Assignment On

Principles of Insurance.
Submitted to:
Afiya Sultana
Assistant Professor,
Faculty of Business Administration.
University of Science and Technology Chittagong
Submitted by:
Name: Tarek Aziz
ID: 1563
Batch: 41th
Semester: Seventh (7th)
Session: March 2017
Date of Submission: 26th December, 2020.

Faculty of Business Administration (FBA)

University of Science & Technology, Chittagong (USTC)
 Topic

1st Topic: Role of Fire Insurance in Protecting the Industry and

Property Loss.
2nd Topic: Understanding the Endowment Life Insurance, National
Insurance.
3rd Topic: Analysing the Factors of Providing Identity and Concept
of Proximate Cause.
4th Topic: Explain the Functions of Claims and Underwriting of
Insurance.
5th Topic: Analyzing the Importance of Health and Accident
Insurance.
1st Topic: Role of Fire Insurance in Protecting the Industry and
Property Loss.

Fire Insurance

The term fire insurance refers to a form of property insurance that covers damage
and losses caused by fire. Most policies come with some form of fire protection,
but homeowners may be able to purchase additional coverage in case their property
is lost or damaged because of fire. Purchasing additional fire coverage helps
to cover the cost of replacement, repair, or reconstruction of property above the
limit set by the property insurance policy. Fire insurance policies typically contain
general exclusions such as war, nuclear risks, and similar perils.

How Fire Insurance Works

Homeowners insurance provides policyholders with coverage against loss and/or

damage to their homes and possessions, also referred to as insured property. This is
a blanket term used to describe both the interior and exterior of the home as well as
any assets that are kept on the property itself. Policies may also cover injuries
someone sustains while on the property. If you have a mortgage, there's a very
good chance that your lender won't advance your loan if your property isn't
covered. Even if it isn't a requirement, it's a good idea to protect yourself. There are
additional forms of coverage you can purchase including fire insurance.

Fire insurance covers a policyholder against fire loss or damage from a number of
sources. These include fires brought about by electricity, such as faulty wiring and
gas explosions, as well as those caused by lightning and natural disasters. A burst
and overflowing water tank or pipes may also be covered by the policy.

Most policies provide coverage regardless of whether the fire originates from
inside or outside of the home. The limit of coverage depends on the cause of the
fire. The policy reimburses the policyholder on either a replacement-cost basis or
an actual cash value (ACV) basis for damages.
If the home is considered a total loss, the insurance company may actually
reimburse the home's current market value. The insurance typically provides a
market value compensation for lost possessions, with the total payout capped based
on the home's overall value. If, for example, a policy insures a house for $350,000,
the contents are usually covered for at least 50% to 70% of the policy value—or a
range of $175,000 to $245,000. Many policies limit how much
reimbursement covers luxury items such as paintings, jewelry, gold, and fur coats.

Being a business owner, you have to take care of a lot of things like overseeing
operations, finding innovative ways to grow your business, reviewing financial
data and a lot more. When you are busy planning about all these important aspects,
you may not be able to identify every possible risk which threatens the future of
your company.

Among all, fire accidents are quite common in the workplace. It may cause huge
damage to your business property. Cooking was the most common reason followed
by carelessness and electrical malfunctions for such a fire outbreak. It's important
for all small business owners to take precautions and minimize the fire risk
involved.  

Find out fire risks at the workplace

A business owner's policy includes general liability insurance coverage with

certain property coverage. He should identify specific fire risks. After evaluating
the possible outbreak, you must opt for the right fire insurance among all the
policies available.
Importance of fire insurance and how it works

When you have fire insurance on a BOP, coverage will be provided regarding:

 New property

 Lost business income

 Physical loss or damage to the personal property of business

 Betterments, office fixtures and improvisations

Those who buy fire insurance against their business property will stay protected for
the losses incurred during the damage. If the damage occurs, you file a standard
fire insurance claim. And the insurance company verifies standard claims prior to
issuing compensation.

However, if you don't know how to follow steps in the process properly, approach
the agent as soon as possible.

