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Introduction To Insurance Role And Importance Of Insurance Insurance Contract Fundamental Principles Of Insurance Bancassurance Difference Between Life Insurance And General Insurance Bibliography

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Introduction To Insurance
Life and property is subject to risk and uncertainties. Certain risks can be minimised- through systematic planning and timely action. For instance, a machine accident can be averted by its timely maintenance. However, there accidental. They take place unexpectedly. In such instances, businessmen and others suffer huge loss to their assets and property. It is to be noted that there are two categories of risks. Insurable Risks and Non- Insurable Risks. The insurable risks includes loss due to fire, theft, flood, earthquake, civil riots and other risks. The non- insurable risks include loss due to changes in fashions, and technology, loss due to competition, bad debts, and so on.

Role And Importance Of Insurance
Financial Support To Family Of Deceased
The life insurance provides financial assistance on the death of the insured person.

Medical Support
The insurance also provides medical support in the case of mediclaim insurance policies. The insured also gets a lumpsum amount in the case of accident resulting in permanent disability.

Recovery Of Loss
The insured can recover or claim the lost property and goods due to the happening of an uncertain event.

Means Of Savings
Life insurance is means of saving. The assured can save the money under salary savings scheme by paying a regular premium.

Provision For Old Age
The endowment policies provides a provision for old age, as the insured can get a lumpsum on the expiry of a certain period.

Facilitates Economic Development
The insurance companies invests money which is collected by the way of premiums. They purchase share and debentures of the companies. They also provide loans to industries.

Source Of Employment
Insurance companies provide a number of employment facilities directly in the insurance sector. They are also responsible indirectly for the number of jobs in the industrial and other sector.

deductible expense. a contract of insurance must have the following legally needed features. Essentials Just like all other contracts. for entering into an insurance contract. 3. 2. Loans To Policy Holder The policy holders can get housing loans in the case of life insurance policies. etc. The policy holders can claim insurance premium as tax. The contract of insurance must satisfy all elements of a simple contract. Competent person is one who is above the age of 18 years and is of sound mind. Insurance Contract Definition “An insurance contract is an agreement between the insurer and the insured under which the insurer undertakes to compensate the insured for the loss arising from the risk insured against at a consideration called premium”.Tax Relief Premiums paid are eligible for tax exemption. The agreement must be in writing by competent presons. ‘Premium’ is a consideration that must be paid. 3 . such as damage to goods due to fire. which are as follows : 1. theft. There must be an offer or proposal on one side and its acceptance on another side. Less Tension To Businessman Businessman can conduct their business operations with less tension as they are protected against losses due to the happening of uncertain events.

The parties should not practice fraud. 7. No one should force anyone to enter into a contract. The object of the contract should be lawful. The event must involve element of uncertainty. misrepresentation and coercion to enter into a contract. no one should hide anything related to contract of insurance. Following are the principles of contract of insurance: 1. Complete. 8. Both the parties must provide all the information related to contract to each other. The risk should not be very small. 5. The subject matter should be at risk. 6. Parties to the contract must enter into contract with a free consent. Fundamentals Principles Of Insurance Insurance is a contract between insurer and insured. it may take place or it may not take place. if these elements are not present in an insurance contract.4. 4 b) c) d) . 9. Utmost good faith means the insured must provide to the insurer complete.Principle Of Utmost Good Faith a) “utmost good faith” is one of the basic principle of insurance. correct and clear information about the terms and conditions of the contract. then the contract becomes invalid. The contract of insurance must be made in full good faith by both the parties. Principles of insurance are the elements which are needed in an insurance contract to make it valid. Uncertainty means the event must not be sure to happen. it should not be unlawful. The risk must be capable enough to be calculated on the basis of past records so that the premium can be fixed. correct and clear information about the subject matter of insurance and the insurer must also provide to the insured.

