insurance by ahsan ilahi

8/6/2019 Insurance By Ahsan ilahi

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2011

Ahsaan

Business Finance

Insurance



Introduction

Insurance is bought to lend financial protection to you or your dear ones in case tragedy strikes

your family. There are certain risks in our future, in fact in everyones life there are some sort of

risks. Insurance will protect your future risk. As everyone is exposed to various risks. Future is

very uncertain, but there is way to protect ones family and make ones childrens future safe.

Life Insurance companies help us to ensure that our familys future is not just secure but also

prosperous.

Life Insurance is particularly important if you are the sole breadwinner for your

family. The loss of you and your income could devastate your family. Life insurance will ensure

that if anything happens to you, your loved ones will be able to manage financially. ConsumersPerception about Life Insurance Policies enables the Life Insurance Companies to understand

how consumers perception differs from person to person. How a consumer selects, organizes

and interprets the service quality and the product quality of different Life Insurance Policies,

offered by various Life Insurance Companies. As it is discussed in one of our article how a

person choose a police and company for him.

Insurance is a tool by which fatalities of a small number are compensated out of

funds (premium payment) collected from plenteous. Insurance companies pay back for financial

losses arising out of occurrence of insured events e.g. in personal accident policy death due to

accident, in fire policy the insured events are fire and other allied perils like strike, explosion

etc.



WHAT IS INSURANCE ?

As said before there is always risk in everyone life. So it is a commonly acknowledgedphenomenon that there are countless risks in every sphere of life . For property, there are fire

risk; for shipment of goods. There are perils of sea; for human life there are risk of death or

disability; and so on .the chances of occurrences of the events causing losses are quite

uncertain because these may or may not take place. Therefore, with this view in mind, people

facing common risks come together and make their small contribution to the common fund.

While it may not be possible to tell in advance, which person will suffer the losses, it is possible

to work out how many persons on an average out of the group, may suffer losses. When risk

occurs, the loss is made good out of the common fund. In this way each and every one shares

the risk, in fact they share the loss by payment of premium, which is calculated on thelikelihood of loss . to secure our future insurance co. insure us.

DEFINITION OF INSURANCE

Insurance has been defined to be that in, which a sum of money as a

premium is paid by the insured in consideration of the insurers bearings the risk of paying a

large sum upon a given contingency. The insurance thus is a contract whereby:

a. Certain sum, termed as premium, is charged in consideration.

b. Against the said consideration, a large amount is guaranteed to be paid by the insurer who

received the premium.

c. The compensation will be made in certain definite sum, i.e., the loss or the policy amount

which ever may be.

d. The payment is made only upon a contingency More specifically, insurance may be definedas a contact between two parties, where in one party (the insurer) agrees to pay to the other

party (the insured) or the beneficiary, a certain sum upon a given contingency (the risk) against

which insurance is required.



TYPES OF INSURANCE

Insurance occupies an important place in the modern world because of the risk, which can be

insured, in number and extent owing to the growing complexity of present day economic

system. The different type of insurance have come about by practice within insurance

companies, and by the influence of legislation controlling the transacting of insurance business,

broadly, insurance may be classified into the following categories:

1.Classification from business point of view

a) Life insurance, and

b) General insurance

2.Classification on the basis of nature of insurance

a) Life insurance

b) Fire insurance

c) Marine insurance

d) Social insurance, and

e) Miscellaneous insurance

3.Classification from risk point of view

a) Personal insurance

b) Property insurance

c) Liability insurance

d) Fidelity general insurance

T

HE IMP

ORTA

NCE OF INSURA

NCEInsurance benefits society by allowing individuals to share the risks faced by many people. But

it also serves many other important economic and societal functions. Because insurance is

available and affordable, banks can make loans with the assurance that the loans collateral

(property that can be taken as payment if a loan goes unpaid) is covered against damage. This

increased availability of credit helps people buy homes and cars. Insurance also provides the



capital that communities need to quickly rebuild and recover economically from natural

disasters, such as tornadoes or hurricanes. Insurance itself has become a significant economic

force in most industrialized countries. Employers buy insurance to cover their employees

against work-related injuries and health problems. Businesses also insure their property,

including technology used in production, against damage and theft. Because it makes businessoperations safer, insurance encourages businesses to make economic transactions, which

benefits the economies of countries.

