Important Points for IC 26 - Life Insurance Finance Exam
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The insurance company records the advance deposits received by the proposer for the purchase of the policy in either the proposal deposit account or the suspense account.
Amount of claims paid will not be recorded in the premium etc cash book.
In the case of ULIPs, if the cheque is dishonoured and the amount paid by the proposer is still held as application money, then the proposal deposit account will be debited.
If the initial deposit amount paid by the proposer of the policy falls short of Re 1, then the shortfall is not collected and is debited to Short remittance account.
Management expenses will be recorded in the cash paid book.
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