Hence. clear and correct information of the subject matter of the insurance at the time of taking the policy. way of payment. a businessman does not provide true information about the previous occurence of fire in his factory and after taking the policy there is an another fire.g. If the insurer does not provide complete and correct facts about the amount of premium. For e. the insurance company can refuse to pay the compensation. the contact of insurance becomes invalid. marine life insurance. In all case of insurance.: 5 b) c) .existence of the subject matter of insurance. If the insured does not provide to the insurer complete.: At the time of taking fire insurance policy. insurer must suffer some kind of financial loss due to damage or non. This principle is applicable to all types of insurance such as fire. amount of payment and other details. then legally insurer can avoid his responsibility to pay compensation.e) Any fact relating to the contract should not be hidden by both the parties. For e. correct information must be given to the company. etc. if it comes to know about the previous occurance of fire which was hidden by the trader at the time of taking the policy. A person is said to have such interest when the physical existence of the object of insurance gives him gains but if the object does not exist then he shall suffer direct financial loss. A contract of insurance which is not based on the principle of utmost good faith is not a valid contract. Insurance is taken to protect against any unexpected loss and not for profit. f) g) h) i) j) k) 2.g. a) Principle Of Insurable Interest Principle of Insurable Interest means the insured must have the subject interest in the matter of insurance.

d) Insurable interest does not mean the person must be emotionally attached to a thing but he must be financially attached to the object. g) • • When insurable interest must be present: In life insurable interest is related to the life insured. B’s” house then “A” will not suffer from any financial loss. e) The owner of the property has an insurable interest as long as he owns it. he does not have insurable interest in it because if the property gets destroyed he will not suffer any financial loss. the insurable interest must exist at the time of taking a life insurance policy. because if anything happens to ‘”Mr. A person ‘Mr. 6 h) . the banker may suffer loss if the person does not pay back the loan. he has an insurable interest in it because if anything happens to the house. if he sells the property. in all cases. f) For e.g. it is not necessary to own it. the insurable interest must be present at the time of taking the policy and also at the time of occurance of loss. B’ and as such cannot insure it. The principle of insurable interest is applicable to all contracts of insurance. A’ who has no insurable interest in the house belonging to ‘Mr. However.• • Every person has insurable interest in his own life so he has legal right to insure it. In fire insurance and general insurance. he cannot claim compensaton as he has already sold it. some other person who has bought it will suffer the loss. he must suffer loss if the object gets destroyed. to have an insurable interest in the property.: A banker gives loan on the security of a person’s house. So.

he might purposely bring out the event insured. c) d) • • e) f) The object of every contract of insurance is to place the insured in same financial position. insurance is for protection not for profit making. then Mr. insures his house worth Rs. the insurer agrees to compensate the insured for the actual loss suffered by him. According to the principle.i) A contract of insurance without insurable interest is legally invalid. 1 lakh and if only a part of it is damaged worth Rs. To control all the above situations.000 as his loss is only worth that amount. The compensation paid in insurance cannot be more or less than actual loss. 20. if the insured will be allowed to make profit.20. For e. It would be against public policy to allow an insured to make profit out of the happening of a loss or damages. 5 lakhs for Rs.: If Mr.000.Principle Of Indemnity a) b) Indemnity means “ a guarantee to pay for. the principle of indemnity is has been made. The actual amount of compensation is limited to the amount assured or the actual loss suffered whichever is less. Hence. the owner of the motorcycle can claim only Rs. 1 lakh. then. to get money and earn extra profit. marine and general insurance. then. after the loss as if the loss had not taken place at all. the loss occurred ”. This principle is applicable to fire. A.g. 3. we can say what was the value of the goods. 7 . Motorcycle is insured for Rs. While when the goods are destroyed. A can claim only for 1 lakh. and if the entire house is destroyed by fire. This is because. It is not applicable to life insurance contracts because the loss of life cannot be measured in terms of money. as nearly as possible.

he can claim proportionate contribution of claim from all other insurers. .g) A contract without indemnity. All the policies must be in force at the time of the loss. iii. Under this principle. 4. The right on contribution arises when: A person takes more than one policy for the same subject matter.g. Proportionate contribution means all the insurers have to contribute money in the proportionate to of the amount of policy insured with them. b) For e. the insured can claim the compensation form any one or from all insurers. expect life insurance contract.: If a fire occurs. any one insurer pays the full amount of loss covered by the policy.Principle Of Loss Minimization a) According to this principle. ii. He must act as if he is not insured and take full care to reduce the loss. 5. when the event occurs. In case. the insured must take proper steps to stop it from spreading and save the property as far as possible. And one of the insurers has paid to the insured more than his share of loss. the insured must take all necessary steps to minimise the loss. This principle is applicable to all policies expect life insurance policies. This policies covers the same risk which caused the loss. c) d) i. 8 . after paying it. iv. is an invalid contract of insurance.Principle Of Contribution a) b) This principle is applicable when the insured has taken out more than one policy on same subject matter.

