Meaning And Features

 Life insurance is where in consideration of premium the insurance company undertakes to pay a certain sum of money either at death or after the expiry of certain no. of years  It is a contract relating to human life ,lump sum amount is paid and the amount is paid after expiry of certain period or death  FEATURES : It is a contract in writing where in offer is made by the insured and acceptance is by insurer  The insured is under a obligation to pay premium till death or the policy period which ever is earlier  Life insurance is not a contract of indemnity as loss of life cannot be quantified  Insurable interest must be present at the time of undertaking the policy  A person has insurable interest in the life of another where there is gain if he lives and loss by his death  Mere love and affection is not sufficient, financial interest should be present for insurable interest  In following cases no proof is required:-1.own life 2. husband in life of wife 3. wife in life of husband 

 The following have been held to prove an insurable
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interest:A child has interest in the life of father A creditor has interest in the life of debtor to the extent of debt A partner in the lives of co-partners A company in the life of key executives In following cases no insurable interest:A father in the life of his son except if he is dependent An elder brother in the life of younger brother An uncle in the life of nephew

Benefits of life insurance
 It is a superior saving plan in comparison to other plans  Encourages savings as it can be done by way of installments  Life insurance policy can given as a security to raise loans

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and have ready marketability as after a certain period it can be surrendered for a cash value Income tax relief is available on premium paid and is treated as an expenditure It provides economic protection to the family members It is used as investments It helps the govt. as they get long term funds to finance developmental projects

Procedure for issuing life insurance
 The process of life insurance starts with proposal and

submitting information as regards age income and health . Age proof is most important as it determines the amount of premium  Medical examination is undertaken sometimes it is waived like in rural areas  The report is send to the directly to insurance company  Then financial position is studied so as to see that premium will be paid in time

The policy
 An insurance policy is a document that contains

written contract between the insured and insurance company specifying terms and conditions like sum assured, type of policy, premium amount  These terms can be altered with mutual consent of both the parties  Alterations relate to:-change in plan, name, nominee, premium  Some alteration are made by endorsement and some by issuing a fresh policy and a fee is charged

Non disclosure and misrepresentation
 Following facts need to disclosed voluntarily: Facts as to whether any proposal is made to other
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insurer and declined or not Any fact which tends to reduce the average age of the insured Hazardous occupation, threats of murder and any other unusual circumstances Any other name insured is known In a joint policy false statement by one of them can avoid the policy

Time for disclosure
 Full disclosure continues during the period of

negotiation till acceptance  For example:-proposal made on 10 march and a declaration that insured is free from any disease made on 15 and acceptance received. He fell ill on 23rd and cheque send for premium and received a receipt on 26th and died on 27th  Held no duty to inform about change in risk after acceptance

Double insurance
 When more than one police is taken to cover same risk.  In case of life insurance the person can recover the amount on all
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polices but in case of non-life insurance the principle of indemnity applies The insured can not recover more than the actual loss and insurer who is made liable to pay can claim from co-insurer REINSURANCE When one insurance company accepts more liability that it can bear it can further insure the risk or a part Reinsurance contract does not affect the original contract and at the time of loss the insurer claim compensation only from original insurance company If original contract lapses reinsurance comes to an end

Assignment of policy
 A life insurance possesses the features of property i.e. assign, sell, mortgage, settle and even gift  Assignment is a method by which interest in a life policy can be transferred to another  The Insurance Act lays down the mode of assignment and transfer of a life insurance policy in following ways:  (i) an endorsement upon the policy itself or by a separate instrument;  (ii) the endorsement or instrument should be signed by the transferor or his agent and should be  attested by at least one witness;  (iii) it should specifically set forth the fact of transfer or assignment The insurer, on being given notice of the assignment or transfer, shall recognize the assignee or transferee as the only person entitled to the benefit of the policy and liabilities also An assignment may be (a) absolute, for a consideration (b) conditional that on the happening of a specific event without consideration A valid assignment once made cannot be cancelled but reassignment can be done and on assignment the earlier nomination is cancelled automatically

 A policy holder may nominate a person to whom the money shall be paid in event of death. The person nominated is called nominee The nominee can only receive claim amount in event of death  In case of joint policy nomination is not done as the amount will pass to he surviving person  No consideration is required  Nomination can be done by mentioning in the policy  It can be changed or cancelled by policy holder during the term of policy  Nominee has no right to sue  Nomination does not pass on the property in the policy  If the nominee is a minor then an appointee has to be appointed to receive the money  Where policy matures during the life term of the person or where the nominee dies before policy matures the amount is payable to policy holder or legal heirs

Marine insurance
 Risk in transportation is the oldest so is the marine insurance.

