............An Honest View of Learned Bankers


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Rajesh Goyal 



Types of Insurance :




  •                 Term Life Insurance

  •                 Permanent Life Insurance





  •                 Fire Insurance

  •                 Marine Insurance

  •                 Accident Insurance




(A)Life Insurance



Life Insurance is a contract providing for payment of a sum of money to the person assured or, following him to the person entitled to receive the same, on the happening of a certain event.  It is a good method to protect your family financially, in case of death, by providing funds for the loss of income.   


 A1. TERM LIFE INSURANCE :  Under a Term Life contract, the insurance company pays a specific lump sum to the designated beneficiary in case of the death of the insured.    These policies are usually for  5, 10, 15, 20 or 30 years.


Term life insurance are the most popular in advance countries but were not so popular in India.   However, after the entry of the private operators and aggressive marketing by few players this kind of policies are becoming popular.    The premium on such type of policies is comparatively quite low when compared with other types of life insurance policies, mainly  due to the fact that these policies do not  carry cash value.


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- The premium payable on these policies is low as they do not carry any cash value.   

- One can afford for quite high value insurance policies

- If one survives the period of the policy, he / she does not get any money at the end of the policy.

The premium on such policies keeps on increasing with age mainly because the risk of death of older people is more. Over the page of 60, these policies become difficult to afford.








    In a Permanent Life contract, a portion of the money paid as  premiums is invested in a fund that earns interest on a tax-deferred basis.  Thus, over a period of time, this policy will accumulate certain "cash value" which you will be able to get back either during the period of the policy or at the end of the policy. 


Your need for life insurance can change over a lifetime. At any age, you should consider your individual circumstances and the standard of living you wish to maintain for your dependents. In most cases, you need life insurance only if someone depends on you for support. Your life insurance premium is based on the type of insurance you buy, the amount you buy and your chance of death while the policy is in effect.  This type of policy not only provides protection for your dependents by paying a death benefit to your designated beneficiary upon your death, but it also allows you to use some part of the money  while you are alive or at the end of the policy.   Some examples of such policies are :-  Whole Life, Universal Life and Variable-Universal Life.





These policies provide for period payment of premiums and a lump sum amount either in the event of death of the insured or on the date of expiry of the policy, whichever occurs earlier.





These policies provide for periodic payments of partial survival benefits during the term of the policy itself.  A unique feature associated with this type of  policies is that in the event of death of the insured during the policy term, the designated beneficiary will get the full sum assured without deducting any of the survival benefit amounts, which have already been paid as money-back components.  Moreover, the bonus on such policies is also calculated on the full sum assured.




This policies / funds require the insured to pay the premium as a single lump sum or  through installments paid over a certain number of years.   The insured  in return will receive back a specific sum periodically from a specified date onwards (the returns can  can be monthly, half yearly or annually), either for life or for a fixed number of years. In case of the death of the insured, or after the fixed annuity period expires for annuity payments, the invested annuity fund is refunded, usually with some additional amounts as per the terms of the policy.

Annuities / Pension funds are different from  from all  other forms of life insurance as an annuity policy / fund  does not provide any life insurance cover but merely offers a guaranteed income either for life or a certain period.  Therefore, this type of insurance is taken so as to get income after the retirement. 





Marine Insurance - What is **


The marine insurance is considered as the oldest form of insurance.   Travelers by sea and land were very much exposed to the risk of losing their vessels and merchandise because the piracy on the open seas and highway robbery of caravans were very common.

The risk to owners of such ships were enormous and, therefore, to safeguard them the marine traders devised a method of spreading over them the financial loss which could not be conveniently borne by the unfortunate individual victims.


The co-operative device was quite voluntary in the beginning, but now in modern it has been converted into modified shape of premium.


The marine policies of the present forms were sold in the beginning of fourteenth century by the Brogans. On the demand of the inhabitants of Burges, the Court of Flanders permitted in the year 1310, the establishment in this Town of a charter of Assurance, by means of which the merchants could insure their goods, exposed to the risks of the sea.


The insurance development was not confined to the Lombard's and to the Hansa merchants; it spread throughout Spain, Portugal, France, Holland and England. The marine form land lending prominence of Lombard's merchants got a prominent section of the London City.    They built homes there and took the name of Lombard Street. Later on, this street became famous in insurance history. The Lloyd's coffee-house gave an impetus to develop the marine insurance.

Fire Insurance:


After marine insurance, fire insurance developed in present form.

It had been originated in Germany in the beginning of sixteenth century. The fire insurance got momentum in England after the great fire in 1666 when the fire losses were tremendous.

About 85 per cent of the houses were burnt to ashes and property worth of sterling ten crores were completely burnt off.


Fire Insurance Office was established in 1681 in England. With colonial development of England, the fire insurance spread all over the world in present form 'Sun Fire Office was successful fire insurance institution.


In India, the general insurer started working since 1850 with the establishment of the Triton Insurance, Calcutta. Again in 1861, the North British and Mercantile catered the requirements of insurance business.

The general insurance in India could not progress much. The slow growth of joint-stock enterprise and mechanised production was another reason for the low level of general insurance business.





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