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| Ten Things You Probably Didn't Know About Insurance |
A contract of insurance. It is a legally binding contract between two parties. One party enters into a contract promising to indemnify the other party. The other party enters into a contract promising to pay a premium at a fixed rate to receive compensation. An agreement between the first party insurer and the second party insured guaranteeing payment of indemnity and premium respectively. If life insurance does not cover the loss, no value of human life can be measured. Hence financial security is provided in life insurance.
Insurance industry plays a very important role in the economic development of any country. Insurance helps in capital formation by collecting small savings (premium) from the public. Ensures compensation for human life, debt and property. Having such reassurance makes people feel safe in their workplace and can concentrate on work. As a result, personal productivity increases. Thus, if individual production increases, national production increases. When production increases, the standard of living of people improves and overall economic prosperity of the country occurs. Example: Life insurance contract, fire insurance contract.
What are the benefits of insurance?
Benefits of insurance:
(1) It provides security of life and property.
(2) It creates capital.
(3) It is old age and emergency assets.
(4) It gives peace of mind.
(5) It provides finance to business.
(6) It reduces inflation.
(7) It provides security of social property.
What is the premium?
Insurance premium is the reimbursement of the insurer's promise to indemnify or pay a claim to the insured in an insurance contract. In the case of life insurance, the policyholder pays the premium to the insurer/insurance company where the insurance company pays the insurance claim on the death of the insured on or before the expiry of the specified term. Analyzing the various perspectives of experts, the definition of premium is as follows:
"Contract of Insurance means an undertaking by the Insurer to mitigate or meet any future financial loss arising out of any future uncertainty or danger on the life or property of the Insured, or in exchange for a promise to pay the usual insurance claims from the Insured at a specified rate or at specified intervals up to a specified period or A lump-sum payment, called the premium or installment of insurance.”
In the case of life insurance, the premium is usually collected in annual installments. However, for the convenience of the policyholder, there is also a system of payment of premiums on six-monthly, quarterly and even monthly basis.
How is the premium rate determined?
The actuary will determine the insurance premium as per the Insurance Act, 2010. The premium is determined depending on the factors such as: Sum Assured, Term of Insurance, Age of Insurance Customer, Office Expenses, Mortality Table, Commission Expenses etc.
What is the insurance offer?
An insurance proposal is a written application made by the insured to the insurer for taking insurance. Generally, insurance is offered on printed paper prescribed by the insurance company. Where the insured's name, father's name, mother's name, occupation details, date of birth, permanent address, present address, list and term of insurance, insurance number, amount of premium, mode of payment of premium, income and source of income Nominator's name, age, relation, customer Signature, date of application, witness statement etc. are recorded.
