What is meaning of insurance?

An arrangement by which a company or the state undertakes to provide a guarantee of compensation for specified loss, damage, illness or death in return for payment of a specified premium.

 

 Types of insurance

1. Life Insurance

2. General insurance (Non-Life Insurance)

 

Principles of insurance

1. Principle of almost good faith.

According to this principle, the insurance contract must be signed by both parties (i. e. insured or insured) in an absolute good faith or believe or trust. They should not hide anything from each other.

2. Principle of insurable interest.

The principle of insurable interest states that the person getting insured must have insurable interest in the object of insurance.

3. Principle of indemnity.

According to the principle of indemnity in insurance contract is signed only for getting protection against unpredicted financial losses arising due to future uncertainties.

4.  Principle of contribution.

·        It applies to all contracts of indemnity if the insured has taken out more than one policy on the same subject matter.

·        According to this principle the insured can claim the compensation only to the extent of actual loss either from all insurers or from anyone insurer.

·        If one insurer pays full compensation then that insurance can claim proportionate claim from insured.

 

5. Principle of subrogation.

According to the principle of subrogation, when the insured is compensated for the losses due to damage to his insured property then the ownership right of such property ships to the insurer.

6. Principle of loss minimization.

According to the principle of loss minimization insured must always try his level best to minimise the loss of his insured property in case of of uncertain events like a fire outbreak or blast etc.

7. Principle of cause a proximal (nearest cause).

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

·        It looks for what is the reason behind the loss, if that is an insured peril or not. Digital Gujarat

Difference between life insurance and general insurance.

 

Ø     Life Insurance-

ü  It is an insurance contract, which covers the life-risks of the person insured.

ü  It is a form of investment.

ü  it is long term.

ü  Premium has to be paid over the year.

ü  Insurable amount is paid either on the experience of the event or on maturity.

ü  It must be present at the time of contract.

ü  It can be done for any value based on the premium policy.

 

 


Ø     General insurance-

·        Anything which is not covered under Life Insurance like motor,house, health etc.

·        It is only a contract of indemnity.

·        It is short term.

·        Premium has to be paid lamp son.

·        Loss is reimbursed or liability will be repaired on the experience of uncertain event.

·        It must be present at the time of contract and loss both.

·        The amount payable under Life Insurance is confined to be actual loss suffered.

 

Types of life insurance

A. Term insurance: - It is the pure Insurance form. It pays your nominees the sum assured in case of your demise within the policy term. It does not have any some assured or modularity amount. Premium is very low.

B.  Endowment plans: - These are insurance and investment plan. A certain portion of the premium is paid for protection of the life and the rest amount is invested in low risk Dept. instrument, so at the time of maturity the insured person gets a predefined amount.

C. Unit linked insurance plan (ULIP):- ULIPs offer life protection as well as the opportunity for capital appreciation by investing in various forms of varying degree of risk. Just like endowment policies in ULIPs a certain porticer of the premium goes in providing life cover. They generally invest in equity market therefore the return in not predefined; it depends on the market return. it has certain lock in period.

 

Types of general insurance

A.  Health Insurance -A General Health Insurance plan is an indemnity plan that pays for hospitalisation expenses up to the sum insured while you can avail a standalone health policy, family floater plans provide coverage to all the members of your family.

B.  Motor insurance - Motor insurance covers your vehicle against accident, damage, theft vandalism and so on.  This form of insurance comes into form - comprehensive and third party.

C. Home Insurance - A Home Insurance policy protects your home and its belonging from the damages suffered due to Man-made or natural disasters. some home insurance policies also provide coverage for temporary living expenses in case you are living on rent, due to your home undergoing renovation.

D. Travel insurance -A Travel insurance policy protects you against losses suffered due to loss of baggage, delays in flight and trip cancellation, when you are travelling abroad. In some cases if you are hospitalised while travelling, a travel insurance may also offer cashless hospitalisation. Also read- Digital Gujarat