Life Insurance vs General Insurance

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.No. Particulars Page No.

1. Introduction To Insurance 1.

2. Role And Importance Of

Insurance

2,3.

3. Insurance Contract 4,5.

4. Fundamental Principles Of

Insurance

6-17.

5. Bancassurance 18,19.

6. Difference Between Life

Insurance And General

Insurance

20-22.

7. Bibliography 23.

Introduction To InsuranceLife 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 risksinclude loss due to changes in fashions, and technology, loss due to

competition, bad debts, and so on.


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Role And Importance Of Insurance

Financial Support To Family Of Deceased

The life insurance provides financial assistance on the death of theinsured 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.

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Tax Relief

Premiums paid are eligible for tax exemption. The policy holders can claim

insurance premium as tax- deductible expense.

Loans To Policy Holder

The policy holders can get housing loans in the case of life insurance

policies.

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,

such as damage to goods due to fire, theft, etc.

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.

Essentials

Just like all other contracts, a contract of insurance must have the following

legally needed features. The contract of insurance must satisfy all elements

of a simple contract, which are as follows :

1. There must be an offer or proposal on one side and its acceptance on

another side.

2. The agreement must be in writing by competent presons. Competent

person is one who is above the age of 18 years and is of sound mind.

3. Premium is a consideration that must be paid, for entering into an

insurance contract.

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4. The object of the contract should be lawful, it should not be unlawful.

5. Parties to the contract must enter into contract with a free consent. No

one should force anyone to enter into a contract. The parties should not

practice fraud, misrepresentation and coercion to enter into a contract.

6. The event must involve element of uncertainty. Uncertainty means the

event must not be sure to happen, it may take place or it may not take

place.

7. The subject matter should be at risk.

8. The risk should not be very small.

9. The risk must be capable enough to be calculated on the basis of past

records so that the premium can be fixed.

Fundamentals Principles Of Insurance

Insurance is a contract between insurer and insured. Principles of

insurance are the elements which are needed in an insurance contract to

make it valid, if these elements are not present in an insurance contract,

then the contract becomes invalid.

Following are the principles of contract of insurance:

1.Principle Of Utmost Good Faith

a) utmost good faith is one of the basic principle of insurance.

b) The contract of insurance must be made in full good faith by both the

parties.

c) Utmost good faith means the insured must provide to the insurer

complete, correct and clear information about the subject matter of

insurance and the insurer must also provide to the insured. Complete,correct and clear information about the terms and conditions of the

contract.

d) Both the parties must provide all the information related to contract to

each other, no one should hide anything related to contract of

insurance.

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e) Any fact relating to the contract should not be hidden by both the

parties.

f) This principle is applicable to all types of insurance such as fire,

marine life insurance, etc.

g) A contract of insurance which is not based on the principle of utmost

good faith is not a valid contract.

h) If the insured does not provide to the insurer complete, clear and

correct information of the subject matter of the insurance at the time

of taking the policy, then legally insurer can avoid his responsibility to

pay compensation.

i) For e.g.: At the time of taking fire insurance policy, 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, the

insurance company can refuse to pay the compensation, if it comes

to know about the previous occurance of fire which was hidden by the

trader at the time of taking the policy.

j) If the insurer does not provide complete and correct facts about the

amount of premium, way of payment, amount of payment and other

details, the contact of insurance becomes invalid.

k) Insurance is taken to protect against any unexpected loss and not forprofit. Hence, correct information must be given to the company.

Principle Of Insurable Interest

a) Principle of Insurable Interest means the insured must have the subject

interest in the matter of insurance. 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.

b) In all case of insurance, insurer must suffer some kind of financial loss

due to damage or non- existence of the subject matter of insurance.

c) For e.g.:

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Every person has insurable interest in his own life so he has

legal right to insure it.

