What is insurance?

The definition of insurance can be made from two points: Functional definition. Contractual definition.

FUNCTIONAL DEFINITION
Insurance is a co-operative device to spread the loss caused by a particular risk over a number of persons who are exposed to it and who agree to insure themselves against the risk.

Contractual Definition
In the words of justice Tindall, Insurance is a contract in which a sum of money is paid to the assured as consideration of insurers incurring the risk of paying a large sum upon a given contingency.

Principle
Insurance involves pooling funds from many insured entities (known as exposures) to pay for the losses that some may incur. The insured entities are therefore protected from risk for a fee, with the fee being dependent upon the frequency and severity of the event occurring.

TYPE OF INSURANCE LIFE INSURANCE GENERAL INSURANCE LIFE INSURANCE

Life insurance is a written contract between the insured and the insurer, that provides for the payment of the insured sum on the date of the maturity of the contract or on the unfortunate death of the insured, whichever occurs earlier.

 GENERAL INSURANCE

General insurance or non-life insurance policies, including automobile and homeowners policies, provide payments depending on the loss from a particular financial event. General insurance typically comprises any insurance that is not determined to be life insurance.

TYPES OF GENERAL INSURANCE

Health insurance Business insurance Automobile insurance Fire insurance etc.

HEALTH INSURANCE
Just like one looks to safeguard ones wealth, these policies ensure guarding the insurer's health against any calamities that may cause long term harm to ones life and even hamper ones earning ability for a lifetime. Some examples of this type of policy are mediclaim policy, personal accident, group accident, traffic accident, etc.

Business Insurance

Risks of loss of profits/business, goods, plant and machinery are most profound in case of business. Under this head they cover the most widely used policies that cover a business from any loss of the above kind. Some of these policies are burglary insurance, shopkeepers insurance, key-man insurance, marine insurance, public liability insurance, workmen

compensation insurance, air transit insurance, fidelity guarantee insurance etc.

Automobile Insurance

Auto Policy is required to be taken to cover the risks that arise to the owner, vehicle and third party. This includes the Compulsory Vehicle Policy (In India, by the Motor Vehicles Act, every car owner is required to covered against Act risks) and the Comprehensive Vehicle Policy.

FIRE INSURANCE
This policy is required to be taken to prevent any loss of profits / property from incidental fire. Eg: fire insurance and fire consequential loss policy.

HISTORY OF INSURANCE IN INDIA contd..

1818 - Oriental Life Insurance Company 1st Insurance Company.

The first General Insurance Company established in the year 1850 in Calcutta by the British.

1870 - Bombay Mutual Life Assurance Society 1st Life Insurance Company. 1912 - The Indian Life Assurance Companies Act enacted the 1st Law to Regulate the Life Insurance Business. 1928 - The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life & non-life insurance businesses. 1938: Earlier legislation consolidated & amended the Insurance Act with the objective of protecting the interests of the insuring public.

1956: 245 Indian & foreign insurers & provident societies are taken over by the central government & nationalized.

LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India GENERAL INSURANCE COMPANY OF INDIA The general insurance industry was nationalized in 1972. With this, nearly 107 insurers were amalgamated and grouped into four companies- National Insurance Company, New India Assurance Company, Oriental Insurance Company and United India Insurance Company. These were subsidiaries of the General Insurance Company (GIC)

Important milestones in the life insurance business in India: 1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business. 1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses. Important milestones in the general insurance business in India are:

1907: The Indian Mercantile Insurance Ltd. set up- the first company to transact all classes of general insurance business. 1957: General Insurance Council, a wing of the Insurance Association of India, frames a code of conduct for ensuring fair conduct and sound business practices. 1968: The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up.

 1972: The general insurance business in India nationalized through The General Insurance Business (Nationalization) Act, 1972 with effect from 1st January 1973. 107 insurers amalgamated and grouped into four companies- the National Insurance Company Limited, the New India Assurance Company Limited, the Oriental Insurance Company Ltd. and the United India Insurance Company Ltd. GIC incorporated as a company.

LIC OF INDIA
Life Insurance Corporation of India (LIC) was formed in September 1956 by an Act of Parliament, LIC Act 1956 with a contribution of Rs. 50 million. The then Finance Minister Mr. C. D. Deshmukh while piloting the bill for nationalization outlined the objectives of LIC thus: To conduct the business with utmost economy with the spirit of trusteeship; to charge premium no higher than warranted by strict actuarial considerations; to invest the funds for obtaining maximum yield for the policy holders consistent with safety of capital; to render prompt and efficient service to policy holders thereby making Insurance widely popular.