Types of fire insurance

Usually, it's hard to find different types of coverage specially designed for fire
outbreak at the commercial place but some provision is of great help. To cite an
instance, if you know that overloaded outlets may result in a fire accidents that
may cause damage to the company's computers or network servers. To deal with
all this, you can avail benefits of fire policies providing electronic data loss
coverage. This is an upgrade option for BOP which provides the coverage for
interruption of computer operations, lost data and e-commerce operations.

As we all know that fire from any source can destroy computer hardware so the
upgrade is highly beneficial for business owners.   
Advantages of fire insurance

When you have a BOP, it assures peace of mind, provides protection against
physical property and safeguard the future of your company. In case an electrical
fire has caused damage to your computers and stock and you are finding it tough to
continue business operations, BOP can provide coverage for temporary business
interruption.

Remember, your physical property is covered and the business can easily recover
in financial terms with the help of the best suitable fire insurance policy. When you
fail to insure the possible business risks, there will be limited scope to reopen and
start it all over again.

Conclusion

All in all, it's important for every business to ensure coverage against fire outbreak
due to any reason mentioned in the policy. Choose the right fire insurance
policy after important considerations.

Reference:

https://www.investopedia.com

https://www.reliancegeneral.co.in
2nd Topic: Understanding the Endowment Life Insurance, National
Insurance.

Endowment Life Insurance

Endowment plan is a life insurance policy which provides you with a combination
of both i.e.: an insurance cover, as well as an savings plan. It helps you in saving
regularly over a specific period of time, so that you are able to get a lump sum
amount on policy maturity, if the policyholder survives the policy term.

The policyholder gets his/her sum assured on a fixed date in future as per the
policy terms and conditions. However, in case of sudden death of the policyholder,
the insurance company will pay the sum assured (plus the bonus, if any) to the
nominee of the policy. Besides, it is also useful to secure yourself or your family
post-retirement or to meet various financial needs such as funding for children's
education and/or marriage or buying a house.

What are the Types of Endowment Plans?

There are three types of Endowment plans that you can choose from

 Unit Linked Endowment Plan Under Unit Linked policies, the insurance
premiums are bifurcated into multiple units held under a specific investment
fund which can be chosen by the policyholders.

 Full /With Profit Endowment Under this plan, the basic amount i.e. sum
assured will be provided to the policy holder. This amount is guaranteed
right from the start of the policy. However, the final payout provided is
comparatively higher depending on the bonuses announced from time to
time by the company. The bonuses once declared form a part of the policy
are paid out in the event of death of the policyholder or maturity of the
policy.
  Low-Cost Endowment This type of endowment plan was designed with an
intention of allowing the policyholder to accumulate the funds which have to
be paid after a specified time period, usually mortgage.

 Non-profit Endowment These are endowment plans which do not

participate in the profits generated by the company (bonuses). However, in
order to make them competitive against other products, companies offer
guaranteed additions in these plans which help in generating returns for the
policy holder.

Features of Endowment plan

 Death along with Survival benefits: In case of demise of the insured, the
beneficiary/nominee of the policy gets the sum assured along with bonuses.
Also, the insured is allowed to get the sum assured if he/she outlives the
policy.

 Higher returns: An endowment policy is helpful in building a corpus for

future and providing financial protection to your family. The payout for
survival benefit and death benefit of an endowment plan is higher than that
of a pure life insurance policy i.e. Term Plans.

 Premium payment frequency: The policyholder can make payment of the

premium based on the policy chosen by him/her. Payment can be done on
monthly, quarterly, half-yearly, and on yearly basis.

 Flexibility in Cover: Riders like critical illness, total permanent disability,

and accidental death can be added to the base plan and enhance the life
cover. In addition to this, there are a few plans that offer waiver in the
premium payment on total permanent disability or critical illness.

 Tax Benefits: The policyholder is entitled to get tax exemption on both

premium payments, maturity and final payouts under the Section 80C and
Section 10(10D) of the Income Tax Act, 1961.

 Low Risk: Traditional Endowment policies are considered safer as

compared to the other investment option such as the Mutual Fund or the
 ULIP’s because the amount here is not directly invested in equity funds or
the stock market.

Riders available under Endowment Plan

The following benefits can be chosen with an endowment plan, these are optional.

