Capital Need Analysis (CNA)

Capital Need Analysis (CNA)
This is the best way to determine how much life Insurance a person should have by analyzing the various needs that would be experience by the family in event of death of a breadwinner.

Average family normally has following needs:
(1) The cleanup fund (The last illness and cremation expense -outstanding loans etc.)
(2) Income for family to maintain present standard of living.
(3) Special needs: Mortgage redemption, emergency fund, education fund and any other specific needs, depending upon the individual requirements.
(4) Retirement needs.

It is also necessary for the family to determine the order of priority of the various needs, since the ability to pay the premium may prevent the attainment of all the desired needs currently.

After determining the financial objectives, needs and their order of priority, it is necessary to determine what benefit/sources are available to meet these needs. So consideration should be given to Investment income, Death benefits from employer, Present Insurance etc.

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Cooling off period : policy returned by the policyholder for cancellation

i) The policy returned by the policyholder for cancellation will be cancelled after deduction of following:

• a) The risk premium for the period.
• b) Expenses incurred by LIC on M.E. Including special reports.
• c) Stamp duty charges.

ii) An advice of cancelled policy will be sent to Agent and Development Officer.
iii) A sum of Rs. 500/- will be charged for such so returned policy from the concerned agent.

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Code of conduct for Agents

Every person holding a license, shall adhere to the code of conduct specified below under IRDA( Licensing of agents) Regulations, 2000


1. Every insurance agent shall:
a) Identify himself and the insurance company of whom he is insurance agent;
b) Disclose his licence to the prospect on demand;
c) Disseminate the requisite information in respect of insurance products offered for sale by his insurer and take into account the needs of the prospect while recommending a specific insurance plan;
d) Disclose the scales of commission in respect of the insurance product offered for sale, if asked by the prospect;
e) Indicate the premium to be charged by the insurer for the insurance product offered for sale;
f) Explain to the prospect the nature of information required in the proposal form by the insurer, and also the importance of disclosure of material information in the purchase of an insurance contract;
g) Bring to the notice of the insurer any adverse habits or income-inconsistency of the prospect, in the form of a report (called "Insurance Agent's Confidential Report") along with every proposal submitted to the insurer, and any material fact that may adversely affect the underwriting decision of the insurer as regards acceptance of the proposal, by making all reasonable enquiries about the prospect;
h) Inform promptly the prospect about the acceptance or rejection of the proposal by the insurer.
i) Obtain the requisite documents at the time of filing the proposal form with the insurer; and other documents subsequently asked for by the insurer for completion of the proposal;
j) Render necessary assistance to the policyholders or claimants or beneficiaries in complying with the requirements for settlement of claims by the insurer;
k) Advise every individual policyholder to effect nomination or assignment or change of address or exercise of options, as the case may be, and offer necessary assistance in this behalf, wherever necessary;

2. No insurance agent shall:
a) Solicit or procure insurance business without holding a valid license;
b) Induce the prospect to omit any material information in the proposal form;
e) Induce the prospect to submit wrong information in the proposal form or documents submitted to the insurer for acceptance of the proposal;
d) Behave in a discourteous manner with the prospect;
e) Interfere with any proposal introduced by any other insurance agent;
f) Offer different rates, advantages, terms and conditions other than those offered by his insurer;
g) Demand or receive a share of proceeds from the beneficiary under an insurance contract;
h) Force a policyholder to terminate the existing policy and to effect a new proposal from him within three years from the date of such termination;
f) Have, in case of a corporate agent, a portfolio of insurance business under which the premium is in excess of fifty percent of total premium procured, in any year, from one person (who is not an individual) or one organisation or one group of organisations;
j) Apply for fresh licence to act as an insurance agent, if his licence was earlier cancelled by the designated person, and a period of five years has not elapsed from the date of such cancellation;
k) Become or remain a director of any insurance company;

3. Every insurance agent shall:
With a view to conserve the insurance business already procured through him, make every attempt to ensure remittance of the premiums by the policyholders within the stipulated time, by giving notice to the policyholder orally and in writing;

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