Insurance Awareness 5

Micro Insurance
The sum assured under an Insurance product offering life or pension

or health benefits shall not exceed an amount of Rs 200,000.
The annual Premium shall not exceed Rs 6000 pa. in a Micro

Variable Insurance product.
Micro Insurance Schemes marketed to Groups with a minimum

Group size of 5.
EDLI scheme
• Under the EPFO’s Employees’ Deposit Linked Insurance

Scheme,(EDLI) all surviving dependent family members of
the members of this scheme are eligible to avail of benefits
of EDLI in case of the death in a harness of the member.
• The purpose of the Employees’ Deposit Linked Insurance

Scheme 1976 (‘EDLI Scheme’) is to provide life insurance
benefits to the employees of the establishments covered
under the Employees’ Provident Funds and Miscellaneous
Provisions Act 1952 (‘EPF Act’).
EDLI scheme
• Salient features of the EDLI scheme
• Maximum assured benefit up to Rs. 7 lakh paid to the nominee or
legal heir of EPF member, if death occurs while in service.
• Minimum assurance benefit of ₹25 lakh, if deceased member was
in continuous employment for 12 months prior to his/her death.
• To benefit families of contractual/ casual workers, the condition of
continuous employment in only one establishment has been
liberalized, with benefit being made available to families of even
those employees who may have changed jobs in the last 12
months preceding his death.
• Minimal contribution by employer @ 0.5% of employees' monthly
wages, up to wage ceiling of ₹15,000.
• No contribution paid by employee.
IRDAI has recently announced that starting January 1, 2023, Know
Your Customer (KYC) documents will be required for all new health,
motor, travel, and home insurance policies. The rule applies to all
types of insurance, including life insurance, health insurance, and
general insurance, irrespective of the policy premium.
While KYC has been a mandatory requirement to buy a life

insurance policy, it was not mandatory to buy health insurance
and general insurance. Until December 31, 2022, providing KYC
documents, such as PAN card and Aadhar card at the time of a
health insurance policy claim, was required if the claim amount
was greater than Rs 1 lakh.
So, as per the new rules, from January 1, 2023, the insurers
are required to conduct a KYC exercise before selling an
insurance policy.
The insurers can complete the KYC of their low-risk customers

within 2 years and high-risk customers within 1 year.
Customers are also required to submit a PAN card if the

insurance premium is Rs 50,000 or greater than that in a
financial year.
IRDAI has said insurers will be allowed to classify their sovereign green
bond purchases as infrastructure investments.
The regulator, in a circular dated Jan. 13, 2023 said the move was made
with the objective of "de-concentration and diversification" of insurers'
infrastructure portfolios as well as "from the perspective of participation
in environmental, social and governance (ESG) initiatives."
16,000 crore sovereign green bonds (RBI will auction 5- and 10-year
green bonds on Jan. 25 and on Feb. 9)
The investments in green bonds can qualify towards statutory liquidity

ratio (SLR)
IRDAI Annual report
Insurance penetration in India in 2021-22 remained unchanged at

4.2 per cent, as in the previous year, despite rising premiums.
Insurance penetration is a metric often used in the insurance

industry to assess the level of development of the insurance sector
in a country.
It is measured as the percentage of insurance premium to gross

domestic product (GDP).
Penetration remained unchanged even though premiums have
increased by about 10 per cent in life and about 11 per cent in
general insurance because of the fact that penetration is
measured as a percentage of premium by GDP.
If there is an equal increase in GDP, then this ratio remains the

same. This basically means that the insurance industry has
grown at the same pace as GDP growth.
Insurance Density
Insurance density is used to assess the level of development

of the insurance sector in a country. It is calculated as the
ratio of premium to population (per capital premium).
Insurance density in India increased from $78 in 2020-21 to

$91 in 2021-22, according to the IRDAI annual report.
Insurance companies settled over 2.25 lakh death claims up to
March 2022, on account of the Covid-19 pandemic
In case of individual life insurance business, the life industry’s

death claim settlement ratio increased to 98.64 per cent in
2021-22 from 98.39 per cent in the previous year.
In case of group life insurance business, life insurance
companies settled 98.77 per cent claims during 2021-
22 against 98.62 per cent in the previous year
According to the data available in the report, a total of