 Critical Illnes: If the policyholder is diagnosed with a critical illness like

cancer, heart attack, paralysis, kidney failure, etc. The policyholder will get
a lump sum amount.

 Accidental Death: When the policyholder opts for this additional rider, the
insurer will pay accidental death benefit in addition to the Death Benefit to
be given to the beneficiary.

 Disability: The disability rider proves to be highly beneficial to the

policyholder if he/she suffers from a partial or permanent disability.

 Waiver of premium: Through this rider the insured is not liable to pay the
premiums of the endowment policy in case the policyholder suffers from a
critical illness or permanently disabled.

 Hospital Cash Benefit: Hospital Cash Benefit provides you for daily
allowance as well as post- hospitalization benefits, in case of hospitalization
of the policyholder.

Disclaimer: The terms and conditions of this rider will differ from insurer to
insurer.

Benefits of Endowment Plan

 Provides Insurance Cover: An endowment policy provides insurance cover

during the policy term.

 Lump sum payout: It provides a lump sum payout when the policy matures
(i.e. at the end of the policy term)
  Serves with a dual purpose: An endowment policy serves you with a dual
purpose as it not only works as an insurance policy but also offers you with
long term investment benefit.

 Provides you with a Tax Benefit: You are entitled to get tax exemption on
both premium payments, maturity and final payouts under the Section 80C
and Section 10(10D) of the Income Tax Act, 1961.

 Offers Low-Risk Investments: When it comes to investing, endowment

policies are considered as a relatively safer option than other types of
investments.

 Offers Long-term savings: An endowment policy offers long term savings.

You can choose a policy term ranging from 10, 15, 20, 30 to 40 years.

 Provides option to add riders: With Endowment policies, you get an

option to enhance your policy by opting for additional riders like critical
illnesses, waiver of premium, family income benefit, accidental death
benefit, and accidental permanent total / partial disability benefit.

 Additional Bonuses: Insurance companies also declare bonuses. Here, the

bonus is the extra amount of money added to the proceeds, which is
distributed to a policyholder by an insurer.

However, policyholder of a with profit policy only is entitled to share in these

profits. Also, payment of bonus is conditional on the life insurance company which
has surplus funds after expenses, costs, claims have been paid for that year.

National Insurance

The National insurance scheme is a social security scheme run by the government
of a country for the required financial security of its citizens, more particularly for
the persons who are employed in various organizations or self-employed or non-
employed.

National insurance has many advantages towards attaining a just socio-economic

system.
Most developed countries do have a scheme as such in one form or the other, and
the students would do well by having preliminary knowledge on the subject.

The following studies will take into account the system practiced in the United
Kingdom as it is thought to be in the best possible form.

Basic Characteristics of National Insurance

1. The government administers the scheme and, therefore, there is no entry for
the private insurers.
2. There are no policies of insurance, and the scheme is managed by stamping
of cards. The government issues these cards to each individual coming under
the scheme, and the cards remain with the individuals.
3. The premium (specifically known as the contribution) is normally deducted
by the employers at the source and credited to appropriate government
authority. In the case of self-employed or non-employed persons, it is their
responsibility to get their cards stamped, and the stamps were available at
post offices.
4. The solvency of the scheme is guaranteed by the state.

Applicability of the National Insurance Scheme

The scheme applies compulsorily upon all in the following categories;

Class 1 – Employed persons.

Class 2 – Self-employed persons.
Class 3 – Non-employed persons.

Within each class, no differentiation is made according to the risk involved and,
therefore, there is no scope for selective underwriting.

Each class is entitled to different rates of benefit.

Contribution for National Insurance

The rates of contribution (premium) are at standard rates for all persons in a
particular class. But the rate varies from class to class.

Similarly, there is a standard rate of benefit for each class, and the rate varies from
class to class. Only the state may vary rates of contribution, benefits, and
conditions.

Cover Provided by National Insurance

1. Under such a scheme cover is mainly provided in respect of:

2. Unemployment benefits payable weekly.
3. Industrial injuries or sickness leading to disabilities
4. Free medical provision under Health Service.
5. Pension.
6. Maternity grants an allowance.
7. Family allowances payable weekly for dependent children, excluding the
first issue.
8. Death grant.

