12.concepts of Benefits and Deductibles - 1436525122
12.concepts of Benefits and Deductibles - 1436525122
12.concepts of Benefits and Deductibles - 1436525122
the
CONCEPTS
OF
BENEFITS
AND
DEDUCTIBLES
Lorem Ipsum Dolor Sit Amet
1. Bonus
available
under
the
terms
of
policy.
In
this
module
we
will
1.1
In
Life
insurance
valuation
of
life
insurance
fund
is
done
see
these
concepts.
by
an
Actuary,
periodically.
At
the
end
of
valuation,
the
surplus
[if
any]
is
distributed
to
the
policyholders
as
Bonus.
Learning
Outcomes:
Policyholders,
who
have
opted
for
participating
[with
profits]
I)
Life
Insurance
polices,
only,
are
entitled
for
bonus.
1. Bonus
1.2
There
are
many
methods
of
paying
bonus.
2. Guaranteed
Additions
3. Surrender
Value
1.2.1
Simple
Revisionary
bonus
is
a
method
in
which
the
4. Paid
up
Value
declared
bonus
is
added
to
the
basic
sum
insured.
If
sum
5. Mortality
Tables
insured
Rs
50,000/-‐
and
bonus
declared
for
the
year
is
Rs
6. Premium
payment
5,000/-‐
the
sum
insured
will
become
Rs
55,000/-‐.
Term
7. Assignment
of
Policies
In
Compounded
Revisionary
bonus
the
bonus
is
calculated
not
on
basic
sum
insured
but
on
previous
year’s
sum
insured
II)
Non
Life
Insurance
with
added
bonus
declared
up
to
last
year.
1. No
Claim
Bonus
2. Excess
/
Revisionary
bonus
declared
after
each
valuation,
are
paid
at
Franchise/Deductible
the
end
of
the
policy
term
along
with
the
sum
insured.
3. Depreciation
1.2.2
Insurers
also
declare
interim
bonus
on
policies,
which
II)
Health
Insurance
become
claim
after
the
valuation
date
but
before
the
date
of
1. Cumulative
Bonus
declaration
of
valuation
results.
If
valuation
results
are
2. TPA
Fees
declared
in
September
for
the
year
ending
31st
March,
the
3. Co-‐pay
policy
becoming
claim
in
May
will
get
interim
bonus
so
declared.
CONCEPTS
OF
BENEFITS
AND
DEDUCTIBLES
CSC – VLE TRAINING
3. Guaranteed
Additions
4. Surrender
Value
4.1
In
case
of
nonpayment
of
premium
the
policy
lapses.
However,
if
the
premiums
have
been
paid
for
three
years,
the
policy
acquires
value,
this
value
is
called
paid-‐up
value
and
the
policy
becomes
paid
up.
The
policy
remains
in
force
for
the
remaining
term
with
reduced
sum
insured.
4.2
Normally
sum
assured
is
reduced
in
proportion
to
the
number
of
premiums
paid
and
number
of
premiums
payable.
Example:
Policy
with
sum
insured
of
Rs
50,000
if
number
of
premiums
payable
are
50
and
after
payment
of
25
premiums
if
the
insured
cannot
pay
the
further
premiums
and
the
policy
becomes
paid
up
the
sum
insured
will
be
reduced
to
Rs
25,000
as
paid
up
as
under:
Premium
paid
-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐-‐
X
sum
insured
=
25/
50
X
50,000=
Rs.
25,000
Premiums
payable
4.3 In ULIP policies the concept of paid up value does not apply.
2
CONCEPTS
OF
BENEFITS
AND
DEDUCTIBLES
CSC – VLE TRAINING
3
CONCEPTS
OF
BENEFITS
AND
DEDUCTIBLES
CSC – VLE TRAINING
2.1
Deductible
The
deductible
is
the
portion
which
is
not
covered
by
the
insurance.
If
the
claim
is
up
to
amount
of
deductible
it
is
not
payable
by
insurance
company
and
if
it
is
higher,
then
only
the
difference
between
the
claim
amount
and
deductible
is
payable.
2.2
Excess
The
excess
is
the
amount
of
expenses
that
must
be
paid
by
insured,
before
an
insurer
will
pay
further
expenses.
An
excess
is
an
amount
a
policyholder
must
bear
before
the
liability
passes
to
the
insurer
(subject
to
sum
insured).
4
CONCEPTS
OF
BENEFITS
AND
DEDUCTIBLES
CSC – VLE TRAINING
2
Excess
The
excess
is
the
amount
of
expenses
that
must
be
paid
by
insured,
before
an
insurer
will
pay
further
expenses.
An
excess
is
an
amount
a
policyholder
must
bear
before
the
liability
passes
to
the
insurer
(subject
to
sum
insured).
The
effect
of
an
excess
or
deductible
are
the
same
if
the
claim
amount
is
fully
covered,
but
differ
when
the
claim
amount
exceeds
that
minimum
insured
value.