A person Mr. A who has no insurable interest in the house

belonging to Mr. B and as such cannot insure it, because if anything

happens to Mr. Bs house then A will not suffer from any financial

loss.

d) Insurable interest does not mean the person must be emotionally

attached to a thing but he must be financially attached to the object,

he must suffer loss if the object gets destroyed.

e) The owner of the property has an insurable interest as long as he ownsit, if he sells the property, he does not have insurable interest in it

because if the property gets destroyed he will not suffer any financial

loss, some other person who has bought it will suffer the loss. So, he

cannot claim compensaton as he has already sold it. However, in all

cases, to have an insurable interest in the property, it is not

necessary to own it.

f) For e.g.: A banker gives loan on the security of a persons house, he

has an insurable interest in it because if anything happens to the

house, the banker may suffer loss if the person does not pay back the

loan.

g) When insurable interest must be present:

In life insurable interest is related to the life insured, theinsurable interest must exist at the time of taking a life insurance policy.

In fire insurance and general insurance, the insurable interest

must be present at the time of taking the policy and also at the time of

occurance of loss.

h) The principle of insurable interest is applicable to all contracts of insurance.6


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i) A contract of insurance without insurable interest is legally invalid.

3.Principle Of Indemnity

a) Indemnity means a guarantee to pay for, the loss occurred .

b) This principle is applicable to fire, marine and general insurance. It is

not applicable to life insurance contracts because the loss of life

cannot be measured in terms of money. While when the goods are

destroyed, we can say what was the value of the goods.

c) According to the principle, the insurer agrees to compensate the

insured for the actual loss suffered by him. The actual amount of

compensation is limited to the amount assured or the actual loss

suffered whichever is less.

d) For e.g.:

If Mr. A, insures his house worth Rs. 5 lakhs for Rs. 1 lakh, and

if the entire house is destroyed by fire, then Mr. A can claim only for 1

lakh.

Motorcycle is insured for Rs. 1 lakh and if only a part of it is

damaged worth Rs.20,000, then, the owner of the motorcycle can

claim only Rs. 20,000 as his loss is only worth that amount.

e) Hence, insurance is for protection not for profit making. The

compensation paid in insurance cannot be more or less than actual

loss.

f) The object of every contract of insurance is to place the insured in

same financial position, as nearly as possible, after the loss as if the

loss had not taken place at all. It would be against public policy to

allow an insured to make profit out of the happening of a loss or

damages. This is because, if the insured will be allowed to make

profit, then, he might purposely bring out the event insured, to get

money and earn extra profit. To control all the above situations, the

principle of indemnity is has been made.

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g) A contract without indemnity, expect life insurance contract, is an

invalid contract of insurance.

4.Principle Of Contribution

a) This principle is applicable when the insured has taken out more than

one policy on same subject matter.

b) Under this principle, the insured can claim the compensation form

any one or from all insurers. In case, any one insurer pays the full

amount of loss covered by the policy, after paying it, he can claim

proportionate contribution of claim from all other insurers.

Proportionate contribution means all the insurers have to contribute

money in the proportionate to of the amount of policy insured with

them.

c) This principle is applicable to all policies expect life insurance

policies.

d) The right on contribution arises when:

i. A person takes more than one policy for the same subject

matter.

ii. This policies covers the same risk which caused the loss.

iii. All the policies must be in force at the time of the loss.

iv. And one of the insurers has paid to the insured more than his

share of loss.

5.Principle Of Loss Minimization

a) According to this principle, when the event occurs, the insured must

take all necessary steps to minimise the loss. He must act as if he is

not insured and take full care to reduce the loss.

b) For e.g.: If a fire occurs, the insured must take proper steps to stop it

from spreading and save the property as far as possible.

.

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c) If an insured does not try to minimize the loss, then the insurer can

avoid the payment of loss by saying that the loss occurred due to

insureds negligence. Negligence means the insured pay attention to

save the property.

d) In short, under this principle, the insured is supposed to minimize the

loss on the happening of an event, but he is not supposed to do so at

the risk of his life.

6. Principle Of Subrogation

The general meaning of the word subrogation is the replacing of one

person for another. According to this principle, after the insured is given

compensation for the loss suffered by him due to damage of propertyinsured, then the right of ownership of such property will pass on to the

insurer.

This principle is applicable only to fire, and marine policies. The application

of the principle of subrogation is based on the principle of indemnity.