Reference:

https://www.investopedia.com

https://www.reliancegeneral.co.in

https://www.coverfox.com

https://www.iedunote.com
3rd Topic: Analyzing the Factors of Providing Identity and Concept
of Proximate Cause.

The actions of the person (or entity) who owes you a duty must be sufficiently
related to your injuries such that the law considers the person to have caused your
injuries in a legal sense. If someone’s actions are a remote cause of your injury,
they are not a proximate cause. However, if your injury would not have occurred
“but for” the actions of another, then usually you can conclude there was
proximate causation. Usually, this is an easy question.

Example: Driver of “Car A” runs a red light and hits “Car B,” which had a green
light, causing injury to the driver of Car B. Driver of Car A had a duty to not run
the red light, and, assuming no extenuating circumstances that excused running the
red light, his actions in doing so directly (and therefore, proximately) caused
injuries to the driver of Car B.

But proximate cause can also be the most difficult issue in a personal injury case.
Not every remote cause of an injury will result in a right to recover damage.

Example: Driver of “Car A” runs a red light, and “Car B” which has a green light,
swerves to avoid being hit. The driver of Car B is fuming and nervous, with a
racing pulse. Upset, the driver of Car B continues driving, and three blocks later,
hits a parked car, injuring himself. The driver of Car B can try and claim that the
actions of the driver of Car A caused him to get hurt when he hit the parked car.
And it may well be a remote cause; but it is probably not the proximate cause.

Sometimes, the actions of the person who got hurt can be the cause of their own
injuries.

Example: You are playing catch, and your ball goes over a fence onto someone
else’s property. The fence is locked, and a sign says, “Do not enter; ring bell.” You
ring the bell, and the owner opens the gate for you, inviting you to his property.
You explain you lost your ball. The owner tells you to wait by the gate while he
retrieves your ball “because the yard is not safe.” The

owner starts going to retrieve the ball, walking in a strange pattern across his yard.
You become impatient and decide to follow him. You walk onto the grass and,
within seconds, notice that your feet are bleeding because there is glass all around.
The owner knew the glass was there and didn’t tell you. But there may be some
question as to whether the owner’s actions proximately caused your injuries, since
he warned you that the yard was dangerous and that you should wait while he got
the ball.

Proximate cause is concerned with how the actual loss or damage happened to the
insured party and whether it is a result of an insured peril.

The principle of proximate cause virtually revolves around the claims

administration and, more precisely, diagnosing the playability or otherwise of a
claim on the question of perils covered by a policy.

A policy may cover certain perils mentioned specifically therein (known as insured
perils), whilst some perils may be specifically excluded (known as excepted perils)
and some may still be neither included nor excluded (known as uninsured perils).

It is not always that much straightforward that a loss would be caused by a singular
insured or uninsured or an excepted peril so that a claim would be either payable or
not payable.

Difficult situations do occur where numbers of perils get involved simultaneously,

some insured, some uninsured and some still accepted.

More so, the position gets further complicated when an insured peril is followed up
by an excepted peril or an excepted peril is followed up by an insured peril,
simultaneously getting mixed up by uninsured perils.

The principle of proximate cause has been established to solve such a cumbersome
situation and to enable a claims manager to decide whether a claim is at all payable
or not and if payable, then to what extent.

What is this proximate cause then? It has been well defined in the leading case of
Pawsey V. Scottish Union and National (1907) as follows;

Proximate cause means the active, efficient cause that sets in motion a train of
events which brings about a result, without the intervention of any force started
and working actively from a new and independent source.
It is the immediate cause and not the remote cause. The maxim is, “Causa Proxima
no remote spectator”. Immediate or proximate means Proximate inefficiency and
not necessarily in time. The consideration is what has brought about the result?

A ship was severely torpedoed and was in the process of sinking. Almost
immediately there was a cyclonic storm and the ship sank. It was held that the
proximate cause of the sinking of the ship was torpedo (Leyland Shipping Co. V.
Norwich Union Fire Insurance Society, 1918).

Proximate Cause Examples

It is only by considering some propositions and examples that the doctrine of

proximate cause can best be understood.

A man goes to a late-night cinema and whilst returning home from the show he is
attacked by a group of vandals, stabbed and killed.

