life insurance can be defined in many ways such as: life insurance is a “risk sharing scheme on...
TRANSCRIPT
CONCEPT OF
LIFE INSURANCE
DEFINITION OF INSURANCE
Life insurance can be defined in many ways
such as:
Life Insurance is a “Risk sharing scheme on co-
operative
basis”.
Life insurance provides financial security against
unforeseen but named event.
There is a long and very interesting History of Evaluation of life Insurance. Very briefly, we may tell you that:
“Plans for sharing risks were developed by merchant
traders in
the past hundreds of years, which with the passage of
time
developed into Social Sciences, Culture and Economy
by life
Insurance experts. Now life Insurance has developed
into a well researched and practiced discipline providing
risk coverage plans of various durations and types, with
different payment and benefit options”.
EVOLUTION OF INSURANCE
Guilds and Churches: Formed Institutes to help their
members to meet the expenses of ailment or
death. These institutions were also developed on
scientific lines and were converted into life
insurance business with the passage of time.
(Guild: Association of People). These too, were
developed on Scientific lines and later formed on
the basis of life insurance.
EVOLUTION OF INSURANCE
Mainly there are only two types of
insurance:
General Insurance
Life Insurance
Types of Life Insurance:
Individual life
Group life
TYPES OF INSURANCE
LIFE INSURANCE SAVING & RISK COVERAGE. It provides protection against the hazards of
untimely
death or living beyond a certain age.
It provides Financial Assistance for specific needs
like
marriages/education of children, building a home
in
future, a vacation after retirement or other
foreseeable
personal and business needs.
It creates a fund for obtaining loans/surrender
values to
meet unforeseen events/needs.
It provides valuable return in the shape of
bonuses.
It takes uncertainty out of one’s life by assuring that a
specified
sum of money will be available upon the happening of
a
certain event.
It is an expression of love and affection for one’s near
and dear
ones by providing for their future needs in advance.
It helps to keep business intact in case of a partner’s
permanent separation i.e. death
It helps business firms to secure the value of their key
men.
It provides expenses for treatment, surgery, and
hospitalization; in case of accidents.
LIFE INSURANCE SAVING & RISK COVERAGE.
Like all other contracts, Life insurance is also a contract between
the insurer, (State Life in our case) and the life insured. The legal
requirements for its validity are:
Offer:
Proposal submitted by the proposer
Consideration:
The premium to be paid by the proposer/life insured
Acceptance:
Acceptance of risk by the insurer through issuance of
an acceptance letter
BASICS OF INSURANCE CONTRACT
A person can become a nominee under the policy if
he/she will
suffer monitory losses equal or greater than the policy
benefits, on
the death of Life proposed.
UTMOST GOOD FAITH In Life Insurance, the proposer knows most of the
Information
required to assess the risk. For this reason, life insurance
is based
on the Principle of “UTMOST GOOD FAITH” meaning that
the
insurer decision is based to cover the risk on the basis of
information provided by the proposer.
INSURABLE INTEREST
Reduces the unemployment:Life Insurance offers unlimited opportunities for selling.
Eliminates Poverty:
This is proportionate to unemployment. The rate of poverty
increases with unemployment. Similarly, the rate of poverty
falls with employment.
Flourishes prosperity:The reduction in unemployment and poverty brings prosperity.
SOCIO-ECONOMIC BENEFITS OF LIFE INSURANCE
Reduces Various Social Crimes:
Nearly half of the various crimes are committed due to
unemployment and poverty. Better employment
opportunities help to reduce the rates of the unemployment
and poverty in the society.
Promotes the saving habits from an individual to the whole nation:
Life Insurance business is a big economic mobilize. It
mobilizes the savings of an individual into huge investment
funds.
SOCIO-ECONOMIC BENEFITS OF LIFE INSURANCE
Family Protection
With the purchase of life insurance policy, the
policyholder ensures the protection of the education
of his/her children and financial stability for his/her
family.
Saving and Investment
Besides saving element, insurance is an attractive
investment because State Life allocates 97.5% of its
surplus to policyholders as Policy Bonus.
INSURANCE AS AN INSTRUMENT OF
A Total Financial Package
Life insurance not only ensures the security of a
family but it also meet the financial needs of the
family when required.
Peace of Mind
When a person purchase life Insurance Policy,
he/she avails peace of mind.
INSURANCE AS AN INSTRUMENT OF
TERM INSURANCE. Risk covers only, no maturity benefits.
WHOLE LIFE INSURANCE. Matures at the age of 85
years, the
policyholder gets Sum Assured and bonuses at the Maturity
or the
claimant gets the sum assured plus bonuses in the event of
death
of policy holder.
ENDOWMENT INSURANCE. Matures at the expiry of the
term
selected by the policyholder who gets sum assured and
bonuses at
the Maturity or the beneficiary gets the sum assured plus
bonuses
in the event of death of policyholder.
MODES OF INSURANCE
THANKS!
FIELD MAN POWER DEVELOPMENT DEPARTMENT
DEVELOPED BY:MOSHIN ABBAS & KASHIF HASHMI
F.M.D P.O , KARACH