NAME: YAMINI L

REG NO: 20397137

INDIAN FINANCIAL FRAMEWORK

TOPIC: MOTOR INSURANCE, FIDELITY INSURANCE, BURGLARY INSURANCE,
EMPLOYEE BENEFITS PLANS, HEALTH CARE FINANCING AND HEALTH CARE
INSURANCE
INSURANCE
MEANING:
Insurance is a contract between two parties, whereby one party agrees to undertake the risk of
another, in exchange for consideration known as premium and promises to pay a fixed sum of
money to the other party on happening of an uncertain event (death) or after the expiry of a
certain period/maturity period in case of life insurance or to indemnify the loss to the other
party on happening of an uncertain event in case of general insurance. The party bearing the
risk is known as the ‘insurer’ or ‘assurer’ and the party whose risk is covered is known as the
‘insured’ or ‘assured’.

MOTOR INSURANCE
MEANING:
A motor insurance policy is a legal contract between the insurance company and the
policyholder to provide cover for any loss or damages sustained by the policyholder in an
unforeseen accident as well as natural calamities. This way the policy ensures peace of mind
and security to the policy holder on the road.
Motor insurance is mandatory for are two wheeler and four wheeler vehicles such as cars,
bikes, scooters, trucks that are plying on the roads in India. Vehicle owners can avail motor
insurance even for commercial vehicles as well.

TYPES OF MOTOR INSURANCE:

Motor insurance can be broadly classified under below heads:

1. Private Car Insurance Policy:

This is motor insurance that needs to be taken for any private car owned by an individual and is
mandated by the Government of India. It covers the vehicle for damages against accidents, fire,
natural disasters and theft among others and also covers for any injury to the owner. It also
covers any damages and injuries caused to the third party.
 2. Two-Wheeler Insurance Policy:
This insurance policy covers two-wheelers like a scooter or a bike and is mandated by the
Government of India. The two-wheeler is covered against damages from accidents, disasters,
fire, theft, etc. as well as any damages and injuries to the third-party. It also offers a
mandatory personal accident cover for the owner rider and can be taken for passengers too.

3. Commercial Vehicle Insurance:

This type of insurance covers all those vehicles which are not used for personal purpose. Trucks,
buses, heavy commercial vehicles, light commercial vehicles, multi-utility vehicles, agricultural
vehicles, taxi/cab, ambulances, auto-rickshaw etc. are some vehicles that are covered under
this insurance.

Exclusions under Motor Insurance:

The following contingencies are generally excluded from Motor Vehicle Insurance Policy:

 Not having a valid Driving License

 Under Influence of intoxicating liquor/ drugs 88 | Page
 Accident taking place beyond Geographical limits
 While Vehicle is used for unlawful purposes
 Electrical/Mechanical Breakdowns.

FIDELITY INSURANCE
MEANING:
Fidelity insurance or fidelity bond insurance is a business insurance product that provides
protection against business losses caused due to employee dishonesty, theft or fraud. The
policy compensates such losses to business owners within the limitations of the policy. Some of
the examples of business losses include theft of money, theft of business inventory and using
business cash for personal profit etc.

TYPES OF FIDELITY INSURANCE:

1. Individual policy: 
Under an individual policy, coverage is limited to losses due to fraud or dishonesty of an
individual employee.
2. Collective policy: 
Under the collective policy, coverage is provided against the business losses caused due to
fraudulent acts by a group of employees. Coverage in this type of fidelity insurance policy will
be decided based on each employee’s responsibilities and position. 
3. Blanket policy: 
Blanket policy covers a group of employees without the names of the guaranteed person.
Basically, this type of policy is issued to well-established businesses.
4. Floater policy: 
Floater policy guarantees a group of employees with one amount of guarantee is given across
the group. Minimum of five employees need to be there to avail this cover.

Who can Avail Fidelity Insurance?