The proximate cause of his death is stabbing and certainly not going to the cinema,
although it may be wrongly argued that has he not had gone to cinema he would
not have met the vandals and got killed in this way.

Here, going to the cinema may be simply a remote cause without proximately
causing his death.

To take another example, a man riding a horse in a lonely hilly place falls from the
horseback, gets an injury and remains unconscious the whole night under exposure
to severe cold. The following morning he is discovered by some persons.

In the meantime, due to the severe exposure, the contracts pneumonia and dies.

Here the proximate cause of his death is accident or falling from the horseback, the
reason being that injury leading to unconsciousness, exposure to severe cold and
then pneumonia are all-natural events developing gradually one after another
without really being intervened by a new or independent source (The example is
based on a judgment given in ETHERINGTON V. LANCASHIRE AND
YORKSHIRE ACCIDENT INSURANCE Co., 1909)
Reference:

https://www.nycbar.org

https://www.iedunote.com
4th Topic: Explain the Functions of Claims and Underwriting of
Insurance.

Insurance Underwriter

Insurance underwriters are professionals who evaluate and analyze the risks
involved in insuring people and assets. Insurance underwriters establish pricing for
accepted insurable risks. The term underwriting means receiving remuneration for
the willingness to pay a potential risk. Underwriters use specialized software and
actuarial data to determine the likelihood and magnitude of a risk.

Insurance Underwriters

Insurance underwriters assume the risk involved in a contract with an individual or

entity. For example, an underwriter may assume the risk of the cost of a fire in a
home in return for a premium or a monthly payment. Evaluating an insurer's risk
before the policy period and at the time of renewal is a vital function of an
underwriter.

For example, homeowners insurance underwriters must consider numerous

variables when rating a homeowner's policy. Property and casualty insurance
agents act as field underwriters, initially inspecting homes or rental properties for
conditions such as deteriorated roofs or foundations that pose a risk to the carrier.
The agents report hazards to the home underwriter. The home underwriter
additionally considers hazards that may trigger a liability claim.

Hazards include unfenced swimming pools, cracked sidewalks, and the presence of
dead or dying trees on the property. These and other hazards represent risks to an
insurance company, which may eventually be required to pay liability claims in the
event of accidental drownings or slip and fall injuries.

Inputting a number of factors, which often includes an applicant's credit rating,

homeowner insurance underwriters employ an algorithmic rating method to
pricing. The system generates an appropriate premium based on the platform’s
interpretation and the combination of all data reported from the observations of the
field underwriter. The lead underwriter also subjectively considers answers
submitted by the applicant on the policy application when arriving at a premium.

How Insurance Underwriting Works

Underwriters are trained insurance professionals who understand risks and how to
prevent them. They have specialized knowledge in risk assessment and use this
knowledge to determine whether they'll insure something or someone, and at what
cost.

The underwriter reviews all the information your agent provides and decides if the
company is willing to gamble on you. The job position includes:

 Reviewing specific information to determine what the actual risk is

 Determining what kind of policy coverage or what perils the insurance
company agrees to insure and under what conditions
 Possibly restricting or altering coverage by endorsement
 Looking for proactive solutions that might reduce or eliminate the risk of
future insurance claims
 Possibly negotiating with your agent or broker to find ways to insure you
when the issue isn't so clear-cut or there are insurance issues

An underwriter will most likely become involved in cases when intervention or

additional assessment is required, such as when an insured individual has made
multiple claims, when new policies are issued, or when there are payment issues
with the insured.

Insurance underwriters will usually review policies and risk information

whenever a situation seems outside the norm. It doesn't necessarily mean that an
underwriter will never look at your case again just because you've already
contracted for a policy. An underwriter can become involved whenever there's a
change in insurance conditions or a material change in risk. 
Insurance Claim

An insurance claim is a formal request by a policyholder to an insurance company

for coverage or compensation for a covered loss or policy event. The insurance
company validates the claim (or denies the claim). If it is approved, the insurance
company will issue payment to the insured or an approved interested party on
behalf of the insured.

Insurance claims cover everything from death benefits on life insurance policies to
routine and comprehensive medical exams. In some cases, a third-party is able to
file claims on behalf of the insured person. However, in the majority of cases, only
the person(s) listed on the policy is entitled to claim payments.

