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What is Insurance?
- Insurance is defined as a contract between two parties whereby one party called insurer undertakes in exchange for a fixed sum called premium to pay the other party called insured a fixed amount of money after happening of a certain event.
- According to the Indian Contract Act 1872, “A Contract may be defined as an agreement between two or more parties to do or to abstain from doing an act, with an intention to create a legally binding relationship.”
- Banccasurance means selling of insurance products through banks. The insurance companies and the banks come up in a partnership wherein the bank sells the tied insurance company’s insurance products to its clients.
- Bank Insurance Model is also termed as Banccassurance.
- A person with expertise in the fields of economics, statistics and mathematics, who helps in risk assessment and estimation of premiums etc for an insurance business, is called an actuary.
- A professional statistician working in an insurance company is an Actuary.
- Actuarial science is the discipline that applies mathematical and statistical methods to assess risk in insurance, finance and other industries and professions.
- Actuarial science includes a number of interrelated subjects, including probability, mathematics, statistics, finance, economics, financial economics, and computer programming.
- Third Party Administrators or TPAs are a vital link between health insurance companies, policyholders and health care providers.
- The TPAs maintain databases of policy holders and issue them identity cards with unique identification numbers and handle all the post policy issues including claim settlements.
- Mortality Charge is the amount charged every year by the insurer to provide the life cover to the policyholder on the life of the Life Insured. It is also called as Cost of Insurance.
- The date on which the principal amount of a note, draft, acceptance bond or other debt instrument becomes due and is repaid to the investor and interest payments stop.
- The maturity date tells you when you will get your principal back and for how long you will receive interest payments.
- An Agent is a person who is licensed by state to sell Insurance. The Agents serve as an intermediary between the insurance company and the insured.
- Agents are only responsible for the timely and accurate processing of forms, premiums, and paperwork.
- Captive Agent – Agent sell Insurance of a specific Company.
- Independent Agent – Agent who works independently and sells Insurance of many companies.
- An insurance broker is a specialist in insurance and risk management.Brokers act on behalf of their clients and provide advice in the interests of their clients.
- Insurance brokers can be best described as a kind of super-independent agent.
- A long-term contract sold by an insurance company designed to provide payments to the holder at specified intervals, usually after retirement.
- A risk that conforms to the norms and specifications of the insurance policy in such a way that the criterion for insurance is fulfilled is called insurable risk.
- In case of a scenario where the loss is too huge that no insurer would want to pay for it, the risk is said to be uninsurable.
- AD&D in Insurance refers to Accidental Death and Dismemberment Insurance.
- It is a policy that pays benefits to the beneficiary if the cause of death is an accident. This is a limited form of life insurance which is generally less expensive.
- The policy for which all benefits to the policy holder cease and is terminated due to non payment of premium amount on the due date or even after the grace period is called a lapsed policy.
- Surrender Value is the amount the policy holder will get from the insurance company if he decides to exit the policy before maturity. Surrender value is payable only after three full years premiums.
- Maturity claim is a type of claim, wherein the insured fills a maturity claim form. It is sent along with the original policy document to the insurance company before the maturity date to get timely settlement from the insurance company as post dated cheque or ECS (Electronic Clearance Service) payment on the maturity date.
- Death claim is a type of claim made by the nominee of the insured to the insurance company due to death of the insured, abiding to the policy terms and conditions.
- An insurance company validates the authenticity and amount claimed by the insured in-order to prevent the insurer from exaggerating the claim amount & the claim fraudulently.
- If it is a valid reason it is classified as valid claim or else it is classified as fraudulent claim, thereby if insurance suspects of fraudulence in the claim.
- If the policy is lapsed i.e., the insured has not paid the policy amount before the grace period expires, then it is termed as policy not in force. The insured is not covered by the policy when it is termed as policy not in force.
- Gratuity is a part of salary that is received by an employee from his/her employer in gratitude for the services offered by the employee in the company.
- According to Payments of Gratuity Act, 1972 with minimum of 5 years service during exit is eligible to minimum of 15 days from the last drawn salary for each completed service year.
- Void contract cannot be enforced by law. It is also considered as void agreement and is not a contractual. Any agreement which is illegal is considered as void contract.
- An agreement between two parties that can be unenforceable for a number of legal reasons like failure or mistake by a party to disclose a fact leading to breach of contract. Then the other party terms it as voidable contract. He may also continue the contract making it a valid contract, as it is decided by both parties.
- The right to change the normal policy into paid up value is given to the insured by the insurance company, if the insured have paid premiums for minimum of three years.
- The paid policy means, after the period if the insured cannot pay premium then the policy is not cancelled but the sum assured is reduced in proportion to the number of premiums paid by the insured.
- Terminal bonus is the loyalty bonus paid by the insurance company to the insured for maintaining the policy till the maturity date.
- It is the bonus paid during the time of maturity and the value is not guaranteed by disclosed during the time of policy maturity only.
