INSURANCE Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium, and can be thought of as a guaranteed and known small loss to prevent a large, possibly devastating loss. An insurer is a company selling the insurance; an insured or policyholder is the person or entity buying the insurance. The insurance rate is a factor used to determine the amount to be charged for a certain amount of insurance coverage, called the premium. Risk management, the practice of
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INSURANCE
Insurance, in law and economics, is a form of risk management primarily
used to hedge against the risk of a contingent loss. Insurance is defined as
the equitable transfer of the risk of a loss, from one entity to another, in
exchange for a premium, and can be thought of as a guaranteed and known
small loss to prevent a large, possibly devastating loss. An insurer is a
company selling the insurance; an insured or policyholder is the person or
entity buying the insurance. The insurance rate is a factor used to determine
the amount to be charged for a certain amount of insurance coverage, called
the premium. Risk management, the practice of appraising and controlling
risk, has evolved as a discrete field of study and practice.
The types of insurance company corporate structures
Governmental insurance organizations
Many types of insurance policies are available to families and organizations
that do not wish to retain their own risks. The following questions may be
raised about an insurance policy:
1. Is it personal, group, or commercial?
2. Is it life/health or property/casualty?
3. Is it issued by a private insurer or a government agency?
4. Is it purchased voluntarily or involuntarily?
Personal, Group, or Commercial Insurance
Personal insurance is insurance that is purchased by individuals and families
for their risk needs. Such insurance includes life, health, disability, auto,
homeowner, and long-term care. Group insurance is insurance provided by
the employer for the benefit of employees. Group insurance coverage
includes life, disability, health, and pension plans. Commercial insurance is
property/casualty insurance for businesses and other organizations.
An insurance company is likely to have separate divisions within its
underwriting department for personal lines, group lines, and commercial
business. The criterion to assign insureds into their appropriate risk pool for
rating purposes is different for each type of insurance. Staff in the personal
lines division are trained to look for risk factors (for example, driving
records and types of home construction) that influence the frequency and
severity of claims among individuals and families. Group underwriting looks
at the characteristics and demographics, including prior experience, of the
employee group. The commercial division has underwriting experts on risks
faced by organizations. Personnel in other functional areas such as claims
adjustment may also specialize in personal, group, or commercial lines.
Life/Health or Property/Casualty Insurance
Life/health insurance covers exposures to the perils of death, medical
expenses, disability, and old age. Private life insurance companies provide
insurance for these perils, and individuals voluntarily decide whether or not
to buy their products. Health insurance is provided primarily by life/health
insurers but is also sold by some property/casualty insurers. All of these are
available on an individual and a group basis. The Social Security program
provides substantial amounts of life/health insurance on an involuntary
basis.
Property/casualty insurance covers property exposures such as direct and
indirect losses of property caused by perils like fire, windstorm, and theft. It
also includes insurance to cover the possibility of being held legally liable to
pay damages to another person. Before the passage of multiple-line
underwriting laws in the late 1940s and early 1950s, property/casualty
insurance had to be written by different insurers. Now they frequently are
written in the same contract (for example, homeowner’s and commercial
package policies, which will be discussed in later chapters).
A private insurer can be classified as either a life/health or a
property/casualty insurer. Health insurance may be sold by either. Some
insurers specialize in a particular type of insurance, such as property
insurance. Others are affiliated insurers, in which several insurers (and
sometimes noninsurance businesses) are controlled by a holding company;
all or almost all types of insurance are offered by some company in the
group.
Private or Government Insurance
Insurance is provided both by privately owned organizations and by state
and federal agencies. Measured by premium income, the bulk of
property/casualty insurance is provided by private insurers. Largely because
of the magnitude of the Social Security program, however, government
provides about one-third more personal insurance than the private sector.
Our society has elected to provide certain levels of death, health, retirement,
and unemployment insurance on an involuntary basis through governmental
(federal and state) agencies. If we desire to supplement the benefit levels of
social insurance or to buy property/casualty insurance, some of which is
required, private insurers provide the protection.
Voluntary or Involuntary Insurance
Most private insurance is purchased voluntarily, although some types, such
as automobile insurance or insurance on mortgages and car loans, are
required by law or contracts. In many states, the purchase of automobile
liability insurance is mandatory, and if the car is financed, the lender
requires property damage coverage.
Government insurance is involuntary under certain conditions for certain
people. Most people are required by law to participate in the Social Security
program, which provides life, health, disability, and retirement coverage.