How an Insurance Claim Works

A paid insurance claim serves to indemnify a policyholder against financial loss.

An individual or group pays premiums as consideration for the completion of an
insurance contract between the insured party and an insurance carrier. The most
common insurance claims involve costs for medical goods and services, physical
damage, loss of life, and liability for the ownership of dwellings (homeowners,
landlords, and renters) and liability resulting from the operation of automobiles.

For property and causality insurance policies, regardless of the scope of an

accident or who was at fault, the number of insurance claims you file has a direct
impact on the rate you pay to gain coverage (typically through installment
payments called insurance premiums). The greater the number of claims that are
filed by a policyholder, the greater the likelihood of a rate hike. In some cases, it's
possible if you file too many claims that the insurance company may decide to
deny you coverage.

If the claim is being filed based on the damage to property that you caused, your
rates will almost surely rise. On the other hand, if you aren't at fault, your rates
may or may not increase. For example, getting hit from behind when your car is
parked or having siding blow off your house during a storm are both events that are
clearly not the result of the policyholder.
However, mitigating circumstances, such as the number of previous claims you
have filed, the number of speeding tickets you have received, the frequency of
natural disasters in your area (earthquakes, hurricanes, floods) and even a
low credit rating can all cause your rates to go up, even if the latest claim was
made for damage you didn't cause.

When it comes to insurance rate increases, not all claims are created equal. Dog
bites, slip-and-fall personal injury claims, water damage, and mold can all act as
signals of future liability for an insurer. These items tend to have a negative impact
on your rates and on your insurer's willingness to continue providing coverage.
Surprisingly, speeding tickets may not cause a rate hike at all. At least for your first
speeding ticket, many companies will not increase your prices. The same goes for a
minor automobile accident or a small claim against your homeowner's insurance
policy.

Types of Insurance Claims

Health Insurance Claims

Costs for surgical procedures or inpatient hospital stays remain prohibitively

expensive. Individual or group health policies indemnify patients against financial
burdens that may otherwise cause crippling financial damage. Health insurance
claims filed with carriers by providers on behalf of policyholders require little
effort from patients; the majority of medical are adjudicated electronically.

Policyholders must file paper claims when medical providers do not participate in
electronic transmittals but charges result from rendered covered services.
Ultimately, an insurance claim protects an individual from the prospect of large
financial burdens resulting from an accident or illness.

Property and Casualty Claims

A house is typically one of the largest assets an individual will purchase in their
lifetime. A claim filed for damage from covered perils is initially routed via the
Internet to a representative of an insurer, commonly referred to as an agent or
claims adjuster.
Unlike health insurance claims, the onus is on the policyholder to report damage of
a deeded property they own. An adjuster, depending on the type of claim, inspects
and assesses damage to property for payment to the insured. Upon verification of
the damage, the adjuster initiates the process of compensating or reimbursing the
insured.

Life Insurance Claims

Life insurance claims require the submission of a claim form, a death certificate,
and oftentimes the original policy. The process, especially for large face value
policies, may require in-depth examination by the carrier to ensure that the death of
the insured did not fall under a contract exclusion, such as suicide (usually
excluded for the first few years after policy inception) or death resulting from a
criminal act.

Generally, the process takes approximately 30 to 60 days without extenuating

circumstances, affording beneficiaries the financial wherewithal to replace the
income of the deceased or simply cover the burden of final expenses.

Reference:

https://www.investopedia.com

https://www.thebalance.com
5th Topic: Analyzing the Importance of Health and Accident
Insurance.

Accident and Health Benefits are a type of health insurance policy that is
purchased by companies on behalf of their employees. They are intended to
supplement the standard health insurance policy offered to employees, by
providing protection for accidents that might occur within the workplace.

How Accident and Health Benefits Work

One of the ways that companies seek to attract and retain employees is by offering
health insurance and other benefits. In the United States, most citizens obtain their
health insurance privately, with many relying on the insurance plans offered by
their employers. Aside from salary and general working conditions, health
insurance plans are often one of the key factors that candidates consider when
deciding whether to accept or decline a job offer.

