Easy2Siksha Sample Papers
GNDU Most Repeated (Important) Quesons
B.Com 5th Semester
INSURANCE SERVICE MANAGEMENT
(Based on 3-Year GNDU Queson Paper Trend Analysis: 2021–2023)
Must-Prepare Quesons (80–100% Probability)
SECTION–A (Introducon & Life Insurance Basics)
1. Denion / Meaning of Life Insurance and Its Importance (3 Times)
2021 (Q1), 2022 (Q1), 2023 (Q1 – Evoluon of Life Insurance / Organizaon
Forms)
Always appears as a rst queson; theory-based start of paper.
Focus Areas: Denion, objecves, importance, evoluon of life insurance in India.
100% Repeon – Guaranteed for 2025
2. Organizaon Structure / Forms of Life Insurance Management (3 Times)
2022 (Q2), 2023 (Q1–Q2), 2021 (Q2 – Endorsements / Documentaon)
Somemes asked as organizaonal structure, somemes as forms of life insurance.
Focus Areas: Hierarchy, departments, types of policies, documentaon.
Very High Probability (90–100%)
2025 Smart Predicon Table
(Based on 3-Year GNDU Paper Trend: 2021–2023)
Secon
Queson Topic
Years
Appeared
Priority
A
Denion / Importance / Evoluon of Life
Insurance
2021–23
Very High (100%)
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Secon
Queson Topic
Years
Appeared
Priority
A
Organizaon Structure / Forms of Life
Insurance
2021–23
Very High (90–
100%)
B
Agency Commission Structures / Training of
Agents
2021–23
Very High (100%)
2025 GUARANTEED QUESTIONS (100% Appearance Trend)
Top 5 Must-Prepare Quesons:
1. Dene life insurance, explain its importance, and discuss the evoluon of life
insurance business in India.
GNDU Most Repeated (Important) Answers
B.Com 5th Semester
INSURANCE SERVICE MANAGEMENT
(Based on 3-Year GNDU Queson Paper Trend Analysis: 2021–2023)
Must-Prepare Quesons (80–100% Probability)
SECTION–A (Introducon & Life Insurance Basics)
Denion / Meaning of Life Insurance and Its Importance (3 Times)
2021 (Q1), 2022 (Q1), 2023 (Q1 – Evoluon of Life Insurance / Organizaon
Forms)
Always appears as a rst queson; theory-based start of paper.
Focus Areas: Denion, objecves, importance, evoluon of life insurance in India.
100% Repeon – Guaranteed for 2025
Ans: A New Beginning: A Promise of Security
Imagine a man named Ravi. He works hard every day to provide his family a comfortable
life—his children go to school, his wife manages the home, and his parents depend on
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his earnings. Life is smooth until one question suddenly strikes him: “What would
happen to my family if something happened to me?”
This single thought creates worry in Ravi’s mind, not because he doubts life, but because
he loves his family deeply. That is where life insurance comes into the picture—it is not
just a policy or a piece of paper, but a promise of financial protection, a symbol of love,
and a tool of responsibility.
In this explanation, we will understand what life insurance truly means, why it is
important, its objectives, and how it has evolved over the years in India. Let’s take this
journey step by step, in the simplest and most human way possible.
Meaning and Definition of Life Insurance
Life insurance is like a financial safety net that one spreads over their loved ones. It
ensures that even if the earning member of the family passes away, the family’s financial
needs continue to be met.
In simple words:
Life insurance is a contract between an individual (called the insured) and an
insurance company (called the insurer), where the insurer promises to pay a fixed sum
of money (called the sum assured) to the insured’s family or nominee in case of the
insured’s death, in return for a regular payment known as a premium.
Formal Definition
According to the Insurance Act, 1938, life insurance is an agreement by which the
insurer promises to pay a certain amount to the insured, or to his nominee, on the
happening of an event dependent on the human life—such as death or survival for a
fixed period—in exchange for regular premium payments.
In short:
• The insured is the person whose life is covered.
• The insurer is the company that provides the insurance.
• The premium is the amount paid regularly for the policy.
• The sum assured is the guaranteed amount that will be paid upon the event (like
death).
• The nominee is the person who receives the money in case of the insured’s
death.
Thus, life insurance converts uncertainty into certainty and risk into protection.
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Objectives of Life Insurance
The main objectives of life insurance can be understood easily if we imagine it as a
protective umbrella—it shields individuals and their families from the financial storms of
life.
1. Protection against Financial Loss
The first and foremost objective is financial protection. If the breadwinner of the family
dies unexpectedly, life insurance ensures that the dependents are not left helpless. It
provides funds to maintain their lifestyle, pay debts, or cover children’s education
expenses.
2. Encouragement of Savings
Life insurance not only provides protection but also acts as a systematic savings tool. By
paying regular premiums, individuals develop the habit of saving. At the end of the
policy term, if the insured survives, he or she receives a lump-sum amount—often used
for marriage, education, or retirement.
3. Investment Opportunity
Many life insurance policies, such as endowment and money-back plans, combine
protection with investment. These policies provide returns in the form of bonuses,
which help the insured grow their wealth over time.
