Thursday 8 September 2016
Monday 5 September 2016
Why Private Insurer's Cannot Be Trusted!
Why Do You Think The Premium Of Other Insurers Are So Less:-
I went through the entire process of LIC, how they calculate their premiums. They take the mortality rates from government data. Their statistical data is all derived with view to provide the maximum coverage possible at the minutest premium. But still how private players are giving policy at lower premium. This is why :-
You can see clearly that LIC has best claim settlement ratio in comparison to other private players. This is because while LIC is a corporation other are privately held companies. For LIC the goal is welfare for others it is profit. But then why private insurers can give low premium rates for their risk. It is because they litigate more and settle less.
The same has been observed by many consumer courts throughout the country, that private players are more indulged in litigation to delay payment and thus adjust risk in between.
For further details see http://insuranceconsumerprotect.blogspot.in/
Endowment Policy Under Life Insurance Corporation of India (LIC)
Endowment Policy Introduction :-
A Endowment policy is a specie of Life Insurance Contract. Here as the word suggests there is a sum assured that will be obtained either after a maturity period or death which ever is before. Traditionally they are either Profit Linked or Unit Linked.
Profit Linked Insurance:-
In profit linked endowment the money is invested and REVISIONARY BONUS is paid on them each year out of profit. In the end a Final Additional Bonus is paid. In pld days in case of loss to the fund they used to adjust "Market Value Reduction" or MVR from the value but now this is discontinued.Unit Linked Endowment Means:-
In Unit Linked Plan there is the money is invested in an unlisted units of insurance fund and then it is linked directly to market for value.Some Example Of Endowment Plans:-
Life Insurance Corporation gives The Endowment Assurance Policy in Table 14, this allows sum assured on death or maturity which ever is before. Then there is a policy called Jivan Mitra i.e, Table 88, here the coverage is doubled as in event of death there are additional benefits.There are other policies also like jeevan sathi and New Jana Raksha Plan(with profits).
Whole Life Insurance Policy In Life Insurance Corporation (LIC)
Whole Life Plan Under Life Insurance Corporation Of India (Introduction):-
Generally speaking a whole life policy is one in which the premium is paid throughout life till death or there is a particular period on which such premium paying stops. It is the cheapest form of Life Insurance due to such large payment period. Here till the payment is made the policy is continued.
Whole Life Plan in LIC:- In LIC whole life plan has a maximum sum assured of Rs 5 Lacs. If premium is paid for at least 3 years then, if one stops premium payment. The policy will be supplemented with a free paid up policy of such reduced sum as may be allowed.
When Sum Assured is Paid :-
- Attainment of age 80 or completion of 40 years from commencement of policy
- In case of limited payment On attainment of Age 80 , provided premium is paid for at least agreed limited period.
- In both cases option will be with the insured to take money on completion of (1) and (2) or on death.
What is the Benefit of Whole Life Insurance:-
- Cheap Premium
- Good Bonus
- Proper Risk Coverage at Low Cost
What is Limited Payment Life Policy:-
It is covered under whole life policy of LIC, but here there is premium payment up to a defined period and coverage is till death. So it is the best form of policy to leave an estate after death. It is available in both Single Premium and Distributed Premium Mode.
Benefits of Limited Payment Life Policy:-
- Easy Estate Creation tool
- Death Benefit
- Limited Payment Paying Term
- Whole life cover
So from the discussion above it is clear that whole life policies are advantageous to those who are looking to leave something for their family. Its an important part of estate creation. It’s a must for all people portfolio as the bonus is very rich.
Key-Man Insurance Policy Under Life Insurance Corporation (LIC)
Key Man Insurance Policy Under Life Insurance Corporation Of India (Introduction)
“Key Man” is an employee of a business whose contribution is so substantial that if anything happens to him the business will struggle to find a replacement and will incur losses during his absence. “KEY MAN INSURANCE” policy is taken to indemnify the business against the loss that it incurs due to non availability of the services of key man due to his death.
The following factors are to be considered before taking a key man insurance policy:-
- Time it will take to find a suitable person to replace the key man.(If Possible)
- Loss that will be incurred during that time. This is loss of profit.
- Cost that will be incurred in finding suitable replacement.
- Increase in cost(such as salary) due to such replacement.
- Loss during the period the new replacement is acclimatizing to his roles & responsibility.
Key Man Insurance Policy Under Life Insurance Corporation Of India :-
Only TERM INSURANCE is sold as KEY-MAN INSURANCE POLICY. Also maturity date cannot go beyond the date of retirement. Supplementary benefits such as Accidental Benefits are not allowed. In Key Man Insurance Policy Under Life Insurance Corporation Of India where Key Man is a Foreign National then, the case is referred to U & R Department, Central Office.
Key Man Insurance Policy For Companies :-
- Maximum Allowed Key Man Insurances 3 Times (AVG of 3 years Gross Profit) or 5 Times (AVG of 3 years Net Profit) , whichever is beneficial.
- Such Key-Man should not have 51% shares in his name. 70% shares in his name and of his family means (Spouse and Children)
- Such Key Man if has share holding but is not drawing any salary then, maximum limit is 3 Times (AVG of 3 years Gross Profit) or 5 Times (AVG of 3 years Net Profit) , whichever is beneficial.
- Where such Key-Man is drawing SALARY but has NO SHARE HOLDING then, 3 Times (AVG of 3 years Gross Profit) or 5 Times (AVG of 3 years Net Profit) or 10 times of key man compensation package , whichever is lower.. 3 years proof of key man salary is to be given here.