Generally speaking, however, the health plans offered by employers will have gaps
in their coverage, meaning employees may still be exposed to significant risks. For
example, if an employee is injured while working on the job, their standard
employee health insurance might not provide them with any support for lost
income if they are unable to work due to their injury. 

To supplement this, an employer might also purchase an accident and health

benefits plan on behalf of their employees. These plans can be designed to
specifically address the gaps in the company’s standard health insurance coverage,
in areas such as child care, transportation to and from medical appointments, or
help with medical deductibles. Depending on the budget of the employer, these
accident and health benefits could even provide injured employees with additional
income for the time in which they are unable to work. Although these plans are an
added expense for the employer, they may represent a worthwhile investment if it
allows them to attract and retain more talented employees.

Accident and health insurance is a broad term that covers specialty policies
available through an employer.
It’s insurance coverage that pays benefits in case of sickness, accidental injury or
accidental death. It sometimes pays for loss of income or for debt payment if it’s in
connection with a loan.

Standard health care plans may not be enough for some employees. That’s why
many businesses give their workforce the chance to pick from accident and health
insurance choices related to their own needs. They aren’t stand-alone policies, nor
should they take the place of traditional workplace insurance plans.

Accident insurance covers workers for any mishap that may occur while they’re at
work. Workers who choose this supplemental policy can use it to pay for expenses
from initial care, surgery, transportation and lodging, and follow-up health care.

To file a claim for this type of insurance, workers must show proof they were
injured, including in-depth medical reports from the hospital or attending
physician.

In addition, two insurance plans under this category deal with life-threatening
illnesses. Critical illness coverage deals with a variety of specific ailments, while
cancer policies directly deal with any form of the disease.

Cancer coverage kicks if an employee is diagnosed with the disease while working
for a company. As the person’s traditional health care plan takes care of most
medical expenses, this plan pays for any additional costs that may come up during
the treatment.

After a positive diagnosis, recovery time also requires additional services such as
in-home care that might otherwise be dropped by traditional insurance policies.

Under both critical illness and cancer plans, additional costs from treatment and
recovery are paid.

Accident insurance, also called accident expense or accidental death insurance,

gives you cash if you get injured or die from an accident covered by your policy. It
pays a benefit directly to you (or your beneficiaries in case of death) for injuries
resulting from a covered accident. Here are a few types of things accident
insurance might cover:

 Emergency treatment
  Hospital stays
 Medical exams
 Supplies
 Lodging
 Final expenses

Accident insurance is a type of product sold by insurance companies. If you get

injured and it’s caused by a specific accident covered by your accident insurance
policy, you or your family can file a claim. The insurance company will pay you
cash as long as you’ve been paying your premiums (often a monthly payment).
You can use this cash however you choose – pay off your medical bills or put it
toward your mortgage, childcare, college tuition or even a vacation. If the accident
results in death, the benefit would be paid directly to your beneficiaries.

Accident insurance complements health insurance too. If an accident results in

medical expenses your current health insurance doesn’t cover, accident insurance
can serve as a financial cushion should the unexpected happen. Accident insurance
also helps complement disability insurance by allowing you to claim benefits even
if your injuries don’t keep you out of work. While both types of insurance help
cover similar injuries (everything from a dislocated shoulder to quadriplegia),
disability insurance pays you benefits for each month you remain disabled.
Accident insurance pays out a preset number of times over a specific range of time,
or all at once (called a lump sum) – you choose. Accident insurance benefits are
lower than disability benefits, but lower benefits mean lower premiums. While you
wait for your disability insurance elimination period to end (the length of time
between the beginning of an injury and receiving benefit payments from an
insurer), you can use the benefit you get from your accident insurance policy as a
small payment in the meantime.

Accident and health insurance example

After falling off a ladder while reaching for an item, Joe is transported to the
hospital with injuries that are not life threatening. He is diagnosed and treated for a
broken leg. All medical expenses are covered through his company’s health
insurance plan.
Since he has accident insurance, his additional expenses, such as rent and
groceries, are covered. As the healing process continues, he is evaluated to
continue or end the additional payments when he is ready to resume his job.

Reference:

https://www.bankrate.com

https://www.investopedia.com

https://www.assurity.com