4. Provision for Old Age
As one grows older, regular income may stop, but expenses continue. Life insurance
provides financial stability in old age through pension or annuity plans. It ensures that
one’s later years are spent peacefully and independently.
5. Tax Benefits
Life insurance policies also come with tax advantages under the Income Tax Act, 1961—
for example, premiums paid are eligible for deductions under Section 80C, and the
maturity amount is exempt under Section 10(10D). This makes it a wise financial
planning tool.
6. Creditworthiness
People with life insurance policies are often seen as financially disciplined and secure,
making it easier for them to obtain loans or credit facilities from banks.
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Importance of Life Insurance
The importance of life insurance can be felt both at the individual level and for the
nation as a whole.
1. Security for the Family
Life insurance provides peace of mind. It ensures that even if something unfortunate
happens to the insured, their family’s financial condition remains stable. The emotional
loss cannot be replaced, but at least financial hardship can be avoided.
2. Promotes Habit of Saving
In today’s fast-moving world, where people often spend more than they save, life
insurance encourages financial discipline. Regular premium payments create a long-term
saving habit.
3. Capital Formation
Insurance companies invest the collected premiums in government projects, industries,
and other sectors. This leads to capital formation and contributes to the nation’s
economic growth.
4. Employment Generation
The insurance sector creates employment opportunities—agents, advisors,
underwriters, actuaries, and customer support professionals—all form a large
workforce, contributing to India’s employment structure.
5. Reduces Public Burden
In the absence of life insurance, dependents of deceased persons may need government
help. Insurance reduces this dependency and encourages self-reliance among citizens.
6. Business Continuity
For businesspersons, life insurance provides funds for the smooth continuation of
business operations after the death of a partner or key person. It can also be used for
paying off business debts.
7. National Development
By pooling funds from millions of policyholders, insurance companies invest in
infrastructure, housing, transport, and social welfare projects—thus directly contributing
to nation-building.
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Evolution of Life Insurance in India
The story of life insurance in India is truly fascinating—it mirrors India’s journey from
colonial rule to a modern financial democracy.
1. Early Beginnings
Life insurance in India began during the British rule. The first life insurance company in
India was The Oriental Life Insurance Company, established in 1818 in Kolkata.
However, it mainly served Europeans and excluded Indians from its benefits.
2. Entry of Indian Companies
Gradually, Indians realized the importance of life insurance and started their own
companies. The Bombay Mutual Life Assurance Society, founded in 1870, was the first
Indian life insurance company that covered Indian lives.
By the early 20th century, several Indian companies entered the market, such as:
• Bharat Insurance Company (1896)
• Empire of India Life Assurance Company (1897)
• United India (1906)
• National Insurance (1906)
These companies gave Indians confidence to trust the concept of life insurance.
3. Regulation and Control
To control frauds and ensure fair practices, the Indian Life Assurance Companies Act
was passed in 1912, marking the first step toward regulation. Later, in 1938, the
Insurance Act was introduced, consolidating and strengthening the legal framework.
4. Nationalization of Life Insurance
After Independence, there were more than 240 private insurance companies in India,
many of which were financially weak or mismanaged. To protect policyholders, the
Government of India nationalized the life insurance sector on 1st September 1956 and
formed the Life Insurance Corporation of India (LIC).
LIC became the sole life insurer and played a major role in spreading insurance
awareness across towns and villages.
5. Liberalization and Opening Up
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In 1999, the Indian government re-opened the insurance sector for private and foreign
players through the Insurance Regulatory and Development Authority (IRDA). This
brought competition, better products, and improved customer service.
6. Present Scenario
Today, India has a vibrant life insurance market with both public and private players
such as:
• LIC (Public Sector)
• HDFC Life, ICICI Prudential, SBI Life, Max Life, Bajaj Allianz (Private Sector)
The digital revolution has made life insurance more accessible and transparent. Policies
can be bought online within minutes, and claims are processed faster than ever before.
Conclusion: A Shield of Love and Responsibility
Life insurance is not just about money—it’s about care, love, and foresight. It is the
assurance that even if one’s life ends, one’s responsibilities will continue to be fulfilled.
For individuals, it means peace of mind; for families, it means stability; and for the
nation, it means progress.
Just like Ravi in our story, every responsible individual should think beyond today and
secure tomorrow. Because life is uncertain, but protection should never be.
In short:
Life insurance transforms love into security, dreams into guarantees, and risks into peace
of mind.
2. Organizaon Structure / Forms of Life Insurance Management (3 Times)
2022 (Q2), 2023 (Q1–Q2), 2021 (Q2 – Endorsements / Documentaon)
Somemes asked as organizaonal structure, somemes as forms of life
insurance.
Focus Areas: Hierarchy, departments, types of policies, documentaon.
Very High Probability (90–100%)
Ans: A young graduate, Kavya, joins a life insurance company as a trainee. On her first
day, she walks into a tall building with glass doors and bustling employees. She wonders:
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“How does this giant organization actually work? Who decides policies, who sells them,
and who manages all the paperwork?”