Unemployment and workers’ compensation insurance are also forms of
involuntary social insurance provided by the government. Some government
insurance, such as flood insurance, is available to those who want it, but no
one is required to buy it.
Insurers’ Corporate Structure
Stock Insurers
Stock insurers are organized in the same way as other privately owned
corporations created for the purpose of making a profit and maximizing the
value of the organization for the benefit of the owners. Individuals provide
the operating capital for the company. Stock companies can be publicly
traded in the stock markets or privately held. Stockholders receive dividends
when the company is profitable.
Mutual Insurers
Mutual insurers are owned and controlled, in theory if not in practice, by
their policyowners. They have no stockholders and issue no capital stock.
People become owners by purchasing an insurance policy from the mutual
insurer. Profits are shared with owners as policyowners’ dividends.
Company officers are appointed by a board of directors that is, at least
theoretically, elected by policyowners. The stated purpose of the
organization is to provide low-cost insurance rather than to make a profit for
stockholders.
Research shows that mutual and stock insurers are highly competitive in the
sense that neither seems to outperform the other. There are high-quality,
low-cost insurers of both types. A wise consumer should analyze both before
buying insurance.
Many mutual insurers in both the life/health and property/casualty fields are
large and operate over large areas of the country. These large mutuals do a
general business in the life/health and property/casualty insurance fields,
rather than confining their efforts to a small geographic area or a particular
type of insured. The largest property/casualty mutual insurer in the United
States is State Farm, which was established in 1922 by George J. Mecherle,
an Illinois farmer who turned to insurance sales. State Farm grew to be the
leading auto and homeowner’s insurer in the United States, with twenty-five
regional offices, more than 79,000 employees, and nearly 70 million policies
in force. Because of its mutual status, State Farm is overcapitalized (holding
relatively more surplus than its peer group or stock companies).
Banks and Insurance
For decades, savings banks in Massachusetts, New York, and Connecticut
have sold life insurance in one of two ways: by establishing life insurance
departments or by acting as agents for other savings banks with insurance
departments. Savings banks sell the usual types of individual life insurance
policies and annuities, as well as group life insurance. Business is transacted
on an over-the-counter basis or by mail. No agents are employed to sell the
insurance; however, advertising is used extensively for marketing. Insurance
is provided at a relatively low cost.
Many savings and loan associations have been selling personal
property/casualty insurance (and some life insurance) through nonbanking
subsidiaries. Commercial banks have lobbied hard for permission to both
underwrite (issue contracts and accept risks as an insurer) and sell all types
of insurance. Approximately two-thirds of the states have granted state-
chartered banks this permission. At this time, national banks have not been
granted such power.
In November 1999, State Farm Mutual Automobile Insurance Company
opened State Farm Bank. At the time of this writing, State Farm has banking
services in eleven states—Alabama, Arizona, Colorado, Illinois, Indiana,
Mississippi, Missouri, New Mexico, Nevada, Utah, and Wyoming—and
plans to expand to all fifty states. The banking division benefits from State
Farm’s 16,000 agents, who can market a full range of banking products.
The U.S. Supreme Court approved (with a 9–0 vote) the sale of fixed-dollar
and variable annuities by national banks, reasoning that annuities are
investments
Individual Insurance
People also have the choice of buying individual health insurance, although it costs more. When
buying individual insurance, the policy is written solely for that person, based on his/her personal
medical conditions. If there is a pre-existing condition, it can make buying individual insurance
difficult. Whether a person is accepted for insurance is very unpredictable at times. It may help to
know that a person may be accepted for comprehensive insurance, excluding the pre-existing
condition. One thing which affects the cost of individual health insurance is smoking—smokers
always pay more.
In order to target the best insurance at the best price for yourself, consider the following guidelines:
Individuals usually buy group health insurance because it is less costly.
It will help you to learn about the various networks associated with the different types of
group insurance (HMOs, PPOs, POSs, and Health Savings Accounts).
Raising your deductible will always lower your premium.
When you have narrowed your choice to two group insurance policies, compare the
following of both: premiums, co-payments, deductibles, speculated out-of-pocket expenses,
percentages of fees paid, maximum limits on each claim and on lifetime claims. It will help
to make a chart.
If you have less than perfect health, you may not be accepted for individual coverage
What is Life Insurance?
Life insurance ensures that your family will receive financial support in your absence. Put simply, life insurance provides your family with a sum of money should something happen to you. It protects your family from financial crises.
