DIFFERENCE AMONG LIFE INSURANCE, FIRE INSURANCE, AND MARINE INSURANCE..
Basis of Difference
Life Insurance
Fire Insurance
Marine Insurance
Risk
The risk of death is certain. The time and place of death is not known. The amount of policy is paid to the assured if the policy natures during his life time or to his nominee in case of death.
The risk is not certain. It is not necessary that the goods insured will catch fire.
The risk is not certain There m or may not be marine losses
Purpose.
The object of life insurance is to provide financial protection to the family members and promotion of thrift. It is a good investment.
The purpose is to get claim if the insured property catches
fire.
The object is to get compensat on actual loss.
3.
Time period.
The life insurance policy is for a longer period say 10, 15, 20 years.
This policy is sold for short period say one year. It may be renewed at the close of a year.
The marine policy, is for a speci short of time which does exceed 12 months or it is for specified voyage..
Premium,
The premium is worked out on the age of the insured and the time of the policy.
The premium is determined on the type of rick involved. The greater the risk of fire, the higher is the rate of premium and vice versa.
The premium is decided on nature of the risk undertake
Friday, November 6, 2009
Thursday, November 5, 2009
Life Insurance
Insurance Corporation. The Pakistan Insurance Corporation •as established in 1953 with an authorized capital of Rs. ten million. Federal Government hold 51% of the capital and the remaining 40% is subscribed by the pubte including national insurance companies. The Pakistan Insurance Corporation (PIC) provides (1) reinsurance facilities within the country and overseas (2) it helps the development of national insurance industry by helping in the promotion of new companies and rendering technical advice to such companies (3) it also promotes regional co-operation in the field of insurance (4) it also administers the Export Guarantee Scheme on behalf to the Government.
Export Credit Guarantee Scheme, It is entirely owned by the FederalGovernment and is managed by the Pakistan Insurance Corporation. It providessecurities to the commercial banks to advance money to the exporters toindemnify for the loss sustained due to non-realization of sale proceeds onaccount of political and commercial risks.
Regional Co-operation. It is an R.C.D. collaboration in the field ofinsurance for the purpose of reducing foreign exchange outflow and proving thestandard of insurance and reinsurance in Pakistan.
National Insurance Corporation. National Insurance Corporation wasset up in 1973 with a working capital of Rs.5 million to preserve the public sectorresources and also the provide general insurance service at lower cost to thepublic and semi-public organization. The profit darned is to be reverted to theGovernment. The Corporation has achieved some progress in respect ofreduction in the cost of insurance, early settlement of claims and reduction ofoutflow of foreign exchange on account of reinsurance premium.
Export Credit Guarantee Scheme, It is entirely owned by the FederalGovernment and is managed by the Pakistan Insurance Corporation. It providessecurities to the commercial banks to advance money to the exporters toindemnify for the loss sustained due to non-realization of sale proceeds onaccount of political and commercial risks.
Regional Co-operation. It is an R.C.D. collaboration in the field ofinsurance for the purpose of reducing foreign exchange outflow and proving thestandard of insurance and reinsurance in Pakistan.
National Insurance Corporation. National Insurance Corporation wasset up in 1973 with a working capital of Rs.5 million to preserve the public sectorresources and also the provide general insurance service at lower cost to thepublic and semi-public organization. The profit darned is to be reverted to theGovernment. The Corporation has achieved some progress in respect ofreduction in the cost of insurance, early settlement of claims and reduction ofoutflow of foreign exchange on account of reinsurance premium.
Wednesday, November 4, 2009
Business use of Life Insurance
Business use of Life Insurance..
1. Effect on business. If the sole proprietor has insured himseff for a big amount and he dies before the attainment of specified age in the contract, the beneficiaries can operate the business on receiving the claim from the insurance company. The business in thus not closed.
2 Availability of credit. The sole proprietor can obtain loan for meeting the operating cost of-a business against the life insurance policy.
Staying power. If the beneficiary is not able to run the business on thepremature death of insured, he can at least stay in the business for a short periodand sell the business in the running condition which certainly fetches a betterprice.
Shock absorber. The death of a sole proprietor completely upsets thebusiness. The payment of claim by the insurance company acts as a shockabsorber and promotes financial security for operating the business.
Payment of debts. If the sole proprietor is insured, the creditors haveinsurable interest in him They can receive the amount of loan on the settlementof claim on the sudden death of the proprietor
6- Financial strength. The periodic payments by the policy holder accumulates large saving which provides financial strength to the sole proprietor
Partnership insurance. In a business partnership, if the partners haveobtained a joint life policy, the surviving partner is not financially affected. He canpurchase the interest of the deceased partner.
