The insurance from business point of view can be categorised into:
2.General Insurance and
(1) Life Insurance
Life Insurance is different from other insurance in the sense that the subject matter of insurance is life of human being. The insurer will pay the fixed amount of insurance at the death or at the expiry of certain period. At present, life insurance enjoys maximum scope because each and every person requires the insurance. This insurance provides protection to the family at the premature death or gives adequate amount at the old age when earning capacities are reduced. Types of insurance plans offered in our country:
– Term Policy
– Whole life Policy
– Endowment Life Policy
– Health Insurance Schemes
– Joint Life Policy
– WITH PROFIT AND WITHOUT PROFIT POLICY
– DOUBLE ACCIDENT BENEFIT POLICY
– ANNUITY POLICY
– POLICIES FOR WOMEN
TERM POLICY: In case of Term assurance plans, insurance company promises the insured for a nominal premium to pay the face value mentioned in the policy in case he is no longer alive during the term of the policy.
Term assurance policy has the following features:
•It provides a risk cover only for a prescribed period. Usually these policies are short-term plans and the term ranges from one year onwards. If the policyholder survives till the end of this period, the risk cover lapses and no insurance benefit payment is made to him.
•The amount of premium to be paid for these policies is lower than all other life insurance policies. As savings and reserves are not accumulated under this policy, it has no surrender value and loan or paid-up values are not allowed on these policies.
•This plan is most suitable for those who are initially unable to pay high Premium
•When income is low as required for Whole Life or Endowment policies, but requires life cover for a high amount.
WHOLE LIFE POLICY
This policy runs for the whole life of the assured. The sum assured becomes payable to the legal heir only after the death of the assured. The whole life policy can be of three types.
•Ordinary whole life policy – In this case premium is payable periodically throughout the life of the assured.
•Limited payment whole life policy – In this case premium is payable for a specified period (Say 20 Years or 25 Years) Only.
•Single Premium whole life policy – In this type of policy the entire premium is payable in one single payment.
ENDOWMENT LIFE POLICY
In this policy the insurer agrees to pay the assured or his nominees a specified sum of money on his death or on the maturity of the policy which ever is earlier. The premium for endowment policy is comparatively higher than that of the whole life policy. The premium is payable till the maturity of the policy or until the death of the assured which ever is earlier. It provides protection to the family against the untimely death of the assured.
HEALTH INSURANCE SCHEMES
An individual is subject to uncertainty regarding his health. He may suffer from ailments, diseases, disability caused by stroke or accident, etc. For serious cases the person may have to be hospitalized and intensive medical care has to be provided which can be very expensive. It is here that medical insurance is helpful in reducing the financial burden. These days the vulnerability to lifestyle diseases such as heart, cancer, neurotic, and pollution based, etc are on the increase. So it makes sense for an individual to go for medical insurance cover.
JOINT LIFE POLICY
This policy is taken on the lives of two or more persons simultaneously. Under this policy the sum assured becomes payable on the death of any one of those who have taken the joint life policy. The sum assured will be paid to the survivor(s). For example, a joint life policy may be taken on the lives of husband and wife, sum assured will be payable to the survivor on the death of the spouse.
WITH PROFIT AND WITHOUT PROFIT POLICY
Under with profit policy the assured is paid, in addition to the sum assured, a share in the profits of the insurer in the form of bonus. Without profit policy is a policy under which the assured does not get any share in the profits earned by the insurer and gets only the sum assured on the maturity of the policy. With profit and without profit policies are also known as participating and non –participating policies respectively.
DOUBLE ACCIDENT BENEFIT POLICY
This policy provides that if the insured person dies of any accident, his beneficiaries will get double the amount of the sum assured.
Under this policy, the sum assured is payable not in one lump sum payment but in monthly, quarterly and half-yearly or yearly installments after the assured attains a certain age. This policy is useful to those who want to have a regular income after the expiry of a certain period e.g. after retirement. Annuity is paid so long as the assured survives. In annuity policy medical checkup is not required. Annuity is paid so long as the assured survives.
POLICIES FOR WOMEN
Women, now a days are free to take life assurance policies. However, some specially designed policies suit their needs in a unique manner; the synopsis of some these policies are as follows:
a. Jeevan Sathi is also known a Life Partner plan where the husband and wife are covered under this endowment policy, which gives the following benefits.
i. On maturity, provided both are alive, full sum assured with bonus is paid.
ii.On the death of one of the assured during the period of the policy, basic sum assured is paid to the surviving partner, who is not required to pay any further premiums.
iii.The surviving partner remains covered for the full sum assured. If she/he dies, then the sum assured is paid to the nominee, but this is before the maturity date.
iv.The surviving partner will be paid sum assured with bonuses if he survives till the maturity date. Hence this policy gives a comprehensive family protection.
b.Jeevan Sukanya is highlighted by the following points.
i.Only female child aged between 1 to 12 years is covered in this plan.
ii.band is automatically covered under the policy after marriage.
iii.Risk of the child starts either after 2 years of taking the policy or not before the age of 7, whichever is early.
iv.Premium paying period is 20 years minus age at entry.
v.On surviving the age of 20, the life assured receives the sum assured as survival benefit and the policy continues to cover the life assured till maturity date when vested bonus will be paid only. If life assured dies before maturity, sum assured with bonuses will be paid.
Group life insurance is a plan of insurance under which the lives of many persons are covered under one life insurance policy. However, the insurance on each life is independent of that on the other lives. Usually, in group insurance, the employer secures a group policy for the benefit of his employees. Insurer provides coverage for many people under single contract.
POLICIES FOR CHILDREN
Policies for children are meant for the various needs of the children such as education, marriage, security of life etc. Some of the major children policies are:
1.Children’s deferred assurances
2.Marriage endowment and educational annuity plans
3.Children endowment policy
MONEY BACK POLICY
In this case policy money is paid to the insured in a number of separate cash payments. Insurer gives periodic payments of survival benefit at fixed intervals during the term of policy as long as the policyholder is alive.
(2) General Insurance
The general insurance includes property insurance, liability insurance and other forms of insurance. Fire and marine insurance comes under property insurance. Liability insurance includes motor, theft, fidelity and machine insurances to a certain extent. The strictest form of liability insurance is fidelity insurance whereby the insurer compensates the loss to the insured when he is under the liability of payment to the third party. Types of insurance policies available are:
– Health insurance
– Medi-claim policy
– Personal accident policy
– Group insurance policy
– Automobile insurance
– Worker’s compensation
– Liability insurance
– Aviation insurance
– Business insurance
– Fire insurance policy
– Travel insurance policy
(3) Social Insurance
The social insurance is to provide protection to the weaker sections of the society who are unable to pay the premium for adequate insurance. Pension plan, disability benefits, unemployment benefits, sickness insurance and industrial insurance are the various forms of social insurance.