and marine policies. but he is not supposed to do so at the risk of his life. The insurance company keeps the letter safely as proof and in case it becomes aware that the insured has cheated the company. after the insured is given compensation for the loss suffered by him due to damage of property insured.c) If an insured does not try to minimize the loss. When the insurance company pays a part of compensation or when the policy is not taken for the full value of the property. The application of the principle of subrogation is based on the principle of indemnity. 6. Once. then the insurer can avoid the payment of loss by saying that the loss occurred due to insured’s negligence. d) In short. This is done because. Negligence means the insured pay attention to save the property. it can take legal action against the insured for recovery of the profit made by him. In such cases. the insurer pays the full compensation to the insured for the damage suffered by him. Principle Of Subrogation a) The general meaning of the word subrogation is the replacing of one person for another. then the right of ownership of such property will pass on to the insurer. b) c) d) e) 9 . under this principle. According to this principle. the property has some value even after it is damaged and if that property is left with the insured. he may make profit by getting full compensation from the insurance company and also by selling it. This principle is applicable only to fire. then insurance company cannot claim such rights. This principle prevents (stops) the insured from making profit out of loss suffered by him. in many cases. the insurer gets all the rights to take the damaged property from him. the insured is supposed to minimize the loss on the happening of an event. the insured has to give a letter of subrogation to the insurance company.

If the nearest cause is not insured in the contract. Hence. the insurer steps into the shoes of the insured. there are two causes of damage of ship. For e. Risk Must Attach a) The subject matter should be at a risk of loss.g. The risk of sea-water is insured and the ship is not insured.f) In short. in principle of subrogation. b) 9. the insurer must return the premium. 10 .g.Principle Of Causa Proxima a) b) The term causa proxima means the nearer cause. For e. certain risk. Here. Period Of Insurance a) An insurance contract clearly mentions the term or period of time it covers. If the nearest cause is insured in the contract. Under this principle when the loss has been caused by s series or chain of causes. then the insurance company is not supposed to pay for the damage or loss. the nearest cause must be taken into the account to determine whether the insurer has to compensate the loss or not. 7 . The nearest and direct cause of damage to goods is sea-water. The insurer gets the premium in a contract of insurance for running. only when he has paid the amount of the policy to the insurer.: If a person insures his goods for marine insurance which are kept in godowns then the goods are not a risk of damage by sea dangers. there is no risk for the insurer so he has to pay back the premium to the insured. c) 8. the insurance company will have to pay the compensation.: a) Goods in a ship are destroyed by sea water flowing in the ship through a hole made by rats. If for any person the risk is not run. then the insurance company has to legally pay the compensation. Hence.

Realising the importance of concept of bancassurance the Reserve Bank of India issued guidelines for entry of banks into insurance business in 2000. but the fire takes place after the term of policy ends.: If a person takes fire policy for 1 year and no fire takes place in 1 year. Bancassurance is one of the important ways for creating business for insurance companies and it is one of the income generating activities for universal banks. 11 . If the premium is not paid regularly.g. Other contracts of insurance like fire and marine may be for a particular period or a particular journey. the contract becomes invalid and can be started back after fulfilling certain conditions as given in the contract. c) d) e) Bancassurance Today. The claim is paid only if the insured event occurs and some damage takes place during the period of insurance only. The European countries and the USA have already combined banking with insurance. They are a combination of commercial banking and investment banking. A contract of life insurance is for a minimum period of one year. banks have been more active in insurance business. then the insurer company will not pay his claim as the period of policy has ended. and not after that. They can sell insurance products for a fee and make this a source of earning. according in this banking and insurance services can be given by a Single Organisation.b) Generally. the contract of life insurance is a continuing contract with the condition that the premium is to be paid at regular periods. The European concept of Bancassurance in ‘Alfinanz’ has found acceptance in India also. Universal banks are those banks which offer a wide variety of financial services under one roof. According to which banks can take one of the following: 1) Banks can undertake agency services for insurance companies. The insurer is legally responsible to pay compensation for the loss insured only till the term or period of time of the policy. For e.

