Now Let’s revise the portion

Insurance

Activity List 5 Insurance companies

Time : 2 mins

What is Insurance?

Insurance is a legal contract that transfers risk from a policyholder to an insurance company.

Principles of Insurance Utmost good faith: A contract of

insurance is a contract based on utmost good faith. Both the insurer and the insured should display good faith towards each other in regard to the contract.

Indemnity: The insurer undertakes to compensate the insured for the loss caused to him/her due to damage or destruction of property insured.

Proximate cause: According to this principle, an insurance policy is designed to provide compensation only for such losses as are caused by the policy.

Subrogation: It refers to the right of the insurer to stand in the place of the insured, after settlement of a claim, as far as the right of insured in respect of recovery from an alternative source is involved.

Contribution: As per this principle it is the right of an insurer who paid claim under an insurance, to call upon other liable insurers to contribute for the loss of payment.

Mitigation: This principle states that it is the duty of the insured to take reasonable steps to minimize the loss or damage to the insured property.

Types of Insurance Life Insurance Life Insurance can be termed as an

agreement between the policy owner and the insurer, where the insurer for a consideration agrees to pay a sum of money upon the occurrence of the insured individual’s or individual’s death or other event, such as terminal illness, critical illness or maturity of the policy.

Types of Life Insurance Whole Life policy: The amount payable to the

insured will not be paid before the death of the assured. The sum then becomes payable only to the beneficiaries ir their of the deceased.

Endowment life assurance policy: The insurer undertakes to pay a specified sum when the insured attains a particular age or on his death which ever is earlier. The sum is payable to his legal heir/s or nominee named there in case of death of the assured.

Joint life policy: this policy is taken by two more persons. The premium is paid jointly or by either of them in installment or lump sum. The assured sum or policy money is payable upon the death of any one person to the other survivor or survivors.

Annuity policy: under this policy, the assured sum or policy money is payable after the assured attends a certain age in monthly, quarterly, half yearly or annual installments.

Children’s endowment policy: This policy is taken by a person for his/her children to meet the expenses of their education or marriage.

The agreement states that a certain sum will be paid by the insurer when the children attain a particular age.

Fire InsuranceFire Insurance is a contract whereby the insure, in

consideration of the premium paid, undertakes to make goods any loss or damage caused by fire during a specified in the policy. Normally, the fire insurance policy is for a period of one year after which it is to be renewed from time to time. The premium may be paid either in lumps sum or installments. A claim for loss by fire must satisfy the two following conditions:

1. There must be actual loss; and2. Fire must be accidental and non intentional.

Marine InsuranceMarine Insurance

Meaning of marine Insurance Marine insurance is a contract

whereby the insurer undertakes to indemnify the assured, in manner and to the extent thereby by agreed, against marine losses ,i.e. the losses incident to marine adventure.