Risk Analysis & Insurance Planning

CFP^CM Certification Education Program Syllabus

Module II - Risk Analysis and Insurance Planning

COURSE DESCRIPTION: This module would cover the knowledge requirements relating to insurance and risk analysis for a CFP^CM certification. It introduces students to risk analysis and insurance decisions in personal Financial Planning. Planning for client's exposures to mortality, health, disability, property, liability, and long term care risk is emphasized.

Risk Analysis

1	Introduction to Risk Analysis
	a. Meaning of risk
	b. Basic categories of risk
	c. Types of pure risk
	d. Property risk
	e. Liability risk
	f. Methods of handling risk
2	Insurance and Risk
	a. Basic characteristics of insurance – pooling of losses, risk transfer, indemnification
	b. Requirements of insurable risks
	c. Difference between insurance and gambling or hedging
	d. Benefits and costs of insurance to society
	e. Advantages and disadvantages of insurance in handling risks
3	Risk analysis Process
	a. Meaning and objective of risk analysis
	b. Steps in personal risk analysis
	c. Risk control and risk financing
	d. Insurance market dynamics and the underwriting cycle
	e. Loss forecasting using probability and regression analysis, loss distributions, law of large numbers
	Insurance Concepts
4	Legal principles in insurance
	a. Indemnity
	b. Insurable Interest
	c. Subrogation
	d. Utmost good Faith (representation, concealment, and warranty
5	The Insurance contract
	a. Requirements of an insurance contract
	b. Distinct legal characteristics of an insurance contract
	c. Basic parts of an insurance contract
	d. Meaning of ‘insured’
	e. Endorsements/riders
	f. Common types of deductibles
	g. Co-insurance – nature, purpose and problems
	h. Other-insurance provisions
6	Legal Liability
	a. Intentional Torts
	b. Absolute Liability
	c. Law of Negligence
	d. Special tort liability problems
	e. Civil justice system
	Insurance Policies and Strategies
7	Identification of life, medical, householders, auto and other property and liability risk exposures
	a. Gathering data on current insurances
	b. Identifying client’s insurance needs – life, disability and medical, property, liability, etc.
	c. Analysis of current insurances
8	Personal property and liability insurance
	a. Householders insurance
	b. Motor vehicles insurance
	c. Motor vehicles insurance and society
	d. Other liability insurance
	e. Personal umbrella policy
	f. Overseas and travel insurance
9	Life insurance needs analysis
	a. Human life approach
	b. Needs approach
	c. Capital needs analysis approach
10	Life insurance policy analysis
	a. Types of life insurance policies
	b. Life insurance policy provisions
	c. Life insurance policy riders
	d. Types, benefits and risks of life insurance (including use of policy provisions and riders)
11	Life Insurance policy selection
	a. Determining the cost of life insurance
	b. Cost comparison method
	c. Return on savings component
	d. Taxation of life insurance
	e. Factors to consider while buying life insurance
12	Annuities
	a. Difference between annuity and life insurance
	b. Types of annuities
	c. Taxation of individual annuities
	d. Individual Retirement Accounts (IRAs) in the international context
13	Medical insurance
	a. Medical expenses
	b. Types of coverage
	c. Determination of appropriate coverage
	d. Long term care insurance
	e. Personal accident / Disability-income insurance
	f. Special life insurance benefits
	g. Factors to consider while buying medical insurance
14	Insurance of business risk
	a. Key person insurance
	b. Business assets and liabilities insurance
15	Implementing and reviewing client’s insurance
	a. Advisor as first-line underwriter.
	b. Completing application forms
	c. Frequency of review
	d. Establishing and implementing changes
	e. Handling claims and complaints
	f. Ongoing review
	Environment of an Insurance Adviso
16	Government regulation of insurance
	a. Insurance Regulatory and Development Authority (IRDA)
	b. The Insurance Act
	c. Laws regarding insurance companies in India
	d. Agents and brokers
	e. Agency law and procedures for becoming an agent
	f. Doctrines of waiver and estoppel
	g. Functions of an agent, personal development and behavioural aspects
	h. Code of professional ethics and advertisements
17	Insurance Pricing
	a. Objective of rate making
	b. Definitions in rate making
	c. Basis of rating in Indian context
	d. Rate making in property and liability insurance
	e. Concept of tariff and market agreement
	f. Rate making in life insurance
18	Insurance Companies
	a. Types of insurers
	b. Rate making
	c. Underwriting
	d. Production
	e. Claim settlement
	f. Reinsurance
	g. Investments
	h. Financial reserves
	i. Selecting insurance companies