Every business having employees to handle cash and payment processes will require fidelity
insurance cover. The following business can avail fidelity insurance and get the benefits of
policy as these businesses are more vulnerable to the risk of employee frauds –
 Restaurants and cafes
 Retail businesses
 Businesses that require trade licenses
 A business that requires the collection of personal information from customers

Features of Fidelity Insurance:

Fidelity insurance provides coverage against financial losses suffered by the organization due to
fraudulent act employees. Following are the features of fidelity insurance –

1) The policy provides comprehensive coverage against various risks arising from fraud and
the dishonest act of an employee or group of employees such as loss of money,
property, securities or other assets, computer fraud, forgery, loss to customers etc
2) Fidelity insurance offer tailor-made coverage to businesses depending on the need and
nature of work
3) Fidelity insurance offers coverage with a broad definition of ‘employees’ 
 4) Coverage under fidelity insurance will start for the insured event on or after the date of
commencement of the policy.
5) Coverage is also applicable for a year or 12 calendar months from the date of policy
expiration
6) In case of death, dismissal or retirement of the employee, coverage is valid for 12
calendar months of such death, dismissal or retirement whichever of these events
occurred first.

Benefits of Fidelity Insurance:

As fidelity insurance policy protects the business against losses arising due to an act of fraud or
dishonesty committed by employees, it becomes important for businesses to buy fidelity
insurance cover to have protection against such risks. Following are the benefits offered by
fidelity insurance –

1) The fidelity insurance policy covers theft of funds committed by the employees
2) The fidelity insurance provides coverage for loss of business assets such as property,
stock certificates or any other assets
3) The fidelity insurance provides protection against loss of customer’s property caused by
dishonest acts of an employee
4) The fidelity insurance protects the business from financial crises coming from a small
portion of the workforce (dishonest employees) which can affect the entire business and
other employees.
5) The fidelity insurance protects the reputation of business along with ensuring absolute
transparency in supervision and accountability requirements within the business.

Exclusions of Fidelity Insurance:

 Fidelity insurance policy does not cover the following losses –

 Losses arising out of the suppression of facts affecting the risk at the time of effecting
the policy
  More than one claims made in respect of any one employee
 If there are any changes in the conditions or circumstances of the said employment
without the consent of the company. 
 Losses arising elsewhere than in the territorial limits stated in the policy schedule
 Losses arising due to non-observance and relaxation of the system of checks and
precautions
 Consequential or indirect loss or damage which is not the direct result of insured perils,
nor does the policy cover apprehended loss or damage or contractual liability or legal
liability of any kind
 Discovered more than 12 months after the termination either of the guarantee or of the
service of the employee concerned
 Loss or damage attributable to willful acts or gross negligence on the part of the insured,
employee or any other person acting on their behalf
 Losses such as trading losses, stock-taking shortages and losses not caused by
dishonesty or fraud 
 The loss is by an act committed subsequent to an earlier act of fraud or dishonesty
which had come to the notice of the insured or supervisor or to insured’s representative
 Any loss resulting directly or indirectly from trading in securities
 Terrorism damage

Documents Required for Fidelity Insurance Claims:

 Duly filled and signed claim form 

 Photocopy of the fidelity insurance policy document
 A detailed description of the employee’s job duties
 Private reference of the fraudulent employee
 Internal investigation report
 CCTV footage in case of theft
 Police FIR regarding the theft or embezzlement
 Auditors report estimating the quantum of loss
  Details on the date of discovery of the loss
 Statement from witnesses who can validate the loss
 Evidence of stolen property values such as receipts or invoices, if any
 Evidence of forgery or identity theft along with proof of loss
 Terminal benefits from any employee

Insurance Companies Offering Fidelity Insurance in India:

 SBI General Insurance Company

 Bharti AXA General Insurance Company
 Liberty General Insurance Company
 HDFC ERGO General Insurance Company
 Tata AIG General Insurance Company
 Oriental Insurance Company 
 Raheja QBE General Insurance Company
 IFFCO Tokio General Insurance Company

