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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).

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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.

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