Key Man Insurance Policy For Partnership :-
- Maximum Allowed Key Man Insurances 3 Times (AVG of 3 years Gross Profit) or 5 Times (AVG of 3 years Net Profit) , whichever lower.
- In case of Employee and not partner it is 10 times salary of latest financial year as reflected in form 16.
Key Man Insurance Policy For Proprietor :-
- In case of Employee and not partner it is 10 times salary of latest financial year as reflected in form 16.
Thursday 1 September 2016
Difference Between Insurance Agent and Insurance Broker
Who is a Insurance Agent?
Economic Times defines Insurance Agent as "An agent is a person who represents an insurance firm and sells insurance policies on its behalf. Generally, there are two types of such agents who reach the prospective parties that may be interested in buying insurance. These are independent agents and captive or exclusive agents"
In Insurance Act, 1938 Insurance Agent is defined as follows " an insurance agent licensed
under section 42, who receives or agrees to receive payment by way of commission or
other remuneration in consideration of his soliciting or procuring insurance business
including business relating to the continuance, renewal or revival of policies of insurance"
Under Section 42 Following Has To Be Kept In Mind Before Giving License:-
"The Authority or an officer authorised by it in this behalf shall, in the manner determined by the regulations made by it and on payment of the fee determined by the regulations, which shall not be more than two hundred and fifty rupees, issue to any person making an application in the manner determined by the regulations, a licence to act as an insurance agent for the purpose of soliciting or procuring insurance business: Provided that,—a) in the case of an individual, he does not suffer from any of the disqualifications mentioned in sub-section (4); and
b) in the case of a company or firm, any of its directors or partners does not suffer from any of the said disqualifications:
The disqualifications above referred in section 42(4) to shall be the following:—(a) that the person is a minor;
(b) that he is found to be of unsound mind by a court of competent jurisdiction;
(c) that he has been found guilty of criminal misappropriation or criminal breach of trust or cheating 1 or forgery or an abutment of or attempt to commit any such offence by a court of competent jurisdiction:
Provided that where at least five years have elapsed since the completion of the sentence imposed on any person in respect of any such offence, the Authority shall ordinarily declare in respect of such person that his conviction shall cease to operate as a disqualification under this clause(d) that in the course of any judicial proceeding relating to any policy of insurance or the winding up of an insurance company or in the course of an investigation of the affairs of an insurer it has been found that he has been guilty of or has knowingly participated in or connived at any fraud, dishonesty or misrepresentation against an insurer or an insured.
(e) that in the case of an individual, he does not possess the requisite qualifications and practical training for a period not exceeding twelve months, as may be specified by the regulations made by the Authority in this behalf;
(ea) that in the case of a company or firm making an application under sub-section (1) or sub-section (3), a director or a partner or one or more of its officers or other employees so designated by it and in the case of any other person, the chief executive, by whatever name called, or one or more of his employees designated by him, do not possess the requisite qualifications and practical training and have not passed such an examination as required under clauses (e) and (f);]
(f) that he has not passed such examination as may be specified by the regulations made by the Authority in this behalf:
Provided that a person who had been issued a licence under sub-section (1) of this section or sub-section (1) of section 64UM shall not be required to possess the requisite qualifications, practical training and pass such examination as required by clauses (e) and (f);(g) that he violates the code of conduct as may be specified by the regulations made by the Authority."
Who is a Insurance Broker?
Wikipedia defines insurance broker as "An insurance broker sells, solicits, or negotiates insurance for compensation"
Difference Between Insurance Agent and Broker:-
There is a relation of Agency between agent and insurer. So Insurer is the principal. One can sue the insurer for defaults of agent. In the case of insurance broker this relation is of a advisor that's too, towards insured and not insurer. So there is no fiduciary relation between broker and insurer.
The agent's primary alliance is with the insurance carrier, not the insurance buyer. In contrast, an insurance broker represents the insured, generally has no contractual agreements with insurance carriers, and relies on common or direct methods of perfecting business transactions with insurance carriers. This can have a significant beneficial impact on insurance negotiations obtained through a broker (vs. those obtained from an agent).
What is General Insurance?
General Insurance is a contract of insurance, by which insurer agree's to INDEMNIFY the insured in exchange of a sum we call premium, on happening of event against which insurance is done.
It is a contract of Indemnity. All essential of a normal contract are to be observed here. It is invoked to re instate status quo. So for an exchange of premium the insurer will indemnify the insured against loss or injury that is caused due to happening of the event against which the insurance is taken.
What is contract of indemnity?
Indemnity means “when a person promises to the save the other from loss caused from the conduct of promisor himself or by the conduct of any other person”. Though the definition is itself not complete in the Indian Contract Act. The courts have held that the definition in English law is to be followed. This was held in the case of GAJANAN MORESHWAR V. MORESHWAR MADAN.
Indemnity is a type of contingent contract. It also depends on happening of events. The contract of insurance is also a contract that is contingent to the happening of an event. Insurance is a contingent contract but is not a wager. There is a huge difference between the contract of wager and a contingent contract. The major event of wager is not causing any loss to the promisee. A contingent contract on the other hand is contingent on the happening of any event that may result in loss of the promise.
The contract of insurance is indeed a contact of indemnity. As the following is noticed in both the contracts:
1) Both are contingent on happening of an event.
2) Both are special contracts, but the general principal applies to both.
3) A promise to compensate is common.
4) Consideration must be there.