Benefit to stock holders. The stock holders in a close corporation may
also have a joint life policy and thus ensure the availability of funds for the business.
9. Insurance of key executive. The life insurance companies also providethe benefit of insuring the key executive of the firm. If the key executive diesbefore the specified age, the firm is compensated of the loss as caused in the
disruption of the company.
10. Group Life Insurance. The firm can provide an added benefit to its employees by giving them a group life insurance policy. In the group insurance, the maximum limit of payment on the death of an employee is fixed by the insurance company. The employees, thus, also benefit from the life insurance
companies.
1. Effect on business. If the sole proprietor has insured himseff for a big amount and he dies before the attainment of specified age in the contract, the beneficiaries can operate the business on receiving the claim from the insurance company. The business in thus not closed.
2 Availability of credit. The sole proprietor can obtain loan for meeting the operating cost of-a business against the life insurance policy.
Staying power. If the beneficiary is not able to run the business on thepremature death of insured, he can at least stay in the business for a short periodand sell the business in the running condition which certainly fetches a betterprice.
Shock absorber. The death of a sole proprietor completely upsets thebusiness. The payment of claim by the insurance company acts as a shockabsorber and promotes financial security for operating the business.
Payment of debts. If the sole proprietor is insured, the creditors haveinsurable interest in him They can receive the amount of loan on the settlementof claim on the sudden death of the proprietor
6- Financial strength. The periodic payments by the policy holder accumulates large saving which provides financial strength to the sole proprietor
Partnership insurance. In a business partnership, if the partners haveobtained a joint life policy, the surviving partner is not financially affected. He canpurchase the interest of the deceased partner.
Benefit to stock holders. The stock holders in a close corporation may
also have a joint life policy and thus ensure the availability of funds for the business.
9. Insurance of key executive. The life insurance companies also providethe benefit of insuring the key executive of the firm. If the key executive diesbefore the specified age, the firm is compensated of the loss as caused in the
disruption of the company.
10. Group Life Insurance. The firm can provide an added benefit to its employees by giving them a group life insurance policy. In the group insurance, the maximum limit of payment on the death of an employee is fixed by the insurance company. The employees, thus, also benefit from the life insurance
companies.
Tuesday, November 3, 2009
KINDS OF LIFE INSURANCE POLICIES
KINDS OF LIFE INSURANCE POLICIES...
The principal types of life insurance policies which are ordinarily issued are as under:
(1) Whole life Policy. The whole life policy runs for the whole term of thelife of the insured, The insured pays premium throughout his life time. It is paid tothe beneficiary when the insured dies. There are three types of whole life policies(a) Straight Life (b) Limited Payment Life and (c) Single Premium Life.
Straight Life. Straight life is the policy in which the premiums arepayable every year as long as the insured lives in this world.
Limited payment life. If the insured is to pay the premium for a statednumber of years, the insurance is called limited payment life.
Single premium life. Single premium life involves only one premiumpayment by the insured.
Endowment Life Policy. This policy runs for a particular period or uptoa specified age. The payment of the stated money becomes payable at the end ofthe period mentioned in the policy. In case the insured dies before the policymatures, the payment of stated sum of money in the policy, becomes payable tothe beneficiary. However, the premium have to be paid till the time of maturity.The advantage of this policy is that it combines saving for old age and also givesprotection to the insured family in the event of premature death.
Term Life Policy. Term policy as the name say maximum for ten yearsmaximum signifies is an insurance policy for a specified period of time saymaximum for ten years maximum. If the assured person dies before a certaindate or age, the insurance company will pay the face value of the policy to thebeneficiary. Term policy can be compared to a fire or marine policy which givesinsurance coverage within the time limit of the policy. If a provision is made in theterms of the policy, the term policy can also be converted into or whole -ftendowment policy.
The principal types of life insurance policies which are ordinarily issued are as under:
(1) Whole life Policy. The whole life policy runs for the whole term of thelife of the insured, The insured pays premium throughout his life time. It is paid tothe beneficiary when the insured dies. There are three types of whole life policies(a) Straight Life (b) Limited Payment Life and (c) Single Premium Life.
Straight Life. Straight life is the policy in which the premiums arepayable every year as long as the insured lives in this world.
Limited payment life. If the insured is to pay the premium for a statednumber of years, the insurance is called limited payment life.