2.65 million (2,654,001) health insurance claims were
settled.
The life insurance industry paid around 73.1 per cent of the net
premium, which is Rs 5.02 lakh crore in 2021-22. The country’s
largest life insurer, the Life Insurance Corporation (LIC) of India
accounted for 70.39 per cent of total benefits paid, with private
insurers accounting for the remaining 29.61 per cent.
General and health insurers settled 2.19 crore health insurance

claims and paid Rs 69,498 crore towards settlement of the
claims. The average amount paid per claim was Rs 31,804.
Public sector general insurers experienced the highest claims
ratio of 103.17 per cent, whereas private sector general
insurers had the lowest claims ratio of 77.95 per cent during
the year 2021-22.
Among the various segments, health segment had the highest

claims ratio at 105.68 per cent in FY 2022.
LIC introduces new plan Jeevan Azad
This is a non-participating, individual, savings life insurance plan which

offers an attractive combination of protection and savings
A participating life insurance policy allows the policyholder to participate

in the profits of the life insurance company. The life insurance company,
like all organizations, will earn profits over the course of a financial year,
In a participating plan, the benefits of these profits are passed on to the
policyholder. These benefits are paid out to the policyholder in the form
of bonuses or dividends.
Death Benefit: Death benefit payable on death of the life

assured during the policy term after the date of
commencement of risk but before the date of maturity, shall
be “Sum Assured on Death” where “Sum Assured on Death” is
defined as higher of ‘Basic Sum Assured’ or ‘7 times of
Annualized Premium’.
This Death Benefit shall not be less than 105% of “Total

Premiums Paid” upto the date of death.
Maturity Benefit: On Life Assured surviving the stipulated Date

of Maturity, ’Sum Assured on Maturity’ which is equal to ‘Basic
Sum Assured’ shall be payable.
Minimum Age at Entry : 90 days (completed)

Maximum Age at Entry : 50 years
Minimum Age at Maturity : 18 years (completed)

Maximum Age at Maturity : 70 years
Policy Term : 15 to 20 years

Minimum Basic Sum Assured per life : Rs. 2,00,000/-
Maximum Basic Sum Assured per life : Rs. 5,00,000/-

According to the Mental
Healthcare Act, 2017, every
insurer will have to make
provisions for medical
insurance for the treatment of
mental illness as they do for
the treatment of physical
illness.
In October 2022, IRDAI had

directed insurance companies
to ensure all health insurance
policies cover mental illness.
Insurers were asked to
implement the new rule by
October 31, 2022.
The endeavour aims to promote
the production of silk in the
region. Over 12,000 families in
the state are impacted by
sericulture both directly and
indirectly, and 6,000
stakeholders produce nearly 300
metric tonnes of silk fibroin
there annually.

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Micro Insurance

The sum assured under an Insurance product offering life or pension

The annual Premium shall not exceed Rs 6000 pa. in a Micro

Micro Insurance Schemes marketed to Groups with a minimum

• Under the EPFO’s Employees’ Deposit Linked Insurance

• The purpose of the Employees’ Deposit Linked Insurance

While KYC has been a mandatory requirement to buy a life

The insurers can complete the KYC of their low-risk customers

Customers are also required to submit a PAN card if the

The investments in green bonds can qualify towards statutory liquidity

Insurance penetration in India in 2021-22 remained unchanged at

Insurance penetration is a metric often used in the insurance

It is measured as the percentage of insurance premium to gross

If there is an equal increase in GDP, then this ratio remains the

Insurance density is used to assess the level of development

Insurance density in India increased from $78 in 2020-21 to

In case of individual life insurance business, the life industry’s

According to the data available in the report, a total of

General and health insurers settled 2.19 crore health insurance

Among the various segments, health segment had the highest

This is a non-participating, individual, savings life insurance plan which

A participating life insurance policy allows the policyholder to participate

Death Benefit: Death benefit payable on death of the life

This Death Benefit shall not be less than 105% of “Total

Maturity Benefit: On Life Assured surviving the stipulated Date

Minimum Age at Entry : 90 days (completed)

Minimum Age at Maturity : 18 years (completed)

Policy Term : 15 to 20 years

Minimum Basic Sum Assured per life : Rs. 2,00,000/-

Maximum Basic Sum Assured per life : Rs. 5,00,000/-

In October 2022, IRDAI had

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