Once, the insurer pays the full compensation to the insured for the damage

suffered by him, the insurer gets all the rights to take the damaged property

from him. This is done because, in many cases, 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 prevents (stops) the insured from making profit out of loss

suffered by him.

When the insurance company pays a part of compensation or when the

policy is not taken for the full value of the property, then insurance

company cannot claim such rights. In such cases, the insured has to give a

letter of subrogation to the insurance company. The insurance company

keeps the letter safely as proof and in case it becomes aware that the

insured has cheated the company, it can take legal action against the

insured for recovery of the profit made by him.

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In short, in principle of subrogation, the insurer steps into the shoes of the

insured, only when he has paid the amount of the policy to the insurer.

7 .Principle Of Causa Proxima

The term causa proxima means the nearer cause.

Under this principle when the loss has been caused by s series or

chain of causes, the nearest cause must be taken into the account to

determine whether the insurer has to compensate the loss or not. If the

nearest cause is insured in the contract, then the insurance company has

to legally pay the compensation. If the nearest cause is not insured in the

contract, then the insurance company is not supposed to pay for the

damage or loss.

For e.g.:

) Goods in a ship are destroyed by sea water flowing in the ship

through a hole made by rats. Here, there are two causes of damage of

ship.

The risk of sea-water is insured and the ship is not insured. The nearest

and direct cause of damage to goods is sea-water.

Hence, the insurance company will have to pay the compensation.

8. Risk Must Attach

a) The subject matter should be at a risk of loss. The insurer gets the

premium in a contract of insurance for running, certain risk. If for any

person the risk is not run, the insurer must return the premium.

b) For e.g.: 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. Hence, there is no risk for the insurer so he has to pay backthe premium to the insured.

9. Period Of Insurance

a) An insurance contract clearly mentions the term or period of time it covers.

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b) Generally, the contract of life insurance is a continuing contract with the

condition that the premium is to be paid at regular periods. If the

premium is not paid regularly, the contract becomes invalid and can

be started back after fulfilling certain conditions as given in the

contract. Other contracts of insurance like fire and marine may be for

a particular period or a particular journey. A contract of life insurance

is for a minimum period of one year.

c) The insurer is legally responsible to pay compensation for the loss insured

only till the term or period of time of the policy, and not after that.

d) For e.g.: If a person takes fire policy for 1 year and no fire takes place in 1

year, but the fire takes place after the term of policy ends, then the

insurer company will not pay his claim as the period of policy has

ended.

e) The claim is paid only if the insured event occurs and some damage takes

place during the period of insurance only.

BancassuranceToday, banks have been more active in insurance business.

Bancassurance is one of the important ways for creating business for

insurance companies and it is one of the income generating activities foruniversal banks. Universal banks are those banks which offer a wide

variety of financial services under one roof. They are a combination of

commercial banking and investment banking. The European countries and

the USA have already combined banking with insurance. The European

concept of Bancassurance in Alfinanz has found acceptance in India also,

according in this banking and insurance services can be given by a Single

Organisation.

Realising the importance of concept of bancassurance the Reserve Bank of

India issued guidelines for entry of banks into insurance business in 2000.

According to which banks can take one of the following:

1) Banks can undertake agency services for insurance companies. They can

sell insurance products for a fee and make this a source of earning.

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2) Banks can set-up Joint venture companies for insurance business.

3) Banks can make investments in insurance companies.

The guidelines are made by keeping in view that since insurance involves

risk coverage banks should not directly take up insurance business or set-

up a separate subsidiary. They should only provide agency services or set-

up joint venture for insurance business. In short, banks should not

independently carry on insurance business.

In simple words, Bancassurance means the sale of insurance,

manufactured by the banks own insurance company, through the banks

distribution channels. Bancassurance not only helps the customers but it

also helps the banks. It helps the banks in generating greater fee income,

maintaining customers for a long period of time. Bancassurance gives an

opportunity to banks and insurance companies to make good profits.

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. To make an alliance and to sell

insurance products, a bank needs to fulfill the requirements of IRDA and

other regulatory authorities like SEBI, RBI, Government of India, etc.

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, share the risk, share the profit,

improve competitive positions, etc.

