Non-Life Insurance Products for NISM certification
Non-life (general) insurance protects assets and protects income from large, unplanned bills: hospitalisation, car repairs, a burglary, a lawsuit. This chapter covers the building blocks of these one-year contracts, each main product, how base, top-up and super top-up plans fit together, and when cover applies abroad. Rules are as per the NISM X-B workbook (Sept 2026 version).
Advice & ResearchSeries X-B62 MCQs4 lessons24 flashcards5 memory tricks
Practise Non-Life Insurance Products free
What you'll learn
- How a non-life policy is built
Name the elements of a general insurance policy and the benefits that change the sum insured or the premium. - The main non-life products
Match each risk with the product that covers it. - Base, top-up and super top-up plans
Work out what a top-up and a super top-up pay on several claims in a year. - Multiple policies, comparisons and cover abroad
Decide when multiple policies help, compare health with critical illness cover, and know when a policy pays outside India.
Key formulas
| Top-up pays on each claim | max(0, claim − threshold), within its sum insured |
|---|---|
| Super top-up pays in the year | max(0, total claims − threshold), within its sum insured |
Concepts explained
Top-up versus super top-up
Both pay hospital bills above a threshold; a top-up applies it to each claim, a super top-up to the year's total claims.
What it means
- Single large claim: both pay the same.
- Several moderate claims: the super top-up pays much more.
- Neither is a legal term; check the wording of each plan.
- Claims ₹2 L, ₹4 L, ₹1.5 L, ₹2.5 L; threshold ₹3 L
- Top-up: only the ₹4 L claim exceeds ₹3 L → ₹1 L
- Super top-up: ₹10 L − ₹3 L = ₹7 L
Answer: ₹1 L versus ₹7 L
Related terms
- Threshold / deductible: amount borne by the insured or a base policy first
- Base policy: regular health policy that pays from the first rupee
Exam tip: Read whether the threshold is 'per claim' (top-up) or 'aggregate in the policy year' (super top-up).
Motor no-claim bonus
A discount on the own-damage premium for claim-free years, up to 50% after 5 years, belonging to the insured person.
What it means
- Not attached to the vehicle; it moves to the owner's next car.
- A new insurer honours it when the policy is moved at renewal.
- It applies to own damage, not the compulsory third-party part.
- Own-damage premium ₹18,000
- Maximum NCB 50%
Answer: Own-damage premium payable ₹9,000
Related terms
- Own damage: cover for the insured's own vehicle
- Third-party liability: compulsory cover for harm to others
Personal accident and critical illness
Both are defined benefit covers that replace income; size them like life cover, not as small extras.
What it means
- PA: injury solely and directly from an accident by external, violent and visible means.
- PA covers permanent total, permanent partial and temporary total disablement.
- CI pays a lump sum on diagnosis after 30-day survival; nothing on death.
- Income ₹12 lakh a year
- Needs 5 years of income while recovering
Answer: CI cover of about ₹60 lakh, not ₹5 lakh
Related terms
- Accelerated CI rider: on a life policy; reduces life cover when paid
- Standalone CI: separate policy from a general or health insurer
Insurance cover outside India
Defined benefit covers normally pay worldwide; indemnity health covers normally pay only for expenses in India unless global cover is added; travel policies are built for each country.
What it means
- Verification is easy for death or diagnosis, hard for foreign hospital bills.
- Foreign insurers' policies (bought under LRS) follow their country's rules.
- Student cover depends on the university's rules.
- University allows own policy meeting conditions
- Indian student policy meets them and costs less
Answer: Indian policy is a sensible choice
Related terms
- LRS: USD 2,50,000 a year remittance limit
- Indemnity: pays assessed actual loss
Memory tricks
Top-up applies the threshold per claim; super top-up applies it to the year's total claims.
Motor NCB (up to 50% after 5 claim-free years) is attached to the insured, not the vehicle.
PA pays for injury solely and directly from an accident by external, violent and visible means.
Fidelity insurance covers an employer's loss from employee forgery, fraud or dishonesty.
Keyman cover is life insurance bought by a company on a key executive; the company pays and benefits.
Try 3 NISM-style questions
Q1. Which policy is a defined benefit cover, unlike a regular health (hospitalisation) policy?
- A critical illness policy
- A mediclaim policy
- A top-up health policy
- A family floater health policy
Show answer
Answer: (1) A critical illness policy
Critical illness pays a fixed lump sum on diagnosis; the other three reimburse hospital expenses (indemnity).
Q2. A restoration benefit in a health policy means that
- Any unused sum insured is refunded in cash to the insured at the end of the policy year
- The premium is restored to the first year's level
- The sum insured is brought back to 100% after claims use it up, as the policy specifies
- Pre-existing diseases are covered from the first day
Show answer
Answer: (3) The sum insured is brought back to 100% after claims use it up, as the policy specifies
Restore and recharge benefits reinstate the sum insured to 100% when it is exhausted or reduced by claims.
Q3. Indian health insurance policies (indemnity) normally cover hospitalisation expenses
- Incurred in India only, unless global cover is included
- Anywhere in the world automatically, at the same premium
- Only in the insured's home state
- Only in government hospitals
Show answer
Answer: (1) Incurred in India only, unless global cover is included
Assessing expenses abroad is hard, so cover is normally India-only; some basic plans now add global cover.
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