Few Plans Of LIC

CHILD FUTURE INSURANCE POLICY BY LIC JEEVAN ANAND LIFE INSURANCE POLICY BY LIC

CURRENT SCENARIO Growing at the rate of 15-20% annually 75% population has no insurance Adds 7% to countrys GDP

LIC market share come down to 75% and private insurers increased over 24% Annuity or pension product have over 33% of market

 Unity linked insurance scheme have monopoly

GENERAL INSURANCE CORPORATION (GIC)

Prior nationalization there were 68 Indian insurers (including LIC) and 45 non-Indian insurers did the business. In Nov. 1972, the general insurance business was nationalized by the General Insurance Business (Nationalized), Act 1972 (GIBNA) and vested in the hand of the GIC and its four subsidiaries viz. 1. National Insurance Co. Ltd., 2. New India Assurance Co. Ltd., 3. Oriental Fire and General Insurance Co. Ltd., and 4. United India Insurance Co. Ltd. GIC was incorporated as a holding company in 1992. General Insurance Business is completely owned by the government. The paid up capital of GIC was fully subscribed by the Government and of four subsidiaries. It was controlled by a single organization with four subsidiaries GIC Continued . TYPES AND STRUCTURE OF BUSINESS
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General insurance policies are not financial claims. There is no guarantee of renewal of policy on the same terms or on any terms. The contract is short-term contract. The general insurance companies do not collect savings. Policy claims are unpredictable. Assets are held in relatively liquid form.

GIC meets the requirements of industrial, manufacturing, commercial, services, household, and agricultural sectors through wide rage of 115 products, granting insurance coverage. GIC has been promoting insurance cover in the field of livestock, poultry, sericulture, horticulture, pump sets, and personal accidents.

IRDA
The Insurance Regulatory and Development Authority (IRDA) is a national agency of the Government of India, based in Hyderabad. It was formed by an act of Indian Parliament known as IRDA Act 1999, which was amended in 2002 to incorporate some emerging requirements. Mission of IRDA as stated in the act is "to protect the interests of the policyholders, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto." In 2010, the Government of India ruled that the Unit Linked Insurance Plans (ULIPs) will be governed by IRDA, and not the market regulator Securities and Exchange Board of India.
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Health care in the United States

Health care in the United States is provided by many separate legal entities. Health care facilities are largely owned and operated by the private sector. Health insurance is now primarily provided by the government in the public sector, with 60-65% of healthcare provision and spending coming from programs such as Medicare, Medicaid, TRICARE, the Children's Health Insurance Program, and the Veterans Health Administration.

 The U.S. Census Bureau reported that a record 50.7 million residents (which includes 9.9 million non-citizens) or 16.7% of the population were uninsured in 2009. More money per person is spent on health care in the USA than in any other nation in the world On March 23, 2010, the Patient Protection and Affordable Care Act (PPACA) became law, providing for major changes in health insurance.

Year 2005 2006 2007 2008 2009

Total GDP $12,638.4 13,398.9 14,061.8 14,369.1 14,119.0

GDP $337.5 367.4 392.4 350.9 424.5

Percent of total GDP 2.7% 2.7 2.8 2.4 3.0

CONCLUSION Growth of Indian economy is an investment driven growth Opens a wide variety of investment avenues Companies help to gain knowledge of products and services Achieve a better standard for near future life

TWO PLANS OF LIC

CHILD FUTURE INSURANCE POLICY BY LIC (Table no. 185, with profits)
Features of plan Life Insurance Corporation has introduced a new with profit child future plan (Table No.185) w. e. f. 8th February 2007. this plan meets the increasing educational and other need of growing children providing the risk cover on the child's life during the policy term as will as extended term (i.e. 7 years after the expiry of policy term). Child's father or mother of female category I and II having his/ her own income can be the proposer In the absence of parents legal guarding can be the proposer. If the consent of parent is obtained, the grand parents can propose even if the parents are alive. Premium are payable regularly during the policy term with yearly, half- yearly or quareterly. Premium may be paid either for 6 years or up to 5 years before the policy term. No premium are payable during the extended term (i.e. 7 years after the expiry date). Risk commencement: risk under this plan will commencement either after 2 years from the date of commencement of the policy or from the policy anniversary coinciding with or immediately following the completion of 5 years of age life assured, whichever is later, (if the life assured age at entry is less then or equal to 10 years). In case the age at entry is more then 10 years but less then 12 years, the risk shall commence from the policy anniversary coinciding with or next following 12th birthday of the life assured, in the life assured age 12 years or more, the risk will commence immediately. Plan parameters Age at entry: min. 0 yrs. (LBD) max. 12 yrs (LBD) Maturity age: min. 23 yrs. (LBD) max. 27 yrs (LBD) Sum assured: min. 1lac max.1cror S.A in multiples of: Rs.5000 PPT: 6 yrs. & policy term- 5 yrs Mode of payment: YLY/ HLY/QLY Policy loan: No Housing loan: No Assignment: No by the proposer, but assignable after the policy has vested in the life assured Revival: yes Underwriting conditions