Alliance helps universal banks in reducing the costs, through increased

knowledge on insurance products, economies of scale, increased use of

technology etc. It offers a scope to banks to enter new markets and slowing

down the competitors position. It also helps in development, developing

new products and improving the quality of services. All the above benefits

help the bank in achieving its objectives, as a result, the bank earns goodprofits.

Today, private sector universal banks are the major players in this field.

Major public banks like SBI, Corporation Bank, etc. have also entered into

alliances with insurance companies. Some of the major banks which have

entered into alliances with Insurance Companies are

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1) HDFC Bank

2) ICICI Bank

3) State Bank of India

4) ING VYSYA

5) Corporation Bank

6) CITI Bank

7) Kotak Mahindra Bank, etc.

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. However, it can be difficult to think about or

plan for such an event. And, unfortunately, adequate planning is

often put off until it's too late.

With the British knowing the basics of life

insurance and the things that could help people like the life

insurance industry, they decided to give it a try in the United

States of America. After talking about how they would decide on

coming about with the first life insurance company, they decided

to base it on the well known British model at the time. The first

life insurance company in American soil was founded in the

Southern Colony of Charleston, South Carolina in the year 1735.

Illegal almost everywhere else in Europe, life insurance in

England was vigorously promoted in the three decades following the

Glorious Revolution of 1688. The type of insurance we see today owes it's

roots to 17th century England. Lloyd's of London, or as they were known

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then, Lloyd's Coffee House, was the location where merchants, ship

owners and underwriters met to discuss and transact business deals.

Risk protection has been a primary goal of humans and

institutions throughout history. Protecting against risk is what insurance is

all about.

Over 5000 years ago, in China, insurance was seen as a preventative

measure against piracy on the sea. Piracy, in fact, was so prevalent, that

as a way of spreading the risk, a number of ships would carry a portion of

another ship's cargo so that if one ship was captured, the entire shipment

would not be lost.

TYPES OF LIFE INSURANCE

There are various types policies of life insurance.There are

issued to meet different and special needs of the members of the

community.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,or on a earlier death.

(b) Typical maturities are ten,fifteen or twenty years upto a certain age limit.

(c) The premium has to be paid till the maturity of the policy if the assured

remains alive.

(d) This policy is suitable for those who wish to save money regularly and plan

to use it after a specific no of years.

(e) This policy is useful to the assured as well as his family members.

Whole life policy:

(a) Life Insurance, orWhole of Life Assurance (in the Commonwealth), 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.

(b) Under whole life policy premiums have to be paid through out the life

time of the assured.(c) In actuarial science, 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, or equivalently, the present value of their expected values .

(d) This policy does not give protection to the assured but it gives protection

to his family.

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(e) It is the cheapest form of policy,because this policy is issued with lower

rate of insurance premiums.

Limited payment whole life policy:

(a) The whole life insurance is the form of permanent insurance policy.It provides

just what its name implies ,insurance coverage for the entire life of insured.

(b) In case of limited payment whole life policy premiums are payable for a selected numberof years or until death if it occurs within this period.

(c) The assured knows how much amount he will be required to pay no matter how he

lives.

(d) This policy is just similar to the endowment policy as regards to payments of

premiums,as the term is fixed in both cases,but in limited payment policy,the amount

becomes payable only on death of the assured.

Convertible whole life policy:

(a) This plan of assurance is designed to meet the needs of those who areinitially unable to pay the larger premium required for a Whole Life or Endowment

Assurance Policy, but hope to be able to pay for such a policy in the near future.

(b) Policy holders get an option of converting an policy into endowment

assurance or limited payment whole life assurance.

(c) For all people with earned income under Category I and unearned incomes

under Category II, basically Standard and sub-Standard lives attracting EMR classes I

and I.

(d) If the option is used the policy gets converted into endowment policy then

the rate of premium increases.If the option is not used the policy continues as a whole

life policy with the lower rate of premium.

Joint life policy :

(a) Joint life insurance policies are policies that enables two individuals

to be protected, but the full value of the policy is paid only once at the time of

either insurer's death. This is also referred to as the joint first to die clause.(b) This is the basic level of a joint life insurance policy. This simply states that

if and when one of the policyholder dies then payout is made. 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.

