the policyholder |

Endowment: no investment risk to policyholder

Transparency of charges ULIP: charges disclosed separately and clearly |

Endowment: charges are usually built into the
premium and not itemised

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 Insurance — Study Notes

Basis ULIP vs Endowment Plan

Liquidity ULIP: partial withdrawal allowed after 5-year lock-

in | Endowment: surrender allowed but often with a
bigger loss in early years

Flexibility ULIP: choice and switching between fund options |

Endowment: no investment choice

Ideal for ULIP: investors comfortable with market risk

seeking growth + cover | Endowment: conservative
investors wanting guaranteed, safe returns + cover

4.5 Points Often Missed by Students

• Early years give lower net investment because allocation charges are front-loaded — the fund value in year
1–2 can look unexpectedly small.
• ULIP is NOT a mutual fund — it has mortality and administration charges that a pure mutual fund does not,
and it comes bundled with insurance cover.
• On death during the policy term, most ULIPs pay the higher of the fund value or the sum assured, not both.
• Since 2010, IRDAI reforms capped charges and extended the lock-in from 3 to 5 years, making modern
ULIPs far more cost-efficient than older versions — useful to mention when comparing 'old vs new' ULIPs.

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 Insurance — Study Notes

5. General Insurance — Types in Detail

General insurance indemnifies the insured against loss to property, health, or liability, and is typically an annual
contract renewed each year.

5.1 Overview of General Insurance Types

• Motor Insurance: Third-Party (mandatory under the Motor Vehicles Act, covers liability to others) and
Comprehensive/Own Damage (covers the insured's own vehicle plus third-party liability).
• Fire Insurance: Covers buildings, machinery, and stock against fire, lightning, explosion, and allied perils.
• Marine Insurance: Cargo insurance (goods in transit by sea/air/road) and Hull insurance (the vessel itself).
• Travel Insurance: Covers medical emergencies abroad, trip cancellation/delay, lost baggage/passport
during travel.
• Home Insurance: Covers the structure and/or contents against fire, burglary, natural calamities.
• Liability Insurance: Covers legal liability to third parties, e.g., Professional Indemnity, Public Liability,
Product Liability.
• Crop Insurance: Covers farmers against yield loss due to drought, flood, pests, etc.
• Health Insurance / Mediclaim: Covers medical and hospitalisation expenses — detailed separately below
as it is the most relevant for students and the most commonly purchased general insurance product.

5.2 Health Insurance / Mediclaim — In Detail

Health insurance (often still called 'Mediclaim' after the pioneering product name) reimburses or directly pays for
medical and hospitalisation expenses incurred due to illness, injury, or surgery.

5.2.1 Types of Health Insurance Plans

• Individual health plan: Covers one person; the entire sum insured is available to that person alone.
• Family floater plan: A single sum insured is shared across all covered family members (self, spouse,
children, sometimes parents); usually cheaper than buying individual policies for each member, but the
cover can be exhausted faster if more than one member claims in the same year.
• Senior citizen health plan: Designed for older applicants, often with higher premiums, pre-policy medical
checks, and sometimes co-payment clauses.
• Critical illness plan: Pays a lump sum on diagnosis of a specified critical illness (cancer, heart attack,
kidney failure, etc.), regardless of actual treatment cost — a benefit plan, not an indemnity plan.
• Personal accident plan: Covers death, disability, or injury due to accidents; often includes weekly income
benefits during recovery.
• Top-up and Super Top-up plans: Provide additional coverage over and above a base policy or a
deductible threshold, at a much lower premium — useful for increasing cover economically.
• Group health insurance: Employer-provided cover for employees (and sometimes their families), usually
with simpler underwriting.
• Government health schemes: E.g., Ayushman Bharat (PM-JAY) for economically weaker sections,
providing cashless hospitalisation cover up to a specified amount per family per year.

