Importance of life and General Insurance

Insurance Services
Insurance is system by which the losses suffered by a few are spread over many, exposed to similar risks. Insurance is a protection against financial loss arising on the happening of an unexpected event. Insurance policy helps in not only mitigating risks but also provides a financial cushion against adverse financial burdens suffered

The functions of Insurance can be bifurcated into Primary Functions Secondary Functions Other Functions

PRIMARY FUNCTION
Provide Protection: The primary function of insurance is to provide protection against future risk, accidents and uncertainty. Insurance cannot check the happening of the risk, but can certainly provide for the losses of risk. Insurance is actually a protection against economic loss, by sharing the risk with others. Collective Bearing of Risk:Insurance is a device to share the financial loss of few among many others. Insurance is a mean by which few losses are shared among larger number of people. All the insured contribute the premiums towards a fund and out of which the persons exposed to a particular risk is paid. Assessment of Risk:Insurance determines the probable volume of risk by evaluating various factors that give rise to risk. Risk is the basis for determining the premium rate also Provide Certainty:Insurance is a device, which helps to change from uncertainty to certainty. Insurance is device whereby the uncertain risks may be made more certain.

Secondary function
Prevention of Losses: Insurance cautions individuals and businessmen to adopt suitable device to prevent unfortunate consequences of risk by observing safety instructions; installation of automatic sparkler or alarm systems, etc. Prevention of losses cause lesser payment to the assured by the insurer and this will encourage for more savings by way of premium. Reduced rate of premiums stimulate for more business and better protection to the insured. Small Capital to cover Larger Risks: Insurance relieves the businessmen from security investments, by paying small amount of premium against larger risks and uncertainty. Contributes towards the Development of Larger Industries: Insurance provides development opportunity to those larger industries having more risks in their setting up. Even the financial institutions may be prepared to give credit to sick industrial units which have insured their assets including plant and machinery.

Other Functions

Means of Savings and Investment: Insurance serves as savings and investment, insurance is a compulsory way of savings and it restricts the unnecessary expenses by the insured's For the purpose of availing income-tax exemptions also, people invest in insurance. Source of Earning Foreign Exchange: Insurance is an international business. The country can earn foreign exchange by way of issue of marine insurance policies and various other ways. Risk Free Trade: Insurance promotes exports insurance, which makes the foreign trade risk free with the help of different types of policies under marine insurance cover.

Life Insurance, India

Life insurance is not for the person who passes away, it for those who survive. It is the responsibility of every bread earner to guard against the events that could affect the family in the unfortunate circumstance of his / her demise. Thus, having a life insurance policy is very vital. Before going for a life insurance policy it is imperative that you know about various types of life insurance policies. Major among them are: Endowment Policy Whole Life Policy Term Life Policy Money-back Policy Joint Life Policy Group Insurance Policy Loan Cover Term Assurance Policy Pension Plan or Annuities Unit Linked Insurance Plan

Whole Life Policy

As the name suggests, a Whole Life Policy is an insurance cover against death, irrespective of when it happens. Under this plan, the policyholder pays regular premiums until his death, following which the money is handed over to his family. This policy, however, fails to address the additional needs of the insured during his post-retirement years. It doesn't take into account a person's increasing needs either. While the insured buys the policy at a young age, his requirements increase over time. By the time he dies, the value of the sum assured is too low to meet his family's needs. As a result of these drawbacks, insurance firms now offer either a modified Whole Life Policy or combine in with another type of policy

Endowment policies
Combining risk cover with financial savings, endowment policies is the most popular policies in the world of life insurance. In an Endowment Policy, the sum assured is payable even if the insured survives the policy term. If the insured dies during the tenure of the policy, the insurance firm has to pay the sum assured just as any other pure risk cover. A pure endowment policy is also a form of financial saving, whereby if the person covered remains alive beyond the tenure of the policy, he gets back the sum assured with some other investment benefits. In addition to the basic policy, insurers offer various benefits such as double endowment and marriage/ education endowment plans. The cost of such a policy is slightly higher but worth its value.

Term insurance policy

A term insurance policy is a pure risk cover for a specified period of time. What this means is that the sum assured is payable only if the policyholder dies within the policy term. For instance, if a person buys Rs 2 lakh policy for 15-years, his family is entitled to the money if he dies within that 15-year period. What if he survives the 15-year period? Well, then he is not entitled to any payment; the insurance company keeps the entire premium paid during the 15-year period. So, there is no element of savings or investment in such a policy. It is a 100 per cent risk cover. It simply means that a person pays a certain premium to protect his family against his sudden death. He forfeits the amount if he outlives the period of the policy. This explains why the Term Insurance Policy comes at the lowest cost.

Money back policies

These policies are structured to provide sums required as anticipated expenses (marriage, education, etc) over a stipulated period of time. With inflation becoming a big issue, companies have realized that sometimes the money value of the policy is eroded. That is why with-profit policies are also being introduced to offset some of the losses incurred on account of inflation. A portion of the sum assured is payable at regular intervals. On survival the remainder of the sum assured is payable. In case of death, the full sum assured is payable to the insured. The premium is payable for a particular period of time.