BURGLARY INSURANCE
MEANING:
Burglary insurance is an insurance policy which covers the financial loss that you suffer in case
of a burglary or attempted burglary into your home or business premises. Burglary is defined as
an act of forceful entry into the house or business premises with an illegal intention of theft.
Features of Burglary Insurance:
Burglary insurance policies have the following salient features –
1) They can be bought by homeowners, tenants as well as business organizations to cover
the financial loss suffered due to burglary
2) A burglary insurance policy can also cover theft and robbery. That is why the plans are
also called burglary and theft insurance plans
3) There are different types of burglary insurance plans available in the market
 4) You can avail different types of burglary insurance policies for covering different types of
assets which are exposed to the risk of theft
5) A standard burglary insurance policy can be extended to cover losses suffered due to
burglaries committed during riots, strikes, fire, etc.

Coverage under Burglary Insurance:

Burglary insurance covers the following losses which you might face in case of a burglary or
attempted burglary –
 Damage to the home or business premises due to forceful and unlawful entry
 Loss of assets or property due to theft and burglary

 Coverage under burglary insurance policies can be taken for the following types of
assets –
 Cash and valuables
 Home appliances
 Electronic gadgets
 Money in transit
 Cash stored in safe
 Stock in trade
 Business assets
 Plants and equipment used in the factory or business premises
 Jewellery, etc.
Exclusion under Burglary Insurance:
 Loss or damage which occurs due to war, strikes, riots, etc. unless otherwise specified
 Losses due to natural calamities
 Losses suffered when the property is under renovation
 Losses due to nuclear threats or contamination
 Loss of property because it was confiscated by the Government
 Consequential losses
  If the family members are involved in the burglary, claims would not be covered
 Precious metals and cash might be excluded unless specifically covered under the plan
 Theft or burglary of share certificates, promissory bonds, treasury bills, etc. are not
covered
 Theft by employees or housemaids are not covered
 Burglary or theft when the premises were left unattended or when the premise was not
completely locked
 Fraudulent claims are not covered
 Theft using a duplicate key is not covered unless the key was acquired forcefully
 Burglary, when proper security was not maintained, would not be covered

TYPES OF BURGLARY INSURANCE:

Burglary insurance policies can be of different types based on the type of coverage as well as
the assets that they cover. Here are some of the commonly found burglary insurance policies in
India –
1. Stock Declaration Policy
This policy is for businesses which cannot estimate the exact value of their stock in trade. In
such cases, the highest possible value of the stock is taken to be the sum insured so that the
losses can be sufficiently covered.
2. First Loss Policy
Under this policy, a portion of the stock is insured which is likely to be burgled. This type of
policy is relevant when the total loss cannot be plausibly estimated.
3. Full Value Policy
This policy covers the asset for its full value so that in case of loss the full value can be claimed.
4. Money in Transit Insurance
This policy covers the risk of theft or burglary on an amount of money which is in transit. The
policy is relevant for businesses where the movement of physical cash is involved.
5. Business Premises Insurance
This policy covers the risk of burglary and theft in the place of business.
6. Dwelling Insurance
Under this policy, your residential house is covered against burglary and theft.

7. Jewellery and Valuable Policy

This policy specifically covers precious jewellery, valuable, works of art and other valuables
against burglary.
8. Cash in Safe Policy
This burglary insurance policy covers the risk of theft of the cash which is kept in a safe at the
house or at the business premises.

EMPLOYEE BENEFITS PLANS

MEANING:

The employee benefit plan is the benefits plan termed as ‘premium benefits’ or ‘perquisites.
Employee Benefit plans are the non-fiscal benefits that are offered by the employer to the
employees apart from their salaries. At some places, the employee benefit plans can be
mandated by laws at or can be provided voluntarily by the employers.
The employer feels assured that employee benefits will make their employees feel motivated
and satisfied and they will serve the organization in a better way. The employee benefit plans
include
 Paid vacations,
 Health insurance and Life insurance,
 Retirement benefits,
 Gratuity, etc.
Employee benefit plans work as an effective strategy to retain talented employees within the
organization.

