The document discusses the concept of the 4 Cs - creation, consumption, conservation, and contingencies of income. It provides examples of how people can create income through work or business and then consume it to cover basic needs like food, shelter, and education. The third C is conservation, which involves accumulating wealth and estate creation. The fourth C is contingencies, which refers to replacing income during retirement, death, or disability through purchasing life insurance. It provides illustrations of calculating appropriate life insurance coverage amounts needed to replace income in these situations.

1. CONCEPT OF 4 CS
Prepared by
SANJAY R. SAWANT
Development officer
LIC BR.906

2. 1ST
CREATION OF INCOME
Earning span of life people
have two options to earn
money
1. SERVICE
2. BUSINESS
3. Profession

3. 2ND
CONSUMPTION OF INCOME
People earn money and spend
on
1) FOOD
2) SHELTER
3) CLOTHING
4) EDUCATION
5) COMFORTS

4. 3RD C
WHAT IS
THAT

5. 4TH
CONSERVATION OF INCOME
I. WEALTH
ACCUMULATION
II. ESTATE CREATION

6. CONTINGENCIES
DEATH
DISABILITY
RETIREMENT

7. CONCEPT OF
CREATION OF LIFE
CAPITAL FUND
Sanjay R. Sawant
Dev. Officer, Br.906

8. WHAT IS LIFE INSURANCE?
Replacement for
RETIREMENT
Replacement for DEATH
(Nat./Acc.)
Replacement for
DISABILITY

9. REPLACEMENT FOR RETIREMENT
 Suppose the person who earns Rs.25,000/-
per month.
 Out of which his personal expenses are of
Rs.5,000/- p.m.
 Therefore his home made expenses are of
Rs. 20,000/- p.m. (basic financial
requirement per month)
 After his retirement his earning will stop but
he has to survive his life in old age with his
life partner if she is alive.

10. REPLACEMENT FOR RETIREMENT
 Therefore he requires some specific amount to his
old age i.e.Rs.25,000/- p.m. means 3,00,000/- per
annum.
 6% of amt. X = 3,00,000
 X = 300000 x 100/6
 X = 50,00,000/- should be the total risk cover
amount that person should have.

11. REPLACEMENT FOR NATURAL
DEATH
 If the same person dies then his earning of
Rs.25,000/-will never come to his family but
his family has to survive.
 Now his family’s basic financial requirement
is 25000-5000=20000 p.m.
 Therefore his family should get Rs.20000 in
very next month after bread winner’s death
and that is for longer period at least for
more than 20 years. Such provision should
be done by bread winner before leaving this
world.

12. HOW?
 That bread winner should have the life insurance
with risk coverage of ------
 20000 x 200 times = 40,00,000
 40,00,000 x 6% (puts in FD at nationalise bank) =
2,40,000 per annum interest will be received by
nominee i.e. 20,000/- p.m.

13. REPLACEMENT FOR ACC. DEATH
 On accidental death nominee receives additional
sum assured equal to basic sum assured but Max.
up to 50 lakhs of basic S.A. here in our case total
amount receivable by nominee is 80 Lakhs.
 Therefore his family will receive Rs.40,000/- p.m. till
that amount is in that nationalise bank FD.

14. REPLACEMENT FOR DISABILITY.
 When the life assured meets with an accident he
might not be died but he may be alive with
permanent disability.
 Permanent disability means he must be totally
disable to earn money.
 In such situation income stops.

15. REPLACEMENT FOR DISABILITY
 After disablement further premium of policy
will be waived ( no need to pay further
prem. ) and the life assured will get the
additional sum assured in 120 monthly
installments with 100% risk cover till
maturity of the policy.
 In such case if maturity comes then (S.A.-
the amount given under 120 monthly
installments) will be given.
 5000000 / 120 =41,666/- p.m.

16. HOW MUCH LIFE CAPITAL FUND IS
REQUIRED IN OUR ILLUSTRATION?
That is
50,00,000/-

17. CREATION OF INCOME
TRADITIONAL MODEL

18. CREATION OF INCOME
HARSHAD MEHTA MODEL

19. CREATION OF INCOME
 BALANCED BOAT
(A LIFEGUARD FOR YOUR FAMILY SAFETY)

20. LIFE IS GAME OF CHESS
 In this game your opponent is time
 Make the right move

21. WEALTH OF NATIONS
 THE GREAT ECONOMIST Adam Smith SAYS “the
wealth of nation/human being should not be divided
into many parts but should be whole and
parallel/double to existing one.”

22. 0
2
4
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8
10
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16
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
IF
DREAM 1,50,00000
TEN LACS Column1 Column2
CREATION OF ASSETS IN TWO WAYS
(IF…………………DREAM)

23. 0
2
4
6
8
10
12
14
16
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
1,50,00000 IS REALITY
TEN LACS Column1 Column2
CREATION OF ASSETS IN TWO WAYS
(IS …………………..REALITY)

24. CONTINUATION OF INCOME (THE
3RD C)

25. THANK YOU