the bank earns good profits. Some of the major banks which have entered into alliances with Insurance Companies are 12 . etc. It also helps in development.2) 3) Banks can set-up Joint venture companies for insurance business. The guidelines are made by keeping in view that since insurance involves risk coverage banks should not directly take up insurance business or setup a separate subsidiary. etc. Bancassurance means the sale of insurance. In order to carry out bancassurance business universal banks should have alliance with other insurance companies or the bank should have licence to carry on insurance business on its own. Government of India. Corporation Bank. as a result. Bancassurance gives an opportunity to banks and insurance companies to make good profits. Bancassurance not only helps the customers but it also helps the banks. economies of scale. It offers a scope to banks to enter new markets and slowing down the competitor’s position. Alliance means agreements between banks and insurance companies in which both of them join their resources together to achieve common objectives to gain entry to new markets. through the banks distribution channels. RBI. developing new products and improving the quality of services. a bank needs to fulfill the requirements of IRDA and other regulatory authorities like SEBI. All the above benefits help the bank in achieving its objectives. In short. Today. banks should not independently carry on insurance business. maintaining customer’s for a long period of time. through increased knowledge on insurance products. share the profit. improve competitive positions. Banks can make investments in insurance companies. manufactured by the banks own insurance company. increased use of technology etc. They should only provide agency services or setup joint venture for insurance business. share the risk. have also entered into alliances with insurance companies. etc. Alliance helps universal banks in reducing the costs. It helps the banks in generating greater fee income. Major public banks like SBI. To make an alliance and to sell insurance products. In simple words. private sector universal banks are the major players in this field.

The type of insurance we see today owes it's roots to 17th century England. it can be difficult to think about or plan for such an event. Lloyd's of London. However. And. Illegal almost everywhere else in Europe. The first life insurance company in American soil was founded in the Southern Colony of Charleston. After talking about how they would decide on coming about with the first life insurance company. etc. life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688. LIFE INSURANCE INTRODUCTION Life insurance is most commonly used to protect your family from any financial effects of your and/or your spouse's premature death.1) 2) 3) 4) 5) 6) 7) HDFC Bank ICICI Bank State Bank of India ING VYSYA Corporation Bank CITI Bank Kotak Mahindra Bank. they decided to base it on the well known British model at the time. South Carolina in the year 1735. adequate planning is often put off until it's too late. they decided to give it a try in the United States of America. unfortunately. or as they were known 13 . With the British knowing the basics of life insurance and the things that could help people like the life insurance industry.

the actuarial present value of a payment or series of payments which are random variables is the expected value of the present value of the payments. is a life insurance policy that remains in force for the insured's whole life and requires (in most cases) premiums to be paid every year into the policy. in fact. the entire shipment would not be lost. (c) The premium has to be paid till the maturity of the policy if the assured remains alive. that as a way of spreading the risk.  Whole life policy: (a) Life Insurance. Protecting against risk is what insurance is all about. 14 . (c) In actuarial science. (d) This policy does not give protection to the assured but it gives protection to his family. Risk protection has been a primary goal of humans and institutions throughout history. (b) Under whole life policy premiums have to be paid through out the life time of the assured. or Whole of Life Assurance (in the Commonwealth). was the location where merchants. Over 5000 years ago. Lloyd's Coffee House.The main and important types are as follows:  Endowment policy: (a) An endowment policy is a life insurance contract designed to pay lump sum after a specific term.fifteen or twenty years upto a certain age limit.There are issued to meet different and special needs of the members of the community.then. was so prevalent. in China. (b) Typical maturities are ten. Piracy. (e) This policy is useful to the assured as well as his family members. or equivalently. the present value of their expected values. ship owners and underwriters met to discuss and transact business deals. a number of ships would carry a portion of another ship's cargo so that if one ship was captured.or on a earlier death. insurance was seen as a preventative measure against piracy on the sea. (d) This policy is suitable for those who wish to save money regularly and plan to use it after a specific no of years. TYPES OF LIFE INSURANCE There are various types policies of life insurance.