Advantages of employee benefit plan:

The company offer employee benefit plan to their employees to keep them motivated and to
retain their talented employees. Companies often provide benefits to employees as a need. The
advantages of an employee benefit plan are-
 1. To retain the talent of the organization

Employee benefits play a very important role in retaining the talent of your organization. By
giving employee benefits to the employees, makes the employees feel that the company care
about their needs and they are valuable for them. This helps in retaining the talent of the
organization for a longer period.

2. Increases work efficiency and productivity

The main reason behind providing the employee benefit plan is to increase the work efficiency
of their employee, as most of the employees are worried because of their financial stress. As a
result, they are not able to focus on their work completely which affects the productivity of the
organization. So, by offering employee benefits to its employees, the company helps them to
have less financial stress so that they can focus on their work and can enhance the
organization’s productivity.

3. Increases the presence at the workplace

 The advantage of employee benefit is that it helps in increasing the presence of employees at
the workplace. Once the employees are in good financial health, they will not miss out on the
work and would be present at the workplace. This will also increase the productivity of the
organization.

4. Fostering the loyalty

Employee benefit helps in fostering the loyalty from the employees. With the package of
employee benefits, the probability of the employees searching for new chances outside will
reduce. The employee benefits improve the scope of your employees’ being loyal towards you.

5. Better recruiting

Employee benefits help in better recruitment. It helps in attracting more candidates towards
the organization. Employee benefits are very important to build the employee’s trust. The
employee will prefer joining an organization which provides a good salary and also good
employee benefits to their employee.

6. Promote employee health and wellness

Employee benefit plans include health and life insurance, preventive doctor care, free health
checkup which helps the employees in the maintenance of good health conditions and
promoting their wellness. These benefits make the employees more satisfied with your
organization.

7. Defeat the competitors

Employee benefits offerings are used as a strategy to defeat the competitors in the market.
Proper strategies should be made by adding some additional features in the employee benefits
plan that are not being offered by the competitor.

Types of employee benefits plan:

The 4 major employee benefits that every company should offer to the employee are-

1. Medical Benefits:
It include Medical Insurance, Dental Insurance, Vision Insurance,
Health saving account, Health Reimbursement Account, Cancer Insurance, Critical Health
Insurance and Hospital Insurance.

2. Life Benefits:
It include Life Insurance and Accidental Death Insurance.

3. Disability Benefits:
It include Disability Insurance and Accident Insurance.

4. Retirement Benefits:
It include Retirement plan, Pension fund and Gratuity.

HEALTH CARE FINANCING

MEANING:

WHO definition of health financing: –

Health financing is the “function of a health system concerned with the

mobilization, accumulation and allocation of money to cover the health needs of the people,
individually and collectively, in the health system.”
The purpose of health financing is to make funding available, as well as to set the right financial
incentives to providers, to ensure that all individuals have access to effective public health and
personal health care” (WHO 2000).

THREE FUNCTION OF HEALTH FINANCING:

 Revenue Collection – it raise sufficient and sustainable revenues in an efficient and

equitable manner
 Pooling – it manage these revenues to equitably and efficiently pool health risks
  Purchasing – it assure the purchase of health services in an allocatively and technically
efficient manner

Financial barriers:

 Countries with high out-of-pocket expenses have inefficient and insufficient pooling of
resources
 Inability to access health services, catastrophic expenditure and impoverishment are
strongly associated with the extent to which countries rely on out-of-pocket payments
as a means of financing their health systems.
 Direct payment at the point of service is inequitable, restricts access to health care and
can lead to economic burden
 Concept of catastrophic expenditure: a high OOP payments budget share has been used
as an indicator of catastrophic impact
 High out-of-pocket health spending has been seen to be poverty-inducing