Joint Life Insurance policies

Joint life insurance policies are policies that enables two individuals to be protected, but the full value of the policy is paid only once at the time of either insurer's death. This is also referred to as the joint first to die clause. Spouses, children, or even a business partner will benefit from a survivorship life insurance policy. Spouses is the directly benefit from it. Should one of the couple die, the surviving spouse will get the proceedings of the policy. The amount should be enough for them to live on, until the whole family gathered had gathered their bearings after the loss

Joint life insurance policies do not only help families. It can be beneficial to business partners as well. Insurance joint life policy in a business setup has two types, the single life annuity and the last to die annuity. The first one corresponds to the clause that the value of the policy is payable until the first partner dies. The second one, on the other hand, says that the policy is in force until the last partner dies.

Group Insurance Policy

Group insurance offers life insurance protection under group policies to various groups such as employers-employees, professionals, co-operatives, weaker sections of society, etc. It also provides insurance coverage for people in certain approved occupations at the lowest possible premium cost. Group insurance plans have low premiums. Such plans are particularly beneficial to those for whom other regular policies are a costlier proposition. Group insurance plans extend cover to large segments of the population including those who cannot afford individual insurance. A number of group insurance schemes have been designed for various groups. These include employer-employee groups, associations of professionals (such as doctors, lawyers, chartered accountants etc.), members of cooperative banks, welfare funds, credit societies and weaker sections of society.

 Many employees see group insurance coverage as a major perk for faithful company service. The premium payments are usually deducted automatically from the pay itself. Some companies will absorb the entire cost of the policy as a benefit for employees. The main advantages of the group insurance schemes are low premium and simple insurability conditions. Premiums are based upon age combination of members, occupation and working conditions of the group. major feature of group insurance is that the premium cost on an individual basis may not be risk-based. Instead it is the same amount for all the insured persons in the group. Another distinctive feature is that under group insurance a person will normally remain covered as long as he or she continues to work for a certain employer and pays their insurance premiums. This is different from the individual insurance policy where the insurance company often has the right to reject the renewal of a person's policy, depending on his risk profile.

Loan Cover Term Assurance Policy

Loan cover term assurance policy is an insurance policy, which covers a home loan. Such a policy covers the individual's home loan amount in case of an eventuality. The cover on such a policy keeps reducing with the passage of time as individuals keep paying their EMIs (equated monthly instalments) regularly, which reduces the loan amount. This plan provides a lumpsum in case of death of the life assured during the term of the plan. The lumpsum will be a decreasing percentage of the initial sum assured as per the policy schedule. Since this is a nonparticipating (without profits) pure risk cover plan, no benefits are payable on survival to the end of the term of the policy The premium of loan cover term assurance policy is structured in a manner to cover the outstanding amount of the loan. Therefore, the size of the insurance cover declines as the loan's term draws to a close. Therefore, loan cover term assurance policy has a lower premium vis--vis a term assurance policy that does not provide investment returns.

Annuities And Pension

In an annuity, the insurer agrees to pay the insured a stipulated sum of money periodically. The purpose of an annuity is to protect against risk as well as provide money in the form of pension at regular intervals. Over the years, insurers have added various features to basic insurance policies in order to address specific needs of a cross section of people.

General Insurance, India

General Insurance provides much-needed protection against unforeseen events such as accidents, illness, fire, burglary et al. Unlike Life Insurance, General Insurance is not meant to offer returns but is a protection against contingencies. Almost everything that has a financial value in life and has a probability of getting lost, stolen or damaged, can be covered through General Insurance policy. Property (both movable and immovable), vehicle, cash, household goods, health, dishonesty and also one's liability towards others can be covered under general insurance policy. Under certain Acts of Parliament, some types of insurance like Motor Insurance and Public Liability Insurance have been made compulsory. Major insurance policies that are covered under General Insurance are: Home Insurance Health Insurance Motor Insurance Travel Insurance

General Insurance
Fire Marine Motor

Fire Insurance
A fire insurance is a contract under which the insurer in return for a consideration (premium) agrees to indemnify the insured for the financial loss which the latter may suffer due to destruction of or damage to property or goods, caused by fire, during a specified period. The contract specifies the maximum amount , agreed to by the parties at the time of the contract, which the insured can claim in case of loss. This amount is not , however , the measure of the loss. The loss can be ascertained only after the fire has occurred. The insurer is liable to make good the actual amount of loss not exceeding the maximum amount fixed under the policy

A fire insurance policy cannot be assigned without the permission of the insurer because the insured must have insurable interest in the property at the time of contract as well as at the time of loss. The insurable interest in goods may arise out on account of (i) ownership, (ii) possession, or (iii) contract. A person with a limited interest in a property or goods may insure them to cover not only his own interest but also the interest of others in them.

Marine Insurance
Marine Cargo Marine Hull

Marine Cargo
Marine Insurance is the oldest form of insurance in the world. Though the name indicates that the policy covers the transit of goods only by waterways, it is not so. It covers transportation of goods by rail, road, air as well as couriers. During this entire process of transportation, storage, loading and unloading, the goods are exposed to a large number of perils. Goods are often lost or damaged due to the operation of these hazards and there is a financial loss to the exporter/ importer. It is this loss that is taken care of by marine cargo insurance or what is more popularly known as transit insurance. This policy covers all goods while in transit depending upon the needs of the insured

Marine Hull
Marine Hull insurance covers nearly everything that floats and moves, starting with rowing boat to huge ocean going tankers. It covers loss or damage to hull and machinery. The hull is the structure of the vessel. Machinery is the equipment that generates the power to move the vessel and control the lighting and temperature system such as boiler, engine, cooler and electricity generator. Just as a motor insurance policy is taken to cover the vehicles on the road, similarly a marine hull policy is taken to cover the vessels.