(d) If the option is used the policy gets converted into endowment policy then the rate of premium increases. But when the surviving spouse or partner in turn goes. then no more payment will be made even if the policy has still not lapsed. (d) This policy is just similar to the endowment policy as regards to payments of premiums. This simply states that if and when one of the policyholder dies then payout is made. Convertible whole life policy: (a) This plan of assurance is designed to meet the needs of those who are initially unable to pay the larger premium required for a Whole Life or Endowment Assurance Policy.whichever is earlier. This is also referred to as the joint first to die clause.insurance coverage for the entire life of insured.If the option is not used the policy continues as a whole life policy with the lower rate of premium. (c) For all people with earned income under Category I and unearned incomes under Category II. but hope to be able to pay for such a policy in the near future.(e) It is the cheapest form of policy.  Limited payment whole life policy: (a) The whole life insurance is the form of permanent insurance policy.  (a) Joint life policy : Joint life insurance policies are policies that enables two individuals to be protected. (c) The assured knows how much amount he will be required to pay no matter how he lives. (e) This policy is suitable for persons who are employed and have the capacity to pay regular premiums. This is the basic level of a joint life insurance policy. (d) Generally partenership firms go in for such policies to provide for the return on capital of the partner who dies.the amount becomes payable only on death of the assured. (b) Policy holders get an option of converting an policy into endowment assurance or limited payment whole life assurance. (b)  With or without profit policy: 15 .but in limited payment policy. but the full value of the policy is paid only once at the time of either insurer's death. basically Standard and sub-Standard lives attracting EMR classes I and I. (b) In case of limited payment whole life policy premiums are payable for a selected number of years or until death if it occurs within this period.It provides just what its name implies .because this policy is issued with lower rate of insurance premiums.as the term is fixed in both cases. (c) The money assured under this policy on two or more lives is payable at the end of a fixed or on the first death of any lives assured.

Guaranteed payouts are also available for a certain number of years. (d) LIFE INSURANCE CORPORATION OF INDIA(LIC) gives good amount of bonus to its policy holders by way of profit. That is. (a)  Annuity policy: (a) Annuities are sometimes described as the opposite of life insurance because annuities can help you protect against the possibility of living too long and outliving your resources. 16 . a proportion of the profits earned during good years is held back to aim to ensure that a reasonable return is paid during years of poor performance. The basic sum assured is the minimum amount of life assurance payable on death. (b) With-profits funds employ the concept of smoothing. for endowment contracts it is also the minimum lump sum payable at maturity. You can also use a deferred annuity to help you accumulate money for future use. (c) These policies allow you to immediately convert a lump sum of money into a guaranteed payout for as long as you live.Conventional with-profits contracts have a basic sum assured to which bonuses are added. (c) In without profit policy the share in the profits is not given but the rate of premium is less as compared to with profit policy. (b) An annuity is a contract under which an insurance company promises to make a series of payments to a person in exchange for a single premium or a series of premiums. (d) This policy is also useful to those who prefer regular income in their old age and people who are not able to control their expenses so that they can limit their expenses.

 Children’s Endowment policy : (a) This type of policy may be taken for the provisions of marriage of children when they achieve a certain age. (c) LIC's Jeevan Sathi offers a single policy for a working couple that not only covers the lives of both the husband and the wife but also gives a lumpsum on maturity. GENERAL INSURANCE INTRODUCTION: Insurance other than ‘Life Insurance’ falls under the category of General Insurance. There are also other covers such as Errors and Omissions insurance for professionals. quarterly. personal insurance such as Accident and Health Insurance. Jeevan sathi policy: (a) This is an Endowment Assurance Plan issued on the lives of husband and wife. whichever is earlier. and liability insurance which covers legal liabilities. (d) In this the insurer pays annuity payments at the end of selected numbers of years. (d) The policy continues even after that due date till the date of maturity. half-yearly. (b) Premiums are payable yearly. (c) IF unfortunately their parents die their studies continues unhampered. It pays the maturity amount on survival of one or both the lives to the end of the policy term. The plan provides financial protection against death of both the lives. 17 . The same amount of money is payable to the survivor or nominee. monthly or through salary deductions as opted by you throughout the term of the policy or till the first death of the lives covered. credit insurance etc.half-yearly or yearly instalments. General Insurance comprises of insurance of property against fire. Annuity means the amount is payable not at once but on monthly.quarterly. burglary etc. (b) It may also be taken to ensure for the education of the children after the death of the assured.