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 Insurance — Study Notes

5.2.2 Cashless vs Reimbursement Claims

Basis Cashless Claim vs Reimbursement Claim

How it works Cashless: insurer/TPA settles the bill directly with a

network hospital | Reimbursement: policyholder
pays the hospital first, then claims the amount back
from the insurer

Hospital type Cashless: only available at network/empanelled

hospitals | Reimbursement: available at any hospital,
network or non-network

Upfront cash needed Cashless: minimal (only for non-covered items) |

Reimbursement: full treatment cost must be arranged
upfront by the patient/family

Process Cashless: pre-authorisation form submitted before/at

admission; TPA approves based on policy terms |
Reimbursement: original bills, discharge summary,
and reports submitted after treatment for claim
processing

Turnaround Cashless: faster at the point of discharge since

payment is settled directly | Reimbursement: takes
longer as it is processed after full documentation is
submitted

5.2.3 Common Exclusions in Health Policies

• Pre-existing diseases, until the specified waiting period (commonly 2–4 years) is completed
• Initial waiting period for any illness (commonly 30 days from policy start, except accidents)
• Specific disease/procedure waiting periods (e.g., cataract, hernia, joint replacement) typically 1–2 years
• Cosmetic or plastic surgery not required due to accident or illness
• Dental treatment and eyewear, unless arising from an accident
• Self-inflicted injury, suicide attempts, and treatment for substance abuse
• Pregnancy and childbirth, unless specifically covered as an add-on (usually with its own separate waiting
period)
• Non-allopathic treatment beyond specified sub-limits (though AYUSH cover is now offered by many
insurers)

5.2.4 Practical Points on Mediclaim

• Sum insured adequacy: Students/customers should choose a sum insured that reflects real hospitalisation
costs in their city, not just the cheapest available option.
• Co-payment and sub-limits: Some policies require the insured to bear a fixed percentage of every claim
(co-pay), or cap payouts for specific costs like room rent — these silently reduce the actual payout even
when a claim is 'approved'.
• Room rent capping: If a policy caps room rent (e.g., 1% of sum insured per day) and the patient opts for a
costlier room, many hospitals apply 'proportionate deduction' across the entire bill, not just the room charge
— a commonly misunderstood clause.

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 Insurance — Study Notes

• No-claim bonus: Many health policies increase the sum insured (or reduce premium) for each claim-free
year, which is lost if a claim is made — worth factoring in before filing small claims.
• Portability: Health insurance policies can be ported from one insurer to another without losing credit for
waiting periods already served, provided the switch is initiated at least 45 days before renewal.
• Free-look and grace period: Similar to life insurance, health policies have a free-look period on first
purchase and a grace period for renewal premium payment.
• Tax benefit: Premiums qualify for deduction under Section 80D of the Income Tax Act, with separate
limits for self/family and parents.

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 Insurance — Study Notes

6. Industry Interaction Guide — Answers to the 20 Questions

The following are model/sample answers that a student could expect from an insurance company representative,
prepared as a reference before or after an actual company visit or interview. Actual answers will vary by
company — students should use these as a benchmark and note down the real answers given during the
interaction.

Q1. What are the major types of insurance policies offered by your company?
What students learn: Types of insurance
A representative would typically list the company's core product lines. For a life insurer: term plans, endowment plans,
ULIPs, child plans, pension/annuity plans, and group insurance. For a general insurer: motor, health, home, travel, and
fire/liability insurance. Composite groups may offer both life and general products through separate subsidiaries, since
IRDAI does not permit a single company to sell both life and non-life insurance.

Q2. What is the difference between Life Insurance and General Insurance?
What students learn: Basic classification
Life insurance covers human life and pays a fixed sum assured on death or maturity, is long-term, and often includes a
savings element. General insurance covers property, health, vehicles, and liability, is typically a one-year renewable
contract, and pays based on the actual loss suffered (indemnity), with health and personal accident being partial
exceptions since they can also pay fixed benefits. (See the comparison table in Section 1.3.)

Q3. Which insurance product is most commonly purchased by your customers?

What students learn: Customer preferences
This varies by company and market segment, but in practice term life insurance and motor third-party/comprehensive
insurance are among the most commonly purchased products in India because motor insurance is legally mandatory
and term insurance is the most affordable form of life cover. Health insurance purchases have risen sharply since 2020
due to rising medical costs and greater health awareness. Students should record the specific answer given by the
company representative, as actual sales mix differs by insurer and city.

Q4. What factors do you consider while deciding the premium of an insurance policy?
What students learn: Premium calculation
Premiums are calculated based on the assessed risk and expected cost of claims. Common factors include:
• Age of the applicant (higher age generally means higher premium in life/health insurance)
• Health condition, medical history, and lifestyle habits (smoking, alcohol use)
• Occupation and its risk level (e.g., a miner or pilot pays more than an office worker)
• Sum assured/sum insured and policy term
• For general insurance: type, age, and value of the asset insured (e.g., vehicle make/model/year, building
construction type)
• Claim history and no-claim bonus record
• Geographic location (e.g., flood/earthquake-prone zones for property; city-tier for health cover)
Actuaries use mortality/morbidity tables and past claims data to price these risks systematically.