Her mentor smiles and says: “Think of a life insurance company like a living organism. It
has a head (top management), a heart (departments), arms and legs (field agents), and
a nervous system (documentation and policies). Only when all these parts work together
does the company survive and grow.”
That’s the essence of our topic: Organization Structure and Forms of Life Insurance
Management. Let’s walk through it step by step, in a story-driven, examiner-friendly
way.
Meaning of Life Insurance Management
Life insurance management is the system by which companies design, sell, and service
life insurance policies. It involves:
• Hierarchy (who manages whom),
• Departments (who does what),
• Types of policies (what products are offered), and
• Documentation (how records are maintained).
Hierarchy in Life Insurance Companies
Just like a school has a principal, teachers, and students, a life insurance company has a
clear chain of command.
1. Top Management
• Board of Directors / CEO / Managing Director
• They set vision, strategy, and compliance with regulators (like IRDAI in India).
• Example: Deciding to launch a new pension plan.
2. Middle Management
• Regional Managers, Zonal Heads, Department Heads
• They translate strategy into action.
• Example: Training agents in a new product.
3. Operational Level
• Branch Managers, Development Officers, Agents
• They interact directly with customers.
• Example: Selling a term insurance policy to a family.
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Story Note: Kavya sees how the CEO’s decision in the boardroom eventually reaches her
branch office as a new sales target.
Departments in Life Insurance Management
Each department is like an organ in the body—specialized, but working together.
1. Underwriting Department
• Evaluates risk before issuing a policy.
• Example: Checking medical reports before approving a ₹1 crore policy.
2. Actuarial Department
• The “math brains” of the company.
• Calculates premiums, mortality rates, reserves.
• Example: Deciding that a 30-year-old pays ₹12,000 annually for a ₹10 lakh cover.
3. Sales and Marketing Department
• The “face” of the company.
• Agents, advisors, digital marketing teams.
• Example: Running an ad campaign for child education plans.
4. Claims Department
• Handles settlement when the insured person dies.
• Ensures quick, fair, and transparent payouts.
5. Customer Service Department
• Answers queries, manages renewals, updates addresses.
6. Finance & Accounts Department
• Manages investments, expenses, and regulatory reporting.
7. Legal & Compliance Department
• Ensures company follows IRDAI rules, handles disputes.
8. IT Department
• Maintains online portals, mobile apps, cybersecurity.
Story Note: Kavya rotates through departments and realizes that while sales bring in
money, underwriting and actuarial ensure the company doesn’t collapse under risk.
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Types of Life Insurance Policies
Life insurance companies offer different policies to suit different needs.
1. Term Insurance
• Pure risk cover.
• High sum assured, low premium.
• Example: ₹1 crore cover for ₹10,000 per year.
2. Whole Life Policy
• Covers the insured for their entire life.
• Builds cash value.
3. Endowment Policy
• Combines insurance + savings.
• Pays lump sum on maturity or death.
4. Money Back Policy
• Periodic payouts during the policy term.
5. Unit Linked Insurance Plans (ULIPs)
• Insurance + investment in equity/debt funds.
6. Pension / Annuity Plans
• Provides regular income after retirement.
7. Child Plans
• Designed for education/marriage needs of children.
Story Note: Kavya sells her first policy—a term plan—to a young father who wants to
secure his family’s future. She feels proud knowing she’s selling peace of mind, not just
paper.
Documentation in Life Insurance
Documentation is the nervous system—without it, nothing works.
1. Proposal Form
• Filled by the proposer with personal, financial, and medical details.
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2. KYC Documents
• Proof of identity, address, PAN, Aadhaar.
3. Medical Reports
• Required for high-value policies.
4. Policy Bond
• Legal contract between insurer and insured.
5. Premium Receipts
• Proof of payment.
6. Claim Documents
• Death certificate, claim form, nominee details.
Story Note: Kavya learns that even a missing signature can delay a claim. She realizes
documentation is not “boring paperwork” but the backbone of trust.
Why Structure Matters
• Efficiency: Clear hierarchy avoids confusion.
• Risk Management: Underwriting + actuarial prevent losses.
• Customer Trust: Claims and service build reputation.
• Compliance: Legal and finance ensure rules are followed.
Recap in a Narrative Table
Focus Area
Key Points
Example
Hierarchy
Top → Middle → Operational
CEO → Zonal Head → Agent
Departments
Underwriting, Actuarial, Sales,
Claims, IT, Legal
Actuary sets premium, Claims
pays settlement
Policies
Term, Whole Life, Endowment,
ULIP, Pension, Child
Term plan for young father
Documentation
Proposal form, KYC, Policy bond,
Claim docs
Missing signature delays claim
Wrapping the Story
So, the story of Organization Structure / Forms of Life Insurance Management is really
the story of how a life insurance company functions like a well-coordinated orchestra.
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• The hierarchy ensures leadership and accountability.
• The departments specialize in risk, sales, service, and compliance.
• The policies are the products that meet diverse human needs—protection,
savings, retirement, children’s future.
• The documentation is the legal glue that binds trust between insurer and
insured.
Final Analogy: If life insurance is a promise, then the organization structure is the
machinery that keeps that promise alive—day after day, policy after policy, life after life.
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