(c) The money assured under this policy on two or more lives is payable at theend of a fixed or on the first death of any lives assured,whichever is earlier.

(d) Generally partenership firms go in for such policies to provide for the return

on capital of the partner who dies.

(e) This policy is suitable for persons who are employed and have the capacity

to pay regular premiums.

With or without profit policy:

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(a) Conventional with-profits contracts have a basic sum assured to which

bonuses are added. The basic sum assured is the minimum amount of life

assurance payable on death; for endowment contracts it is also the minimum

lump sum payable at maturity.

(b) With-profits funds employ the concept of smoothing. That is, 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.(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.

(d) LIFE INSURANCE CORPORATION OF INDIA(LIC) gives good

amount of bonus to its policy holders by way of profit.

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.(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. 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. Guaranteed payouts are also

available for a certain number of years.

(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.

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Childrens Endowment policy :

(a) This type of policy may be taken for the provisions of marriage of

children when they achieve a certain age.

(b) It may also be taken to ensure for the education of the children

after the death of the assured.

(c) IF unfortunately their parents die their studies continues

unhampered.

(d) In this the insurer pays annuity payments at the end of selected

numbers of years. Annuity means the amount is payable not at

once but on monthly,quarterly,half-yearly or yearly instalments.

Jeevan sathi policy:

(a) This is an Endowment Assurance Plan issued on the lives of husband

and wife. The plan provides financial protection against death of both

the lives. It pays the maturity amount on survival of one or both the

lives to the end of the policy term.

(b) Premiums are payable yearly, half-yearly, quarterly, monthly or

through salary deductions as opted by you throughout the term of the

policy or till the first death of the lives covered, whichever is earlier.(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.

(d) The policy continues even after that due date till the date of maturity.

The same amount of money is payable to the survivor or nominee.

GENERAL INSURANCE

INTRODUCTION:

Insurance other than Life Insurance falls under the category of

General Insurance. General Insurance comprises of insurance of property against

fire, burglary etc, personal insurance such as Accident and Health Insurance, and

liability insurance which covers legal liabilities. There are also other covers such as

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Non-life insurance companies have products that cover property

against Fire and allied perils, flood storm and inundation, earthquake and so on.

There are products that cover property against burglary, theft etc. The non-life

companies also offer policies covering machinery against breakdown,there are

policies that cover the hull of ships and so on. A Marine Cargo policy covers

goods in transit including by sea, air and road. Further, insurance of motor vehicles

against damages and theft forms a major chunk of non-life insurance business.

Personal insurance covers include policies for Accident, Health etc.

Products offering Personal Accident cover are benefit policies. Health insurance

covers offered by non-life insurers are mainly hospitalization covers either on

reimbursement or cashless basis. The cashless service is offered through Third

Party Administrators who have arrangements with various service providers, i.e.,

hospitals. The Third Party Administrators also provide service for reimbursement

claims. Sometimes the insurers themselves process reimbursement claims.

Industries also need to protect themselves by

obtaining insurance covers to protect their building, machinery,

stocks etc. They need to cover their liabilities as well. Financiers

insist on insurance. So, most industries or businesses that are

financed by banks and other institutions do obtain covers. But are

they obtaining the right covers? And are they insuring adequately

are questions that need to be given some thought. Also

organizations or industries that are self-financed should ensurethat they are protected by insurance.

TYPES OF GENERAL INSURANCE

Marine insurance:

(a) Marine Insurance covers the loss or damage ofships, cargo, terminals, and any transport or cargo by which

property is transferred, acquired, or held between the pointsof origin and final destination.

(b) The different terms refer to the difficulties of provinga loss where there might be no evidence of such a loss. Inthis respect, marine insurance differs from non-marineinsurance, where the insured is required to prove his loss.

Traditionally, in law, marine insurance was seen as aninsurance of 'the adventure', with insurers having a stake

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and an interest in the vessel and/ or the cargo rather than,simply, an interest in the financial consequences of thesubject-matter's survival.

(c) Marine insurance is a contract under which theinsurer agrees to compensate the insured againstlosses,caused due to perils(dangers) of sea.