Single premium life. Single premium life involves only one premiumpayment by the insured.
Endowment Life Policy. This policy runs for a particular period or uptoa specified age. The payment of the stated money becomes payable at the end ofthe period mentioned in the policy. In case the insured dies before the policymatures, the payment of stated sum of money in the policy, becomes payable tothe beneficiary. However, the premium have to be paid till the time of maturity.The advantage of this policy is that it combines saving for old age and also givesprotection to the insured family in the event of premature death.
Term Life Policy. Term policy as the name say maximum for ten yearsmaximum signifies is an insurance policy for a specified period of time saymaximum for ten years maximum. If the assured person dies before a certaindate or age, the insurance company will pay the face value of the policy to thebeneficiary. Term policy can be compared to a fire or marine policy which givesinsurance coverage within the time limit of the policy. If a provision is made in theterms of the policy, the term policy can also be converted into or whole -ftendowment policy.
Monday, November 2, 2009
. HOW TO GET LIFE INSURANCE POLICY
. HOW TO GET LIFE INSURANCE POLICY
The method of procuring life insurance policy is very simple. The mair involved in effecting the life insurance policy are as under:
1 Selection of the company. A person who wants to get his life -r. must select an insurance company which has a good credit standing.
Proposal. The person desirous of being insured has to fill in theProposal Form. He has to abide by the basic principles of insurance explain
the true facts. The concealment of facts will lead to the cancellation of contract
Medical Examination. The company on receipt of the Proposal Formwill get the proposer medically checked up. On receipt of the doctor's report, thecompany will consider the proposal,
Acceptance of the Proposal, On receipt of the Proposal Form and thesatisfactory medical report, the company will issue a Letter of Acceptancerequesting to complete the transaction at the earliest so that the protection andsecurity guaranteed by the policy is issued to him by the company.
Payment of Premium. The risk of life is covered from the date, thepremium is paid. The premium may be paid in easy instalments monthly,quarterly, half yearly, or annually.
6.' Issue of Policy. On receipt of the premium, the Executive Director of Insurance company issues the Life Insurance, Policy of the Insured which states, name, policy number, commencement date, maturity date, amount of premium, name of the nominee
The method of procuring life insurance policy is very simple. The mair involved in effecting the life insurance policy are as under:
1 Selection of the company. A person who wants to get his life -r. must select an insurance company which has a good credit standing.
Proposal. The person desirous of being insured has to fill in theProposal Form. He has to abide by the basic principles of insurance explain
the true facts. The concealment of facts will lead to the cancellation of contract
Medical Examination. The company on receipt of the Proposal Formwill get the proposer medically checked up. On receipt of the doctor's report, thecompany will consider the proposal,
Acceptance of the Proposal, On receipt of the Proposal Form and thesatisfactory medical report, the company will issue a Letter of Acceptancerequesting to complete the transaction at the earliest so that the protection andsecurity guaranteed by the policy is issued to him by the company.
Payment of Premium. The risk of life is covered from the date, thepremium is paid. The premium may be paid in easy instalments monthly,quarterly, half yearly, or annually.
6.' Issue of Policy. On receipt of the premium, the Executive Director of Insurance company issues the Life Insurance, Policy of the Insured which states, name, policy number, commencement date, maturity date, amount of premium, name of the nominee
Sunday, November 1, 2009
LIFE INSURANCE DISTINGUISHED FROM OTHER TYPES OF
LIFE INSURANCE DISTINGUISHED FROM OTHER TYPES OF
INSURANCES...
The main difference between life insurance and other type of insurances are as follows:
1. Not a contract of Indemnity: Life insurance is not a contract of indemnity. In case of fire or marine insurance, the insured is entitled to claim the actual loss caused to the insured property within the insured amount. In life insurance, the indemnity principle does not apply as no upper limit can be fixed of the life of the insured.
2 Full payment of insured amount: In case of life insurance, if the insured attains the age prescribed in the life insurance contract, he would be paid the stipulated amount by the company. In case of other types of insurances, the premiums are never paid back to the insured.
Future income: Life insurance is the only form of insurance designed tocover the loss of future income as a result of death of the insured. In case of fireor marine insurances, the actual loss of the property is covered which is no caseexceeds the insured sum.