Health insurance covers offered by non-life insurers are mainly hospitalization covers either on reimbursement or cashless basis. They need to cover their liabilities as well. A Marine Cargo policy covers goods in transit including by sea. Sometimes the insurers themselves process reimbursement claims. marine insurance differs from non-marine insurance.there are policies that cover the hull of ships and so on. acquired. marine insurance was seen as an insurance of 'the adventure'.. Products offering Personal Accident cover are benefit policies. most industries or businesses that are financed by banks and other institutions do obtain covers. Traditionally. The different terms refer to the difficulties of proving a loss where there might be no evidence of such a loss. The cashless service is offered through Third Party Administrators who have arrangements with various service providers. earthquake and so on. i. Also organizations or industries that are self-financed should ensure that they are protected by insurance. and any transport or cargo by which property is transferred.Non-life insurance companies have products that cover property against Fire and allied perils. Financiers insist on insurance. theft etc. machinery. with insurers having a stake 18 .e. where the insured is required to prove his loss. or held between the points of origin and final destination. But are they obtaining the right covers? And are they insuring adequately are questions that need to be given some thought. The Third Party Administrators also provide service for reimbursement claims. air and road. There are products that cover property against burglary. So. cargo. hospitals. The non-life companies also offer policies covering machinery against breakdown. terminals. Personal insurance covers include policies for Accident. TYPES OF GENERAL INSURANCE  Marine insurance: (a) (b) Marine Insurance covers the loss or damage of ships. stocks etc. insurance of motor vehicles against damages and theft forms a major chunk of non-life insurance business. flood storm and inundation. Industries also need to protect themselves by obtaining insurance covers to protect their building. In this respect. Health etc. in law. Further.

 Fire insurance: A fire insurance policy involves an insurance company agreeing to pay a certain amount equivalent to the estimated loss caused by fire to the insured. All types of principles are applicable to fire insurance. or fixing and fittings. against hazard and provides you with the financial resources to replace what you have lost. Its primary use is to provide protection against losses incurred as a result of traffic accidents and against liability that could be incurred in an accidents. leaves the scene and is not traced. (a) (b) (c) (d) (e)  Motor vehicle insurance: Vehicle insurance (also known as auto insurance. Marine insurance is a contract under which the insurer agrees to compensate the insured against losses. simply. the MIB will consider a claim for compensation in respect of both property and personal injury damages.caused due to perils(dangers) of sea. or motor insurance) is insurance purchased for cars. car insurance. This scheme applies to the victims of hit and run driver accidents. within the time specified in the contract. All principals of insurance is applicable to the marine insurance. an interest in the financial consequences of the subject-matter's survival. The MIB will under certain circumstances agree to step in and deal with claims 19 (a) (b) (c) . This scheme involves accidents caused by the negligent driving of foreign motorists. Where the driver deemed to be responsible for an accident. Fire Insurance covers your home's structure.(c) (d) and an interest in the vessel and/ or the cargo rather than. so that you can get back to normal as soon as possible. and other vehicles. trucks. Fire insurance originated in Germany in the 16th century. It is contract of insurance under which the insurer agrees to compensate the insured against the lost to the property due to fire.

 Medical insurance: Health insurance. (d) The claim amount depends upon the amount of medical expanses and type of sickness.which causes more and more accidents. ensuring that money is available to pay for the healthcare benefits specified in the insurance agreement. is a form of collectivism by means of which people collectively pool their risk. The benefit is administered by a central organization such as a government agency. (d) In present times life insurance policies also cover accident insurance. The individual insured person's obligations may take several forms. The type and amount of health care costs that will be covered by the health insurance company are specified in advance. a routine finance structure (such as a monthly premium or annual tax) can be developed. (b) By estimating the overall risk of healthcare expenses. (c) The contract can be renewable annually or monthly. (b) The individuals can take accidents insurance policy to protect against risk to life or disability arising directly from accidents. or not-for-profit entity. in this case the risk of incurring medical expenses. The concept of this scheme was introduced to the UK as a result of European Union (EU) legislation. in the member contract or "Evidence of Coverage" booklet. rather than force the injured victim to seek compensation from a potentially uncommunicative foreign insurer. private business. The importance of this insurance increases day by day as more and more people are buying vehicles. (a) 20 .  Personal accident insurance: (a) The accident insurance covers loss due to accidents. (c) The amount of compensation depends on the amount insured with the insurance company.(d) from innocent victims of such accidents. like other forms of insurance.