Health service financing source:

Health services financed broadly through private expenditure or public expenditure or external
aid

Public expenditure includes all expenditure on health services by:

 Central and local government funds spent by state owned and parastatal
enterprises as well as government and social insurance contributions
 Where services are paid for by taxes, or compulsory health insurance
contributions either by employers or insured persons or both this counts as
public expenditure.
 Voluntary payments by individuals or employers are private expenditure.
 External sources refer to the external aid which comes through bilateral aid programme
or international non-governmental organizations
 The ownership of the facilities used whether government by government, social
insurance agencies, non-profit organizations private companies or individuals is not
relevant

HEALTH CARE INSURANCE

MEANING:
Health insurance is a type of insurance coverage that typically pays for medical, surgical,
prescription drug and sometimes dental expenses incurred by the insured. Health insurance can
reimburse the insured for expenses incurred from illness or injury, or pay the care provider
directly. It is often included in employer benefit packages as a means of enticing quality
employees, with premiums partially covered by the employer but often also deducted from
employee paychecks. 

TYPES OF HEALTH INSURANCE PLANS IN INDIA:

Health insurance encompasses two types - Indemnity plans and Definite Benefit Plan. The
indemnity plans are traditional health covers which cover hospitalization costs from the sum
assured. Definite benefit plans offer lump sum payment on detection of illness.

Indemnity plans further include:

 Individual
 Family floater
 Senior Citizen
 Mediclaim
 Unit linked health plans

Definite benefit plans include the following:

 Critical Illness Plan
 Personal Accident plan
 Hospitalization cash benefit plan

WHY IS HEALTH INSURANCE IMPORTANT?

1. Savings

The best part about health insurance is it helps to keep your savings intact in case there is a
medical emergency. The insurer will take care of all the expenses such as hospitalization,
drugs/medicines, etc. A health insurance plan is a trusted way to ensure a healthy and
financially stable future.

2. Security of Family’s health

Protecting the health of self and your family members or parents is necessary. You can protect
your family members by investing regularly in the family floater plan wherein you can also get
health cover for your parents. This type of health insurance ensures that all types of medical
treatments are covered.
 3. High Medical Costs

Due to the high healthcare services cost, you may not be able to afford treatment. But when
you have a health insurance cover, you can avail quality treatment at the best network
hospitals. Network hospitals are those wherein insurers have a tie-up with hospitals that helps
you get cashless treatment. With this facility, the insurance company directly settles the bills
with the hospital.

4. Lifestyle changes

Our fast-paced lives have influenced our lifestyle choices. Work stress, indulgence in junk food,
smoking, environmental changes, etc., affect our overall health, and this could lead to life-
threatening diseases such as cancer, liver problem, kidney failure and so on. In such situations,
health insurance will cover the medical and surgical expenses incurred during an illness. It is an
established way to provide for health-related or medical emergencies.

HEALTH INSURANCE INCLUSIONS:

 In-patient hospitalization expenses
 Pre-existing illnesses or diseases
 Pre and post hospitalization
 Ambulance charges
 Maternity or newborn
 Health check-ups
 Daycare procedures
 Treatment availed at home or domiciliary hospitalization cover
 Ayush benefits

HEALTH INSURANCE EXCLUSIONS:

 Unless an accidental emergency, claims arising during the initial 30 days are not
covered.
 Coverage of critical illnesses and pre-existing diseases is subject to a waiting period of 2
to 4 years.
 Injuries caused by war/terrorism/nuclear activity/suicide attempts are excluded
 Terminal illnesses, AIDS, and other diseases of similar nature also make to the list of
exclusion.
 Cosmetic/plastic surgery, replacement of hormones, etc.
 Dental or eye surgery expenses
 Bed rest/hospitalization and rehabilitation, common illnesses, etc.
 Treatment/diagnostic tests, post-care procedures are not covered.