Q5. What documents are required when a person wants to purchase an insurance policy?
What students learn: Documentation/KYC
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 Insurance — Study Notes

Standard KYC documents are required: identity proof (Aadhaar, PAN, Passport), address proof, age proof, income
proof (for high sum assured), and passport-size photographs. Health and life insurers may also require medical reports
or a health declaration form depending on age and sum assured. (See the full list in Section 3.2.)

Q6. What is the process of buying an insurance policy from your company?
What students learn: Policy procedure
Broadly: need assessment → filling the proposal form with full disclosure → underwriting (including medical tests, if
required) → KYC document submission → premium payment → policy issuance → free-look review period. Many
companies now also offer a fully digital journey — online application, e-KYC, and instant policy issuance for simpler
products like term or motor insurance. (See the detailed step-by-step process in Section 3.1.)

Q7. How do you assess the risk of a customer before issuing a policy?
What students learn: Risk assessment/underwriting
This is done through underwriting (see Q8). The insurer evaluates the proposal form disclosures, medical test results
(for life/health), past claim history, occupation, and — for general insurance — the physical condition, location, and
value of the asset. Based on this, the underwriter decides whether to accept the risk at standard premium, charge an
extra premium ('loading') for higher risk, apply specific exclusions, or decline the proposal altogether.

Q8. What is underwriting, and who is responsible for it?

What students learn: Insurance operations
Underwriting is the process of evaluating and classifying the risk of a proposed insured (person or asset) to decide
whether to accept it, and on what terms and at what premium. It is carried out by trained professionals called
underwriters, who apply the insurer's risk acceptance guidelines, medical reports, actuarial data, and, for large or
complex risks, may consult actuaries and reinsurers. The goal is to prevent 'adverse selection' — where only high-risk
customers seek insurance — which would make the risk pool unsustainable.

Q9. What are the major reasons for rejection of an insurance claim?
What students learn: Claim settlement
Common reasons include:
• Non-disclosure or misrepresentation of material facts at the time of buying the policy (e.g., hiding a pre-existing
illness)
• Claim falling under a specific policy exclusion (see Section 5.2.3 for health insurance exclusions)
• Claim made during a waiting period (for health) or the suicide clause period (for life, within 12 months)
• Policy having lapsed due to non-payment of premium before the incident
• Incomplete or inconsistent documentation submitted with the claim
• Claim amount or event falling outside the sum insured/policy terms (e.g., cosmetic surgery under health
insurance)
• Fraudulent or exaggerated claims

Q10. Can you explain the claim settlement process from beginning to end?
What students learn: Practical claims process
A general end-to-end flow:
• Intimation: The policyholder/nominee informs the insurer (or TPA) about the event as soon as possible, ideally
within the time limit specified in the policy.

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 Insurance — Study Notes

• Documentation: Required documents are submitted — e.g., death certificate and policy bond for life claims;
hospital bills, discharge summary, and reports for health claims; FIR and repair estimates for motor claims.
• Verification/Investigation: The insurer verifies the documents and, for large or suspicious claims, may conduct
an investigation (e.g., a surveyor for property/motor claims, or a medical examiner for health claims).
• Assessment: The claims team assesses the amount payable based on policy terms, sum insured, exclusions, and
any applicable deductions (co-pay, depreciation, etc.).
• Approval and payment: Once approved, the claim amount is disbursed to the claimant's bank account (or directly
to the hospital in a cashless claim).
• Communication: If rejected, the insurer is required to communicate the specific reason in writing, and the
claimant can escalate to the insurer's grievance cell, the Insurance Ombudsman, or IRDAI if unsatisfied.

Q11. What documents are generally required to make an insurance claim?

What students learn: Claim documentation
Documents vary by claim type:
• Life insurance claim: Original policy bond, death certificate, claim form, nominee's ID and bank details, and, in
case of accidental death, FIR/post-mortem report
• Health insurance claim: Claim form, original hospital bills and receipts, discharge summary, diagnostic reports,
doctor's prescription, and pre-authorisation form (for cashless claims)
• Motor insurance claim: Claim form, copy of RC and driving license, FIR (for theft/major accidents), repair
estimate/bills, and photographs of the damage

Q12. What is the average time taken to settle a genuine claim?