(d) All principals of insurance is applicable to the marineinsurance.

Fire insurance:

(a) A fire insurance policy involves an insurancecompany agreeing to pay a certain amount equivalent to theestimated loss caused by fire to the insured, within the timespecified in the contract.

(b) Fire Insurance covers your home's structure, or fixing

and fittings, against hazard and provides you with thefinancial resources to replace what you have lost, so that youcan get back to normal as soon as possible.

(c) Fire insurance originated in Germany in the 16th

century.(d) It is contract of insurance under which the insurer

agrees to compensate the insured against the lost to theproperty due to fire.

(e) All types of principles are applicable to fire insurance.

Motor vehicle insurance:

(a) Vehicle insurance (also known as autoinsurance, car insurance, or motor insurance) isinsurance purchased for cars, trucks, and other vehicles. Itsprimary use is to provide protection against losses incurredas a result of traffic accidents and against liability that couldbe incurred in an accidents.

(b) This scheme applies to the victims of hit and rundriver accidents. Where the driver deemed to be responsiblefor an accident, leaves the scene and is not traced, the MIBwill consider a claim for compensation in respect of bothproperty and personal injury damages.

(c) This scheme involves accidents caused by thenegligent driving of foreign motorists. The MIB will undercertain circumstances agree to step in and deal with claims

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from innocent victims of such accidents, rather than forcethe injured victim to seek compensation from a potentiallyuncommunicative foreign insurer. The concept of thisscheme was introduced to the UK as a result of EuropeanUnion (EU) legislation.

(d) The importance of this insurance increases day

by day as more and more people are buying vehicles,whichcauses more and more accidents.

Personal accident insurance:

(a) The accident insurance covers loss due to accidents.(b) The individuals can take accidents insurance policy toprotect against risk to life or disability arising directly fromaccidents.(c) The amount of compensation depends on the amount

insured with the insurance company.(d) In present times life insurance policies also coveraccident insurance.

Medical insurance:

(a) Health insurance, like other forms of insurance, isa form of collectivism by means of which people collectivelypool their risk, in this case the risk of incurring medical

expenses.(b) By estimating the overall risk of healthcareexpenses, a routine finance structure (such as a monthlypremium or annual tax) can be developed, ensuring thatmoney is available to pay for the healthcare benefits specifiedin the insurance agreement. The benefit is administered by acentral organization such as a government agency, privatebusiness, or not-for-profit entity.(c) The contract can be renewable annually or monthly.

The type and amount of health care costs that will be coveredby the health insurance company are specified in advance, inthe member contract or "Evidence of Coverage" booklet. Theindividual insured person's obligations may take severalforms.(d) The claim amount depends upon the amount ofmedical expanses and type of sickness.

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Crop insurance:

(a) Crop insurance is purchased by agriculturalproducers, including farmers, ranchers, and others to protectthemselves against either the loss of their crops due tonatural disasters, such as hail, drought, and floods, or the loss

of revenue due to declines in the prices of agriculturalcommodities.(b) Crop-hail insurance is generally available fromprivate insurers (in countries with private sectors) becausehail is a narrow peril that occurs in a limited place and itsaccumulated losses tend not to overwhelm the capitalreserves of private insurers.(c) The National Agricultural Insurance (NAIS) forcrops has been specially introduced since 2000 to provideinsurance cover to small and marginal farmers.

(d) Insurer cover is provided if any crops fail due tonatural calamities like floods,cyclones etc.(e) This kind of insurance will definitely help thefarmers as they have always been victim of losses due tonatural calamities.

Fidelity guarantee insurance:

(a) Fidelity insurance protects organizations from loss

of money, securities, or inventory resulting from crime.Common Fidelity claims allege employee dishonesty,embezzlement, forgery, robbery, safe burglary, computerfraud, wire transfer fraud, counterfeiting, and other criminalacts.

(b) Any business employer needs to be concerned withEmployee Dishonesty or any business handing cash orsecurities needs protection from robbery or theft will needFidelity.

