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INSURANCE CONCEPT FUNCTIONS AND TYPES
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INSURANCE The dictionary of business and Finance has defined insurance as a “ form of contract or agreement under which one party agrees in return for a consideration to pay an agreed amount of money to another party to make good a loss, damage, or injury to something of value, as a result of some uncertain event in which the insured has pecuniary interest” The document which contains the contract is called “ Insurance policy” The person who is insured is called the “Insured” and the firm which insures is called the “Insurer”.
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Nature of Insurance Sharing of Risk Co-operative device Value of risk
Amount of payment Payment at contingency Large number of insured persons Insurance is not gambling Insurance is not charity
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Essentials of contract of Insurance
Agreement between two parties Agreement must be in writing with consent of both the parties Event must be subject to risk Event must involve some element of uncertainty either in regards to time or with respect to its occurrence Risk should not be very small The cost of insurance should not be prohibitive The risk must be capable of approximate mathematical estimation on the basis of the past records so that premium can be fixed.
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Role of Insurance Insurance protects and safeguards the interest of individuals or business It gives them safety It results in diversification of risk among insurance companies It promotes rate of savings and investment and leads to capital formation Creates a sense of security Insurance companies acts as a underwriters, guarantor, subscriber and financer.
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Principles of Insurance
Principle of Utmost good faith Principle of Insurable interest Principle of Indemnity Principle of Subrogation Principle of Contribution Mitigation loss Risk must attach Causa Proxima
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LIFE INSURANCE Life insurance may be defined as a type of Insurance contract whereby the insurer, in consideration of the premium paid in periodical installments, undertakes to pay an annuity or certain sum of money either on the death of the insured or on expiry of a certain number of years
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Features of Life Insurance
General contract Insurable interest Warranties Proximate cause Assignment and Nomination Return of premium
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Life Insurance Products
Whole life policy Endowment policy With or without profit policy Joint life Policy Double Accident Policy Annuity Policy Group Insurance Policy Convertible Whole life Policy Janta policy Jeevan Sathi Policy Jeevan-Mitra Policy
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NON-LIFE INSURANCE FIRE INSURANCE MARINE INSURANCE HEALTH INSURANCE
MOTOR INSURANCE
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FIRE INSURANCE Sec 2(6A) of Insurance act 1968 defines” Fire insurance Business” as “the business of effecting , otherwise than incidentally , to some other class of insurance business, contracts of insurance against loss incidental to fire or other occurrences customarily included among the risks insured in the Fire Insurance Policies”
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Principles of Fire Insurance
Contract of Indemnity Insurable interest Contract of Good faith Loss through fire A contract from year to year Principles of subrogation and contribution
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Fire Insurance Coverage
Standard Fire Policy Fire Explosion/ Implosion Lightning Impact damage Storm, cyclone, typhoons, hurricane, tornado, floods Landslide Riots, strike, terror attack Missile testing operation Forest fire Aircraft damage
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MARINE INSURANCE According to Insurance act 1963 Marine insurance is defined as “ an agreement whereby the insuree undertakes to indemnify the assured, in the manner and to the extent thereby agreed, against losses incidental to marine adventure. It may cover loss or damage to vessels, cargo or frieght.
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Essential elements of Marine Insurance
Features of general contract Insurable interest Utmost good faith Contract of Indemnity Principle[le of subrogation and contribution Warranties Double Insurance / Reinsurance
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Types of Marine Insurance Policies
Voyage policy Time policy Mixed policy Valued policy Unvalued policy Floating policy Blanket policy Specific cover policy Open cover policy Fleet Insurance policy Port policy Composite policy Currency policy Block policy
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HEALTH INSURANCE Health insurance is safeguard against rising medical costs A health insurance policy is a contract between an insurer and an individual or group, in which the insurer agrees to provide specified heath insurance at an agreed upon price(premium) Premium may be paid as lump sum or in installments Cashless Hospitalization Planned Hospitalization Emergency Hospitalization Medical Reimbursement
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MOTOR INSURANCE Largest non-life insurance business in the world
All motor vehicles are required to be registered with the road transport authorities and insured for third party liability. Need: Footpaths Drunken driving Theft Fire
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Types of Motor Insurance policies
The Third Party Liability Policy or the act Liability Policy Liability for death or bodily injury is unlimited and damage to the property of third party is limited to Rs 6000. The Comprehensive Policy or the Own Damage Losses and Act Liability Policy
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OTHER TYPES OF NON-LIFE INSURANCE
MICRO INSURANCE CROP INSURANCE MISCELLANEOUS INSURANCE Personal accident Insurance Fidelity Insurance Credit Insurance Workmen's Compensation insurance Travel Insurance GROUP INSURANCE UNIT LINKED INSURANCE PLANS(ULIPS) PEDAL CYCLE INSURANCE
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