 Crop insurance: Crop insurance is purchased by agricultural producers. and others to protect themselves against either the loss of their crops due to natural disasters. drought. (c) From fictitious employees. dummy accounts payable. ranchers. and floods. such as hail. or inventory resulting from crime. (d) These frauds can go on for years. (b) Any business employer needs to be concerned with Employee Dishonesty or any business handing cash or securities needs protection from robbery or theft will need Fidelity. computer fraud. Fraud and embezzlement in the workplace is on the rise. Common Fidelity claims allege employee dishonesty. (b) Crop-hail insurance is generally available from private insurers (in countries with private sectors) because hail is a narrow peril that occurs in a limited place and its accumulated losses tend not to overwhelm the capital reserves of private insurers. non-existent suppliers to outright theft of money. (e) This kind of insurance will definitely help the farmers as they have always been victim of losses due to natural calamities. (c) The National Agricultural Insurance (NAIS) for crops has been specially introduced since 2000 to provide insurance cover to small and marginal farmers. (a)  Fidelity guarantee insurance: (a) Fidelity insurance protects organizations from loss of money. 21 . embezzlement. securities and property. and when discovered the ultimate impact can be enormous. occurring in even the best work environments. forgery. safe burglary.cyclones etc. securities. wire transfer fraud. including farmers. and other criminal acts. robbery. or the loss of revenue due to declines in the prices of agricultural commodities. Smaller companies are especially vulnerable to Fidelity crimes. (d) Insurer cover is provided if any crops fail due to natural calamities like floods. counterfeiting.

cattle insurance has been made. (c) This kind of insurance helps the farmers.  Burglary insurance (a)‘Burglary’ means to go into a house illegally to steal its things.Postal Orders.(e) The insurer pays the loss to the employer as per agreed terms in the contract.burglary. (b) The cause of death of cattle may be accidents or disease etc The compensation is given by the insurer if death occurs due to any cause covered in the policy. Coins.house breaking and similar kinds of acts are covered. (f) All principles are applicable to this insurance policy.salaries and other 22 .If their cattle die then they have to suffer huge loss. (d)The actual loss is compensated by the insurance company. Currency Notes.To reduce this loss. (b) Burglary falls in the category of property insurance. whilst in transit enroute to final destination and/or in locked safe.  Cash in transit insurance: (a)The Insurer under this Policies indemnify the Insured against loss of Cash.Stamps. (c) In case of burglary policy the loss or damage of household goods and properties due to theft.  Cattle insurance (a) In cattle insurance a particular amount of money is given to the insured in the event of death of animals like bulls cows buffaloes goats etc.Generally farmers buy cattle from their savings. Securities for Money. (b) The Cover is available for the loss of Cash drawn for the payment of wages. and Cheques etc.

for a consideration called ‘premium’. Examples of General insurance are fire insurance. under which the assurer agrees to compensate the assured a certain amount of money on the expiry of a certain term. It is a contract between the assurer(insurance company) and the assured (insured person). Difference Between Life Insurance And General Insurance Life Insurance 1. property of any kind Human life is the subject matter of are the subject matter of general insurance. What Does It Include? Life insurance includes the insurance of life of an individual. health insurance. marine insurance. whichever is earlier. The cash in transit insurance is important to any business as large amount of money or cash is taken out of the bank to meet the day to day expenses of business and pay wages to employees. under which the insurer agrees to compensate a certain amount of money on the happening of an uncertain event. etc. General Insurance What Matter? 2. Is The Subject Generally goods.(c) earnings or for petty Cash in direct transit from the Bank to the Insured’s premises. It is a contract between the insurer and insured. General insurance includes all other types of insurance except life insurance. for a consideration called ‘premium’. life insurance contract. 23 . or on death.

6. Surrender Policy. 4. measured in terms of money. it can The marine and fire insurance policies and other general policies be surrendered before its maturity. Insurable Interest. Indemnity. 24 . marine and other contracts of indemnity because no one can insurance are contracts of indemnity because the life of goods can be measure the value of human life.3. Life insurance contract is generally Individuals generally take for one taken by individuals non life year. Hence. it need not be present at the maturity of the policy. Life insurance is not a contract of Fire. In fire insurance. Insurable interest must be present only at the time of taking out the policy. insurable interest must be present both at the time of taking the policy and when loss occurs in marine insurance. In case of life insurance policy. it must be present only at the time when loss occurs. The term ‘Assurance’ is used for life The term ‘Insurance’ is used to refer other kinds of non-life policies. 5. it is a kind of continuing contract. it need not be present at the time of making the policy. cannot be surrendered by the insured before maturity. Terms Of Contract. Insurance/ Assurance. 7. insurance for long term. insurance business.

etc. General insurance policies do not contain any investment element in them. For e.g. etc.8. provide some amount of investment. members in case something property.Why They Are Taken By Individuals? Individuals take life policies to Individuals take general insurance provide protection to their family policies to protect their goods. Life policies which are made for long term. taking loans. Life policies are also taken for providing for old age. happens to them. They do not offer any kind of return on maturity. 15 to 20% profit margin. tax concessions. 25 . a) Return On Investment.

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