Element of Investment: The life insurance undertakes to protect theinsured's family, creditors and others who have insurabfe interest on the death of
a person. It also provides an opportunity of investment by making a period! payment (premium) to the company. The life insurance company pays th insured amount on the happening of death of the insured or to his dependants, the insured attains the specified age in the contract, the premiums and thi compound rate of interest is paid back in lump sum to the insured. Lif insurance thus combines the elements of Investment and protection. Tru fire or, marine or all other type of insurances give protection only to the insured t restore him to his original financial position in event of loss.
5. Time Element: Life insurance policy is issued for longer period of timi depending upon the age, health, and profession of the insured. The other form of insurances are issued for a short period of time. The fire insurance is renewei annually. The marine insurance is for the particular voyage etc.
6 Surrender Value: In the life insurance policy, the insured can give u the policy as and when he desires. If the policy is surrendered after a period c three years, the insurer will pay a certain percentage of the total premium to thi insured. In case of fire or marine insurance, the insured cannot give up thi insurance policy as the premium has already ben received by the insurer.
7.- Assignment of policy: A fire insurance policy can be assigned to i third party by the insured giving a due notice to the insurance company. In case a life insurance, the policy cannot be assigned to a third party without the prio approval of the insurer
INSURANCES...
The main difference between life insurance and other type of insurances are as follows:
1. Not a contract of Indemnity: Life insurance is not a contract of indemnity. In case of fire or marine insurance, the insured is entitled to claim the actual loss caused to the insured property within the insured amount. In life insurance, the indemnity principle does not apply as no upper limit can be fixed of the life of the insured.
2 Full payment of insured amount: In case of life insurance, if the insured attains the age prescribed in the life insurance contract, he would be paid the stipulated amount by the company. In case of other types of insurances, the premiums are never paid back to the insured.
Future income: Life insurance is the only form of insurance designed tocover the loss of future income as a result of death of the insured. In case of fireor marine insurances, the actual loss of the property is covered which is no caseexceeds the insured sum.
Element of Investment: The life insurance undertakes to protect theinsured's family, creditors and others who have insurabfe interest on the death of
a person. It also provides an opportunity of investment by making a period! payment (premium) to the company. The life insurance company pays th insured amount on the happening of death of the insured or to his dependants, the insured attains the specified age in the contract, the premiums and thi compound rate of interest is paid back in lump sum to the insured. Lif insurance thus combines the elements of Investment and protection. Tru fire or, marine or all other type of insurances give protection only to the insured t restore him to his original financial position in event of loss.
5. Time Element: Life insurance policy is issued for longer period of timi depending upon the age, health, and profession of the insured. The other form of insurances are issued for a short period of time. The fire insurance is renewei annually. The marine insurance is for the particular voyage etc.
6 Surrender Value: In the life insurance policy, the insured can give u the policy as and when he desires. If the policy is surrendered after a period c three years, the insurer will pay a certain percentage of the total premium to thi insured. In case of fire or marine insurance, the insured cannot give up thi insurance policy as the premium has already ben received by the insurer.
7.- Assignment of policy: A fire insurance policy can be assigned to i third party by the insured giving a due notice to the insurance company. In case a life insurance, the policy cannot be assigned to a third party without the prio approval of the insurer
. ESSENTIALS OF LIFE INSURANCE CONTRACT
ESSENTIALS OF LIFE INSURANCE CONTRACT...
The important essentials of life insurance contract are as follows:
Insurable Interest. Insurable interest is a legal requirement in all type:of insurance contracts. A person who wants to get his life insured for a specifieFraud or misrepresentation. The person desirous of getting a liftpolicy should not conceal any fact about his age, profession, disease etc Bottthe parties involved in the contract should be honest in their dealings.
Notice of Proof of loss. In case of the death of the insured person, th*person/persons having insurable interest must give immediate notice of the deatrof the insured to the insurance company.
4 Death due to war or aviation accident. If the insured person dies w war or from a certain aviational accident, which are excluded perils in life insu^ei contract, the insurer will not pay the claim.
5. Principle of Indemnity. The life insurance and most health insurance contracts are not subject to the principle of indemnity.
The important essentials of life insurance contract are as follows:
Insurable Interest. Insurable interest is a legal requirement in all type:of insurance contracts. A person who wants to get his life insured for a specifie
Notice of Proof of loss. In case of the death of the insured person, th*person/persons having insurable interest must give immediate notice of the deatrof the insured to the insurance company.
4 Death due to war or aviation accident. If the insured person dies w war or from a certain aviational accident, which are excluded perils in life insu^ei contract, the insurer will not pay the claim.
5. Principle of Indemnity. The life insurance and most health insurance contracts are not subject to the principle of indemnity.
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