Form no: 340/360 Age proof: * Actual sum assured: basic SA Dating back: allowed @ 8% p.a. *Age proof: aged 5 yrs. & above- school certificate aged less then 5 yrs- certificate from municipal/ local village panchayat records Auto cover: after payment of two full year's premium, if any subsequent premium be not duly paid, full death cover shall continue for a two years from the due date of the first unpaid premium (FUP). PWB, if any shall remain in force during the auto cover period. Benefit Death benefit: on death after the date of risk commencement. 1. if death occurs within the period from the date of risk commencement to 5 years before expiry date of policy term: sum assured + vested simple reversionary bonuses + F.A.B, if any, is payable. I 2. if death occurs within 5 years before the expiry the date of policy term: sum assured + F.A.B if any, is payable. 3. on death during the extended term: sum assured is payable. 4. if death occurs before the date of risk commencement: all the premium paid (excluding premium for extra and PWB, if any) + interest @ 3% p.a. compounding yearly shall be payable. 5. if death occurs during the auto cover period: death benefits after deducting unpaid premium with interest as also the premium falling due before the next bonus, if any. Survival benefit: on life assured survival till the end of the specified durations an amount is payable as survival benefit as under: 5 yrs before the expiry date of policy term: 25% of the SA 4 yrs before the expiry date of policy term: 10% of the SA 3 yrs before the expiry date of policy term: 10% of the SA 2 yrs before the expiry date of policy term: 10% of the SA 1 yrs before the expiry date of policy term: 10% of the SA on the expiry date of policy term: 50% of the S.A + Vested simple reversionary bonus + final additional bonus (FAB, if any. Premium waiver benefit: under this plan (PWB) is available on payment of an additional premium during the premium payable term or till death of the proposer, whichever occurs earlier.

i) after the date of death of the proposer the premium falling due shall be waived. ii) during the auto cover period the premium waiver benefit shall remain in force.

iii) the premium waiver benefit as stated in (i) shall be granted on the basic of proposer age personal health declaration and other requirements. In case any given information is found to be untrue and incorrect, all clime to the benefit shall cease. iv) in the event of the proposer by his own hands whether sane or insane within one yearly from the issuance of FPR the PWB described in (i) and (ii) shall not operate.

Cooling off period: in case the policyholder is not satisfied with the 'terms and condition' of the policy, he/she may return the policy to the corporation within 15 days from date of the policy.

JEEVAN ANAND LIFE INSURANCE POLICY BY LIC (table: 149)

Features of plan Jeevan Anand plan is the combination of whole life policy and endowment insurance policy the plan provides the per-decided S.A. and bonus at the end of the stipulated PPT, but the risk cover on the life continues till death. This policy is suitable for the people of all ages and social groups. The policyholder will be benefited by giving protection to their families from a financial setback that may occur owing to their demise The amount assured if not paid by reason of his death earlier will be payable at the end of the endowment term where it can be invested in an annuity provision for the rest of the policyholder's of this plan is moderate premiums, high liquidity, saving oriented. Premiums are usually payable for the selected term of years or until death if it occurs during the term period. Accident benefit is available during engaged in hazardous occupations attracting occupational extra. Plan parameters Age at entry: Min.18 yrs Max. 65 yrs. PPT maturity age: Max. 75 yrs Sum assured: Min. 1,00,000 Max. No. Limit S.A. in multiples: 5000 Term: Min.5 yrs Max. 57 yrs Mode of payment: YLY/HLY/QLY/SSS/MLY Accident benefit: Incl. in. T.P. Policy loan: yes Housing loan: yes Assignment: yes Revival: yes Surrender of policy: yes Term rider: N.A. CIR: yes UNDERWRITING CNDITION

Form no: 300 (rev.) Age proof: std/ NSAP- 1,2,3 Female lives category: I/II/III Non-medical (Gen): Allowed Non-medical (Prof): Allowed Non-medical (special): Allowed Actual sum assured: Basic SA Risk coverage: SA+ Bonus Dating back @ 8%: Allowed BENEFITS Maturity benefit: S.A. +Bonus + FAB, if any is at the end of the premium paying term (PPT) Death benefit: If death occurs during the premium paying term S.A. + Bonus +FAB, if any is payable and premium payment is ceased. An extra amount equal to the S.A. is payable if death occurs after the premium paying term. No bonus is paid on death after the premium paying term. Accident benefit: The double accident benefit is available during the premium paying term and thereafter up to age 70. the premium for this has been built into the tabular premium rate. Example: Mr. Sharad Pawar 25 years, opts for jeevan anand policy for 20 years with S.A. Rs.1 Lac. He has to pay annual premium of Rs.5490/- on maturity, Mr. Sharad Pawar will get Rs.1,98,000/- (S.A. + Bonus as per 2005 rates i.e. Rs.43 per thousand per annum which become 43 x 100 x 20 = 86,000/-). Even after the premium paying term is over, risk cover continues till the death of Mr. Sharad Pawar. But if, Mr. Sharad Pawar dies at the age of 65 years his nominee will get an additional amount equal to the S.A. i. e. Rs.1 Lac in cash, Mr. Sharad Pawar dies during premium paying term his nominee will receive Rs. 1Lac + accumulated Bonus.