Life Insueance - A Slideshow

Meaning And Features 

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Life insurance is where in consideration consideratio n 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 insurable interest 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

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

Benefits of life insurance   

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It is a superior saving plan in comparison to other plans Encourages savings savings as it can be done by way of installments instal lments Life insurance policy can given as a security to raise raise loans loa ns and have ready marketability as after a certain period peri od it can be surrendered for a cash value Income tax relief is available on premium paid and is treated as an expenditure It provides provides economic protection to the family members me mbers It is used as investments It helps the govt. govt. as they the y get get long term term funds to finance developmental developmental projects

Procedure for issuing life insurance 

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

The policy 

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

Non disclosure and misrepresentation  

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

Time for disclosure 

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

Double insurance  

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 When more more than one police is taken to co cover ver same risk. In case of life insurance the person can recover the amount on all polices but in case of non-life insurance the principle of  indemnity applies The insured can not recover recover more than the actual loss l oss and insurer who is made liable li able to pay can claim from co-insurer co-insurer REINSURANCE  When one insuranc insurancee company company accepts accepts more more liability liability that it can bear it can further furthe r insure the risk or a part Reinsurance contract does not no t affect the original contract and at the time of loss l oss the insurer claim compensation only from original insurance company  If origina o riginall contract lapses reinsurance comes to an end

Assignment of policy  A life insurance insurance possesses the features of property i.e. assign, sell, mortgage, mortgage, settle settle and and even gift  Assignment is a method by which interest interest in a life policy can be transferred 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 assignment may may be (a) absolute, for a consideration consideration (b) conditional that on the happening of a specific event without consideration consideration  A valid valid assignment once made made cannot cannot be cancelled but reassignment can be done and on assignment the earlier nomination is cancelled automatically 

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Nomination 

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 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 ha s 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 matures during during the life term term of the person or where the nominee nominee dies before policy matures the amount is payable to policy holder or legal heirs

Marine insurance 

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Risk in transportation is the oldest so is the marine insurance. Trade was done in the Mediterranean Mediter ranean sea which developed the t he insurance industry indus try.. Earlier Ea rlier a merchant would would take ta ke a loan using his ship as security and the money mon ey lender would charge interest and premium on the condition that tha t the loan would be waived if  the cargo is lost. This is similar simila r to modern marine ma rine 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 mar ine insurance contract contract requires assessment of size siz e and  value of risk, quality of ship, destination, voyage voyage route route as the the premium is calculated accordingly 

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Freight includes the profit derivable by a ship-owner from the employment of his hi s ship to carry his own goods or other movables, as well as freight payable by a third party, party, but but does not include include passage money  Insurable property means me ans any ship, goods or other movables which are exposed to maritime marit ime perils. Maritime perils means the perils consequent on, or incidental incident al to, the navigation of the sea, like:li ke:- fire, fire, war, war, pirates, rovers, rovers, thieves, thie ves, captures, seizures, restraints and detainments detainme nts of princes and peoples and any other perils

Nature of marine insurance 

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 All the essentials of a contract contract apply to it i.e. offer, offer, acceptance, acceptance, and consideration consideration The insured is bound to disclose all material facts concealment may cancel the contract The insurable insurabl e interest may not be present at the time undertaking the policy but must be at time of loss Insurable interest in terest may be defeasible if the voyage voyage comes comes to end by an event event other than marine peril like transfer of title ti tle 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

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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 insurer in the the ordinary ordinary course of his business busin ess as such, ought to know (c) any circumstance as to which information is waived by the insurer (d) every material circumstance circumst ance which the assured is bound to disclose, unless un less it comes to his knowledge too late to communicate

The Policy  

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A marine policy must specify – (1) the name of the the assured or of some person pers on who effects the insurance insu rance on his behalf  beha lf  (2) the risk insured against (3) the the voyag voyage, e, or period of time, or both, as the case may be (4) the the sum or sums insured (5) the the name or names of the insurer in surer or insurers.

Types of policies There are different types of marine policies with various names and covers they are as under  Voyage  Voyage policy:-it cover coverss a specific transit from one one point to another and it ceases on reaching the destination. It provides basic, wider, and all risk cover cover as described describe d by ICC-c, b, a  Annual policy:-if there is regular dispatch of goods then then estimated estimated annual 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 indemnif ies 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

voyage 

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 Where the contract contract is to to insure the subject-matter subject-matter at and from, or from one place to another or others, the policy is called a “voyage policy”  where the contract contract is to insure the subject-matter 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 polic y. A time policy which is is made for any time exceeding exceeding twelve months is invalid. i nvalid.

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 Where the subject-matter subject-matter is insured insured by a voyag voyagee policy  “at and from” or “from “from”” a particular particular place, it is not no t 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 adventure be not so commenced the insurer may avoid the contract.

Change of voyage 

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 Where, after the commencement commencement of the risk, the destination destination of the the ship is voluntarily voluntarily changed from the destination destin ation contemplated by the policy, policy, there is said to be a change of voyage. Unless the policy otherwise otherw ise provides, where there is a change of voyage, voyage, the insurer is discharged from liability liabili ty and it is immaterial that t hat the ship may may not in fact have left the course of voyage contemplated by the policy when the loss l oss occurs.