(c) From fictitious employees, dummy accountspayable, non-existent suppliers to outright theft of money,securities and property. Fraud and embezzlement in theworkplace is on the rise, occurring in even the best workenvironments.

(d) These frauds can go on for years, and whendiscovered the ultimate impact can be enormous. Smallercompanies are especially vulnerable to Fidelity crimes.

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(e) The insurer pays the loss to the employer as peragreed terms in the contract.

(f) All principles are applicable to this insurance policy.

Burglary insurance

(a)Burglary means to go into a house illegally to stealits things.(b) Burglary falls in the category of property insurance.

(c) In case of burglary policy the loss or damage of

household goods and properties due to

theft,burglary,house breaking and similar kinds of acts

are covered.

(d)The actual loss is compensated by the insurancecompany.

Cattle insurance

(a) In cattle insurance a particular amount of money isgiven to the insured in the event of death of animals like bullscows buffaloes goats etc.

(b) The cause of death of cattle may be accidents or

disease etc The compensation is given by the insurer if deathoccurs due to any cause covered in the policy.(c) This kind of insurance helps the farmers.Generally

farmers buy cattle from their savings.If their cattle die thenthey have to suffer huge loss.To reduce this loss,cattleinsurance has been made.

Cash in transit insurance:

(a) The Insurer under this Policies indemnify the

Insured against loss of Cash, Currency Notes,Coins, Securities for Money,Postal Orders,Stamps,and Cheques etc. whilst in transit enroute to finaldestination and/or in locked safe.

(b)The Cover is available for the loss of Cash drawnfor the payment of wages,salaries and other

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earnings or for petty Cash in direct transit fromthe Bank to the Insureds premises.

(c) The cash in transit insurance is important to anybusiness as large amount of money or cash istaken out of the bank to meet the day to dayexpenses of business and pay wages to

employees.

Difference Between Life Insurance And

General Insurance

Life Insurance General Insurance

1. What Does It Include?

Life insurance includes the

insurance of life of an individual. It is

a contract between the

assurer(insurance company) and the

assured (insured person), under

which the assurer agrees tocompensate the assured a certain

amount of money on the expiry of a

certain term, or on death, whichever

is earlier; for a consideration called

premium.

General insurance includes all other

types of insurance except life

insurance. Examples of General

insurance are fire insurance, marine

insurance, health insurance, etc. It is

a contract between the insurer andinsured, under which the insurer

agrees to compensate a certain

amount of money on the happening

of an uncertain event, for a

consideration called premium.

2. What Is The SubjectMatter?

Human life is the subject matter of

life insurance contract.

Generally goods, property of any kind

are the subject matter of general

insurance.

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3. Indemnity.

Life insurance is not a contract of

indemnity because no one can

measure the value of human life.

Fire, marine and other contracts of

insurance are contracts of indemnity

because the life of goods can be

measured in terms of money.

4.Terms Of Contract.

Life insurance contract is generally

taken by individuals non life

insurance for long term. Hence, it is

a kind of continuing contract.

Individuals generally take for oneyear.

5. Insurable Interest.

Insurable interest must be present

only at the time of taking out the

policy, it need not be present at the

maturity of the policy.

In fire insurance, insurable interest

must be present both at the time of

taking the policy and when loss

occurs in marine insurance, it must

be present only at the time when

loss occurs, it need not be present at

the time of making the policy.

6. Insurance/ Assurance.

The term Assurance is used for life

insurance business.

The term Insurance is used to refer

other kinds of non-life policies.

7. Surrender Policy.

In case of life insurance policy, it can

be surrendered before its maturity.

The marine and fire insurance

policies and other general policies

cannot be surrendered by the insured

before maturity.

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8.Why They Are Taken By

Individuals?

Individuals take life policies to

provide protection to their familymembers in case something

happens to them. Life policies are

also taken for providing for old age,

tax concessions, taking loans, etc.

Individuals take general insurance

policies to protect their goods,property, etc.

a)Return On Investment.

Life policies which are made for longterm, provide some amount of

investment. For e.g. 15 to 20% profit

margin.

General insurance policies do notcontain any investment element in

them. They do not offer any kind of

return on maturity.

Life Insurance vs General Insurance

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