Trade was done in the Mediterranean sea which developed the insurance industry. Earlier a merchant would take a loan using his ship as security and the money lender would charge interest and premium on the condition that the loan would be waived if the cargo is lost. This is similar to modern marine insurance  . Marine insurance defined. A contract of marine insurance is an agreement whereby the insurer undertakes to indemnify the assured, in the manner and to the extent thereby agreed, against marine losses, that is to say, the losses incidental to marine adventure.  Each marine insurance contract requires assessment of size and value of risk, quality of ship, destination, voyage route as the premium is calculated accordingly

 Freight includes the profit derivable by a ship-owner

from the employment of his ship to carry his own goods or other movables, as well as freight payable by a third party, but does not include passage money Insurable property means any ship, goods or other movables which are exposed to maritime perils. Maritime perils means the perils consequent on, or incidental to, the navigation of the sea, like:- fire, war, pirates, rovers, thieves, captures, seizures, restraints and detainments of princes and peoples and any other perils

Nature of marine insurance
 All the essentials of a contract apply to it i.e. offer, acceptance,
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and consideration The insured is bound to disclose all material facts concealment may cancel the contract The insurable interest may not be present at the time undertaking the policy but must be at time of loss Insurable interest may be defeasible if the voyage comes to end by an event other than marine peril like transfer of title The indemnity depends upon the value agreed .sometime value of indemnity is difficult because cargos value keep on changing and it increases as it reaches closer to its destination The most important is that they are issued on agreed value basis The value agreed must include all expenses and profit margins

 The following circumstances need not be disclosed:–  (a) any circumstance which diminishes the risk  (b) any circumstance which is known or presumed to

be known to the insurer.  Which an insurer in the ordinary course of his business as such, ought to know  (c) any circumstance as to which information is waived by the insurer (d) every material circumstance which the assured is bound to disclose, unless it comes to his knowledge too late to communicate

The Policy
 A marine policy must specify–  (1) the name of the assured or of some person who
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effects the insurance on his behalf (2) the risk insured against (3) the voyage, or period of time, or both, as the case may be (4) the sum or sums insured (5) the name or names of the insurer or insurers.

Types of policies
There are different types of marine policies with various names and covers they are as under Voyage policy:-it covers a specific transit from one point to another and it ceases on reaching the destination. It provides basic, wider, and all risk cover as described by ICC-c, b, a Annual policy:-if there is regular dispatch of goods then estimated annual dispatch is calculated and premium is fixed Declaration policy:-it is an alternative to annual policy and policy is taken for a specific amount and every dispatch is declared and accounted till the sum is exhausted Special declaration:-if the sum insured is more than 2 crores then such a policy is taken as it provides discount on premium because of volume and advance payment Open cover:-it is not a policy but an agreement in which the insured will set the terms and rate of premium for one year Duty policy:-under it the insured is indemnified as regards the loss due to custom duty. This policy should be before the vessel reaches the point of destination and can be taken the vessel is dispatched Increased value policy:-if goods imported are damaged in transit and can be purchased locally at a higher price the policy indemnifies the difference and should be obtained before the vessel reaches the point of destination. It also take care the price fluctutions Marine delays:-if there is a delay in the completion of a project because the ship bring the equipment is delayed and there is loss of profits then such a loss can be covered by the insurance contract

 Where the contract is to insure the subject-matter at

and from, or from one place to another or others, the policy is called a “voyage policy” where the contract is to insure the subject-matter for a definite period of time, the policy is called a “time policy”. A contract for both voyage and time may be included in the same policy.  A time policy which is made for any time exceeding twelve months is invalid.

 Where the subject-matter is insured by a voyage policy

“at and from” or “from” a particular place, it is not necessary that  The ship should be at that place when the contract is concluded, but the adventure shall be commenced within a reasonable time, and that if the adventure be not so commenced the insurer may avoid the contract.

Change of voyage
 Where, after the commencement of the risk, the

destination of the ship is voluntarily changed from the destination contemplated by the policy, there is said to be a change of voyage.  Unless the policy otherwise provides, where there is a change of voyage, the insurer is discharged from liability and it is immaterial that the ship may not in fact have left the course of voyage contemplated by the policy when the loss occurs.

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