In addition, millions of people work for insurance companies and related businesses. In 1996

more than 2.4 million people worked in the insurance industry in the United States and Canada.

Insurance as an investment that offers a lot more in terms of returns, risk cover & as also that

tax concessions & added bonuses. Not all effects of insurance are positive ones. The possibility

of earning insurance payments motivates some people to attempt to cause damage or losses.

Without the possibility of collecting insurance benefits, for instance, no one would think of

arson, the willful destruction of property by fire, as a potential source of money.

THE INSURANCE INDUSTRY TODAY

Since the 1980s, the insurance business has grown dramatically and undergone tremendous

changes. As a result of the deregulation of financial services businesses including insurance,

banking, and securities tradingthe roles, products, and services of these formerly distinctbusinesses have become blurred. For instance, citizens in the U.S. state of California voted in

1988 to allow banks to sell insurance in that state. In Canada, banks may also soon be allowed

to sell insurance. Advances in communications technology have also allowed traditionally

distinct financial businesses to keep instantaneous track of developments in other businesses

and compete for some of the same customers. Some insurance companies now offer deposit

accounts and mortgages. In the United States, life insurance companies now sell more pension

plans and other asset management services than they do conventional life insurance.

Developments in computer technology that have given insurance providers the ability to quickly

access and process information have allowed them to custom-design policies to fit the needs of

individual customers. But the increasing complexity of policies has also made some aspects of

buying and selling insurance more difficult.

In addition, improvements in geological and meteorological technology have the potential to

change the way property insurers calculate risks of damage. For example, as scientists improve



their abilities to predict severe weather patterns, such as hurricanes, and geological

disturbances, such as earthquakes, insurers may change how they provide protection against

losses from such events.

There are a number of policies for specific insurance needs. Some of these

include:

1. Family income life insurance.

This is a decreasing term policy that provides a stated income for a fixed period of

time, if the insured person dies during the term of coverage. These payments

continue until the end of a time period specified when the policy is purchased.

2. Family insurance

A whole life policy that insures all the members of an immediate family --

husband, wife and children. Usually the coverage is sold in units per person, with

the primary wage-earner insured for the greatest amount.

3. Senior life insurance

Also known as graded death benefit plans, they provide for a graded amount to be

paid to the beneficiary. For example, in each of the first three to five years after

the insured dies, the death benefit slowly increases. After that period, the entire

death benefit is paid to the beneficiary. This might be appropriate if the

beneficiary is not able to handle a large amount of money soon after the death, but

would be in a better position to handle it a few years later.

4. Juvenile insurance

This is life insurance on a child. Coverage is paid for by an adult, usually the

parents or guardians. Such policies are not considered traditional life insurance

because the child is not producing an income that needs to be protected. However,



by buying the policy when the child is young, the parents are able to lock in an

extremely low premium rate and allow many more years of tax-deferred cash

value buildup.

5. Credit life insurance

This insurance is designed to pay off the balance of a loan if you die before you

have repaid it. Credit life insurance is available for many kinds of loans including

student loans, auto loans, farm equipment loans, furniture and other personal

loans including credit cards. Credit life insurance can be purchased by an

individual. Usually it is sold by financial institutions making loans, like banks, to

borrowers at the time they take out the loan. If a borrower dies, the proceeds of

the policy repay the loan directly to the lender or creditor.

6. Mortgage insurance

This decreasing term coverage is designed to pay off the unpaid balance of a

mortgage if you die before the mortgage is paid off. Premiums are generally level throughout the

term of the policy. The policy is usually independent of the mortgage, meaning that the financial

institution granting the mortgage is separate from the insurance company issuing the policy. The

proceeds of the policy are paid to the beneficiaries of the policy, not the mortgage company. The

beneficiary is not required to use the proceeds to pay off the mortgage.

7. Annuity

An annuity is a form of insurance that enables you to save for your retirement. Basically, you give

the insurance company money for a certain period of time, and then after you retire they will pay

you a certain amount of money every year until you die. There are many different forms of

annuities. Most people who buy annuities are 55 or older. Example of this is article, topic is what is

fixed annuity? That is attached with the report.



Reference:

www.google.com.pk

http://www.allinsuranceinfo.info/2011/04/what-is-a-fixed-annuity/

www.articlesoninsurance.com

en.wikipedia.org/wiki/Insurance

insurance by ahsan ilahi

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