Example:
Policy
amount
Rs.
5,00,000
Deductible
Excess
Deductible/Excess
Rs.
5,000
Claim-‐1
Rs.
4,000
NIL
Nil
Claim-‐2
Rs.
25,000
Rs.20,000(Rs.25,000
Rs.20,000
(Rs.
less
Rs
5,000
25,000
less
Rs
5,000
Claim
-‐3
Rs.
5,,00,000
Rs
4,95,000
5,00,000
2.3
Franchise
In
case
of
franchise,
if
the
amount
of
claim
is
up
to
franchise
it
is
not
paid.
Once
it
reaches
amount
of
“franchise”
it
is
paid
in
full,
without
any
deduction.
Example:
Policy
amount
Rs
5,00,000/-‐
Payment
Franchise
Rs
5,000/-‐
Claim
1
Rs.
4,000/-‐
NIL
Claim
2
Rs
25,000/-‐
Rs.
25,000/-‐
Claim
3
Rs.
1,00,000/-‐
Rs
1,00,000/-‐
The
purpose
of
deductible/
excess
and
franchise
is
to
avoid
smaller
claims
and
also
make
the
insured
responsible.
3. Depreciation
3.1
In
non
life
insurance
principle
of
indemnity
applies.
If
the
damaged
property
has
depreciated
[natural
wear
and
tear],
the
insurance
company
will
pay
claim
which
is
equivalent
to
depreciated
property
value.
An
amount
is
deducted
towards
depreciation
depending
upon
the
life
of
property/machinery.
3.2
In
motor
insurance
policy
the
percentage
of
depreciation
is
fixed
by
Policy
conditions.
Different
percentages
for
metal,
rubber
and
fiber
glass
etc
parts
are
provided
in
policy.
Some
insurers
issue
policies
under
motor
insurance
for
without
depreciation
for
which
extra
premium
is
charged.
3.3
Under
fire
policy
there
is
no
fixed
depreciation.
It
is
deducted
depending
on
total
and
expected
balance
life
of
the
property/machinery.
Example:
for
machinery,
if
total
life
is
20
years
and
if
5
years
are
over,
25%
depreciation
is
deducted
from
the
new
value
at
the
time
of
claim.
5
CONCEPTS
OF
BENEFITS
AND
DEDUCTIBLES
CSC – VLE TRAINING
Health Insurance
III)
Health
Insurance
It
is
paid
as
percentage
of
a
premium
amount
for
the
policies
handled
by
him.
He
1. Cumulative
Bonus
is
paid
fees
on
all
the
policies
and
not
only
For
each
claim
free
year
the
policyholder
on
the
policies
on
which
the
claims
are
gets
a
benefit
known
as
‘cumulative’
bonus
lodged.
and
is
similar
to
‘no
claim
bonus’
in
concept.
3. Co-‐pay
The
only
difference
being
that
instead
of
giving
a
discount,
in
the
next
year’s
renewal
Co-‐Pay
is
the
amount
which
the
insured
premium
the
health
insurance
company
person
has
to
bear
out
of
the
medical
adds
more
benefits
for
the
same
premium
expenses
incurred
by
him
for
paid.
However,
the
overall
amount
of
hospitalization
of
a
particular
sickness
benefits
will
not
exceed
a
certain
insured
under
a
health
policy.
It
is
like
an
percentage
as
specified
in
the
health-‐ excess
but
generally
higher
amount
and
insurance
policy
cover.
always
expressed
in
terms
of
percentage
Example:
Sum
Insured
is
Rs
1,
00,000
and
say
10%,
20%
etc.
Moreover
in
excess
if
Cumulative
Bonus
is
5%
per
year.
claim
is
less
than
excess
then
it
is
not
paid
whereas
under
Co
Pay
whether
claim
is
big
For
4
claim
free
years,
the
cumulative
bonus
or
small
it
is
payable
after
deduction
of
Co-‐
will
be
20%.
[5%
x
4]
pay.
In
fifth
year
sum
insured
will
be
Rs
1,
00,000
+
Rs
20,000-‐=
Rs
1,
20,000
Example:
Mr.
Shenoy
has
taken
a
health
The
premium
charged
will
be
for
Rs
1,
00,000
insurance
policy
for
sum
Rs
1,00,000/-‐
Co-‐
sum
insured.
pay
is
10%.
Now
he
is
hospitalized
and
submits
claim
for
Rs
30,000/-‐.
If
claim
is
made
in
any
year
cumulative
Claim
payable
will
be
Rs
30,000/-‐
less
Rs
bonus
is
lost.
3,000/-‐
=
Rs
27,000/-‐.
2. TPA
Fees
The
Purpose
of
Co-‐Pay
is
to
make
insured
TPA
fees
is
the
amount
paid
by
insurer
to
exercise
economy
in
spending
on
medical
the
Third
Party
Administrator
who
expenses.
processes
the
claims
under
health
insurance
policies
of
the
company.