In addition to serving as a protective cover, life insurance acts as a flexible money-saving scheme, which empowers you to accumulate wealth-to buy a new car, get your children married and even retire comfortably.
Life insurance also triples up as an ideal tax-saving scheme. To know more, read the Key Benefits of Life Insurance.
Key Benefits of Life Insurance
Life insurance, especially tailored to meet your financial needs
Need for Life Insurance
Today, there is no shortage of investment options for a person to choose from. Modern day investments include gold, property, fixed income instruments, mutual funds and of course, life insurance. Given the plethora of choices, it becomes imperative to make the right choice when investing your hard-earned money. Life insurance is a unique investment that helps you to meet your dual needs - saving for life's important goals, and protecting your assets. Let us look at these unique benefits of life insurance in detail.
Asset Protection
From an investor's point of view, an investment can play two roles - asset appreciation or asset protection. While most financial instruments have the underlying benefit of asset appreciation, life insurance is unique in that it gives the customer the reassurance of asset protection, along with a strong element of asset appreciation. The core benefit of life insurance is that the financial interests of one’s family remain protected from circumstances such as loss of income due to critical illness or death of the policyholder. Simultaneously, insurance products also have a strong inbuilt wealth creation proposition. The customer therefore benefits on two counts and life insurance occupies a unique space in the landscape of investment options available to a customer.
Goal based savings
Each of us has some goals in life for which we need to save. For a young, newly married couple, it could be buying a house. Once, they decide to start a family, the goal changes to planning for the education or marriage of their children. As one grows older, planning for one's retirement will begin to take precedence.
Clearly, as your life stage and therefore your financial goals change, the instrument in which you invest should offer corresponding benefits pertinent to the new life stage. Life insurance is the only investment option that offers specific products tailormade for different life stages. It thus ensures that the benefits offered to the customer reflect the needs of the customer at that particular life stage, and hence ensures that the financial goals of that life stage are met. The table below gives a general guide to the plans that are appropriate for different life stages.
Life Stage
Primary Need Life Insurance Product
Young & Single Asset creation Wealth creation plans
Young & Just married
Asset creation & protectionWealth creation and mortgage protection plans
Married with kidsChildren's education, Asset creation and protection
To find out, which ICICI Prudential plan will best suit your requirements, play the Wheel of Fortune game by clicking here Life Insurance is an effective tool to save tax,
Life Insurance Plans
Life insurance products assure your family will receive financial support, even in your absence. Put simply, when you buy insurance you provide your family with a sum of money, should something happen to you. It thus permanently protects your family from financial crises. In addition to serving as a protective cover, when you buy insurance you create a flexible money-saving scheme, which empowers you to accumulate wealth to buy a new car, get your children educational solutions, and even retire comfortably. Today, there is no shortage of investment options for a person to choose from. Given the plethora of choices, it becomes imperative to make the right choice when investing your hard-earned money, and online insurance is an ideal choice in today’s technology driven world. Buying Life insurance online is a way to make a unique investment that helps you to meet your dual needs - saving for life's important goals, and protecting your assets. From an investor's point of view, an investment can play two roles - asset appreciation or asset protection. While most financial instruments have the underlying benefit of asset appreciation, buying life insurance online gets you the unique reassurance of asset protection, along with a strong element of asset appreciation. When you buy life insurance online the core benefit is that the financial interests of one’s family remain protected from circumstances such as loss of income due to critical illness or death of the policyholder. Simultaneously, buying life insurance online gives a strong inbuilt wealth creation proposition. The customer therefore benefits on two counts and online insurance products occupy a unique space in the landscape of investment options available to a customer. As your life stage and therefore your financial goals change, the instrument in which you invest should offer corresponding benefits pertinent to the new life stage. Online insurance products are
the only investment option that offer specific products tailor-made for different life stages. You are thus ensured that the benefits offered to the customer reflect the needs of the customer at that particular life stage, and hence ensures that the financial goals of that life stage are met. On the basis of which life stage you are in and the corresponding insurance needs, ICICI Prudential plans can be categorized into the following three types:
One of your most important responsibilities as a parent is to ensure that your child gets the best possible education that can be provided. ICICI Prudential offers a wide portfolio of education insurance plans that are designed to provide peace of mind to you, as a parent, that your child's education will be secure. These plans ensure that money is made available at the crucial junctures in a child's education - Class X, Class XII, graduation and post-graduation - to fund crucial commitments for the child's future. Importantly, education insurance plans ensure that in the unfortunate event of the death of a parent, the child's education continues unhampered. Under the education insurance plans platform, ICICI Prudential brings the following products to you. Please click on the product name to know more about the plans.
