Important Points for IC 26 - Life Insurance Finance Exam
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In single premium life insurance plans, the policyholder has to pay a single lump sum amount as premium to the insurance company and gets a life insurance cover for his whole life.
In Salary Savings Scheme or SSS, policies are group insurance plans in which, the insurance company signs a contract with the employer for providing insurance to its employees.
Advance deposit is a minimum amount that needs to be paid by the proposer along with the proposal form. This advance deposit has to be submitted by the insurance agent at the insurance company office along with the proposal form.
The advance deposits are recorded in the Proposal Deposit Account / Suspense account till the underwriter takes the decision regarding acceptance or rejection of the risk. Once the underwriter decides to accept the proposal, this deposit is then taken out of suspense account and credited to premium accounts.
During the financial year, premiums are accounted for on cash basis. At the end of the financial year, the outstanding premiums are provided for in the accounts for Revenue Account and Balance Sheet purposes.
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