What students learn: Customer service
This depends on the insurer and product; students should note the specific figure quoted by the company. As a general
benchmark, IRDAI regulations require insurers to settle or reject a claim within a defined timeframe after receiving all
required documents (commonly cited as around 30 days for a straightforward claim, and longer if investigation is
needed). Cashless health claims at network hospitals are typically approved much faster — often within a few hours
for pre-authorisation.

Q13. What is the difference between cashless and reimbursement claims?

What students learn: Especially useful for health insurance
In a cashless claim, the insurer or its TPA settles the hospital bill directly at a network hospital, so the patient does not
need to arrange large sums upfront. In a reimbursement claim, the patient/family pays the hospital first (at any hospital,
network or not) and later submits bills and reports to the insurer to be reimbursed. (See the full comparison table in
Section 5.2.2.)

Q14. What are the major exclusions mentioned in your insurance policies?
What students learn: Policy conditions
Exclusions differ by product but commonly include: pre-existing conditions during the waiting period, self-inflicted
injury or suicide (within specified periods), war and nuclear risks, cosmetic procedures, and losses arising from illegal
activity or gross negligence. For property/motor insurance, wear-and-tear, mechanical breakdown, and driving without
a valid license are typical exclusions. (See Section 5.2.3 for a detailed health insurance exclusion list.)

Q15. How can a customer check the status of their policy and claim online?
What students learn: Digital insurance

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 Insurance — Study Notes

Most insurers provide a customer self-service portal or mobile app where policyholders can log in (using policy
number, PAN, or registered mobile number) to view policy documents, premium due dates, and real-time claim status.
Many also send SMS/email/WhatsApp updates at each stage of claim processing, and offer a toll-free helpline and
chatbot for status queries.

Q16. What role does technology/AI play in your insurance business?

What students learn: InsurTech
Insurers increasingly use technology across the value chain, for example:
• AI-based underwriting to assess risk faster using data analytics
• Chatbots and WhatsApp bots for customer service and policy queries
• Telematics/IoT devices in motor insurance to price premiums based on actual driving behaviour
• AI-assisted claims processing and fraud detection to speed up settlement
• Wearable-linked wellness programs in health insurance offering premium discounts for healthy habits
• Fully digital, paperless policy issuance for simple products

Q17. What are the major challenges faced by insurance companies today?
What students learn: Industry understanding
Commonly cited industry challenges include:
• Low insurance penetration and awareness, especially in rural and semi-urban India
• Rising healthcare costs driving up health insurance premiums and claim payouts
• Claim fraud and misrepresentation
• Intense price competition, especially in motor and term insurance
• Regulatory compliance costs and evolving IRDAI norms
• Retaining and training a reliable agent/distribution network
• Building customer trust around claim settlement and transparency

Q18. How does your company create awareness among people about insurance?
What students learn: Marketing
Typical approaches include mass media and digital advertising campaigns, financial literacy workshops and college
seminars, partnerships with banks (bancassurance) and NBFCs, agent and advisor networks in smaller towns, social
media content explaining insurance concepts simply, and participation in government financial inclusion drives.
Students should record the specific initiatives mentioned by the company they visit.

Q19. What career opportunities are available for BBA graduates in the insurance sector?
What students learn: Career awareness
The insurance sector offers a wide range of roles suited to commerce/business graduates, including:
• Sales and distribution: Insurance advisor, Relationship Manager, Agency Manager, Bancassurance Manager
• Underwriting: Underwriter/Assistant Underwriter assessing and pricing risk
• Claims: Claims Executive/Manager handling claim assessment and settlement
• Actuarial: Actuarial Analyst (usually requires further actuarial exams/qualification)
• Operations and Customer Service: Policy servicing, grievance handling, contact centre roles
• Marketing and Product: Product development, brand and digital marketing roles
• Risk Management and Compliance: Regulatory compliance, risk assessment roles
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 Insurance — Study Notes

• Corporate roles: Finance, HR, IT/InsurTech within insurance companies

Q20. What advice would you give to a college student who wants to build a career in insurance?
What students learn: Industry interaction
Common advice from industry professionals typically includes:
• Build a strong foundation in basic finance and risk concepts, and pursue relevant certifications (e.g., IRDAI
licensing exams, Insurance Institute of India diplomas, or actuarial exams for analytical roles)
• Develop genuine communication and relationship-building skills, since trust is central to selling and servicing
insurance
• Gain practical exposure through internships with insurers, brokers, or TPAs
• Stay updated on IRDAI regulations and emerging InsurTech trends, since the sector is evolving quickly
• Be patient and ethical — long-term success in insurance sales and service depends heavily on reputation and
client trust, not just short-term targets

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