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Insurance

Insurance is the equitable transfer of the risk of a loss, from one entity to another in exchange
for payment. It is a form of risk management primarily used to hedge against the risk of a
contingent, uncertain loss. An insurer, or insurance carrier, is a company selling the insurance;
the insured, or policyholder, is the person or entity buying the insurance policy. The amount
of money to be charged for a certain amount of insurance coverage is called the premium. Risk
management, the practice of appraising and controlling risk, has evolved as a discrete field of
study and practice.
The transaction involves the insured assuming a guaranteed and known relatively small loss in
the form of payment to the insurer in exchange for the insurer's promise to compensate
(indemnify) the insured in the case of a financial (personal) loss. The insured receives a contract,
called the insurance policy, which details the conditions and circumstances under which the
insured will be financially compensated.
Types of Insurance
Insurance business is basically of two types Life and General. These terms are defined under
the Insurance Act,, 1938 as follows.
i)

Life Insurance business means the business of effective contracts of insurance


upon human life, including any contract whereby the payment of money is assured on
death or the happening of any contingency dependent on human life and shall be
deemed to include the granting of disability and indemnity benefit; annuities upon
human life; and superannuation allowance and annuities.

ii)

General insurance business means fire, marine or miscellaneous insurance


business, whether carried on singly or in combination with one or more of them.

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 is typically defined as any insurance that is not determined to be life insurance. It is
called property and casualty insurance in the U.S. and Canada and Non-Life Insurance in
Continental Europe.
In the UK, insurance is broadly divided into three areas: personal lines, commercial
lines and London market.
The London market insures large commercial risks such as supermarkets, football players and
other very specific risks. It consists of a number of insurers, reinsurers, P&I Clubs, brokers and
other companies that are typically physically located in the City of London. TheLloyd's of
London is a big participant in this market.[1] The London Market also participates in personal
lines and commercial lines, domestic and foreign, through reinsurance.
Commercial lines products are usually designed for relatively small legal entities. These would
include workers' comp (employers liability), public liability, product liability, commercial fleet and
other general insurance products sold in a relatively standard fashion to many organisations.
There are many companies that supply comprehensive commercial insurance packages for a
wide range of different industries, including shops, restaurants and hotels.
Personal lines products are designed to be sold in large quantities. This would
include autos (private car), homeowners (household), pet insurance, creditor insurance and
others.
ACORD [2] which is the insurance industry global standards organisation. ACORD has standards
for personal and commercial lines and has been working with the Australian General Insurers to
develop those XML standards, standard applications for insurance, and certificates of currency.

Life insurance
Life insurance (or commonly life assurance, especially in the Commonwealth) is
a contract between an insured (insurance policy holder) and aninsurer or assurer,
where the insurer promises to pay a designated beneficiary a sum of money (the
"benefits") in exchange for a premium, upon the death of the insured person.
Depending on the contract, other events such as terminal illness or critical
illness can also trigger payment. The policy holder typically pays a premium, either
regularly or as one lump sum. Other expenses (such as funeral expenses) can also
be included in the benefits.
Life policies are legal contracts and the terms of the contract describe the
limitations of the insured events. Specific exclusions are often written into the
contract to limit the liability of the insurer; common examples are claims relating
to suicide, fraud, war, riot, and civil commotion.
Life-based contracts tend to fall into two major categories:
Protection policies designed to provide a benefit, typically
a lump sum payment, in the event of specified event. A
common form of a protection policy design is term
insurance.
Investment policies where the main objective is to facilitate
the growth of capital by regular or single premiums.
Common forms (in the U.S.) are whole life, universal life,
and variable life policies.