Plan Name
Plan Type
SmartKid New Unit-linked Regular Premium
SmartKid New Unit-linked Single Premium
SmartKid Regular Premium
Unit Linked Unit Linked Traditional
Wealth Creation Plans
Wealth Creation Plans give the customer the dual benefit of protection along with the potentially higher returns of market-linked instruments. The most important benefit of ULIPs is the flexibility they give the customer in choosing the premium amount and also choosing the underlying fund in which this money is to be invested. Wealth creation plans also offer the customer more liquidity options as compared to traditional plans. As such, ULIPs are ideal for customers who want the protection of a life cover to be allied to the returns of market linked instrument – giving them an unmatched combination of benefits. Under the wealth creation platform, ICICI Prudential brings the following products to you. Please click on the product name to know more about the plans.
Unit Linked Unit Linked Unit Linked Unit Linked Unit Linked Unit Linked Unit Linked
Unit Linked
Premium Guarantee Plans
The latest addition to the life insurance product portfolio of ICICI Prudential is the Premium Guarantee plan - InvestShield Life New. Premium Guarantee plans are the ideal insurance-cum-investment option for customers who want to enjoy the potentially higher returns(over the long term) of a market linked instrument, but without taking any market risk.
Under the Premium Guarantee Plans platform, ICICI Prudential brings to you the following products:
Plan Name
Plan Type
InvestShield Life New InvestShield CashBak
Unit Linked Unit Linked
Protection Plans
The sole objective of these plans, as their name indicates, is to serve the protection needs of the customer and by doing so, safeguard one’s family from the financial implications of unfortunate circumstances than one cannot foresee.
Under the Protection Plans platform, ICICI Prudential brings to you the following products:
Why should you purchase term life insurance from our agency?
Our Agency gives you the information you need to make your term life insurance decision with confidence. We provide you information from the leading life insurance companies. We provide instant term life insurance quotes, online insurance applications, and online customer service. We give you simple instructions, and competent and qualified staff to respond to your needs over the net or over the phone.
It has never been easier to purchase term life insurance. For more information please visit Our Company page. Our extraordinary carrier database means more choices for you and you can rest assured that you can purchase for the lowest premiums available.
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Term life insurance defined
Term life insurance is an insurance policy covering a person's life for a specified number of years. It is often offered with a guaranteed premium for a particular number of years. Term life does not have accumulated cash value. Accumulated cash value generally is the distinction between term life insurance and whole life or universal life insurance. Cash value policies are initially much more expensive than term life insurance policies for the same amount of coverage.
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Choosing a term life insurance company
Term life insurance is very much like many common commodities in the market place. It is a product that varies very little from company to company. Generally the biggest difference in the product is the price. So that you can choose between many different companies and see the price difference, we provide you a comparison of approximately 25 of the best rates for your age from America's 175 top-rated companies.
Our Agency only quotes from companies with an A.M. Best rating of A- or better. As a result you will be selecting from insurance companies that have been assigned a superior rating of A- or better from the leading independent insurance company rating service... A. M. Best. All you have to do is to decide the amount of life insurance you need and how much you want to pay
Our Agency understands that each person has individual insurance needs. There is no set rule as to how much insurance you need to purchase. You need to decide how much life insurance you want to leave your dependents to carry on in your absence. You have to decide how much support you wish to provide. Many financial planning experts recommend 10 to 20 times your annual earnings. For business life insurance the amount is often even more. For many the answer is simply the amount makes you feel your family is safe.
What is Level Rate Guarantee?
A level rate guarantee simply means that your premium will not change for a guaranteed period of time. This period of time generally ranges from 5 to 30 years. Our Agency recommends that you purchase a level rate guarantee for the period of time that you intend to keep the policy in force.
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What premium payment options do I have?
Our online quotes are for annual term life insurance premiums. Annual term life insurance premiums are the lowest rates the insurance company offers. However, you may instead pay for your term life insurance premiums on a check-a-matic (monthly), quarterly, or semi-annual basis. These payment options are slightly more expensive than those on an annual basis.
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How long will this take?
The insurance company cannot begin underwriting your policy until you have completed your free medical exam and they have received your signed application. Generally it takes three to four weeks to complete this process. If the insurance company has to get your doctor's records it will generally take 4 to 7 weeks since the insurance company has to depend upon your doctor's promptness in providing them the records they need.