Presentation on life insurance


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Presentation on life insurance

  1. 1.  Tahseeb Hassan 11308  Muhammad Ali 11310  Bilal Sarwar 11335
  2. 2. Life Insurance
  3. 3. What is insurance? History of insurance What is life insurance Evolution of life insurance industry Life insurance in Pakistan Types of life insurance Why to have a life insurance How insurance work Effects of insurance Claim of insurance Terms and conditions Difference of life insurance and takaful
  4. 4. What is Insurance? Insurance began as a way of reducing the risk to traders. History of insurance  As early as 2000 BC in China and 1750 BC in Babylon. Life insurance    dates to ancient Rome; "burial clubs" covered the cost of members' funeral expenses and assisted survivors financially. Modern life insurance originated in 17th century England. The first insurance company in the United States was formed in 1732 but it provided only fire insurance. The sale of life insurance in the U.S. began in the late 1760s.
  5. 5.   What is life insurance? Life insurance is an insurance policy that pays monetary benefits upon the death of the insured person in the policy. Basically it is an agreement between the insurance company and the insurer wherein the former pays the later with the accepted amount of money as per the agreement in case of death, accident or serious illness.
  6. 6.     EVOLUTION OF LIFE INSURANCE INDUSTRY Life insurance started back in the 16th century when people were taking out life insurance contracts, mainly on a one year basis, to cover funeral expenses. At the time there were no restrictions on who you could take out the insurance contract on and, as a result, a number of people were using it as gambling. Towards the end of the 18th century, there were a number of people with quite high income but no assets who saw the need for taking out cover to protect their dependents.
  7. 7. LIFE INSURANCE IN PAKISTAN     The insurance sector in Pakistan, until end of year 2000, was under the regulatory purview of The Federal Ministry of Commerce, Government of Pakistan. Empirical results show that during That period, the private sector insurance industry was fragmented and suffered operational Inefficiencies due to lower Paid‐up Capital and Equity requirements, while the public sector Insurance companies enjoyed their privileged status due to captive business. A new insurance law was introduced in 2000 when the Insurance Act, 1938 was repealed and replaced with the Insurance Ordinance, 2000. The new law primarily aimed to ensure the Protection of insurance policyholders’ interest and to promote sound development of the Insurance industry. As of October 20, 2010 forty nine (49) insurance and takaful companies are transacting insurance business in Pakistan along with one government owned reinsurance company PRCL
  8. 8.            Types of Life Insurance Term Assurance Cash Value Life Insurance Whole Life Insurance Universal Life Insurance Variable Life Insurance Why to have a Life Insurance? Protection Liquidity Tax Relief Money when you need it
  9. 9.  How insurance work?  Everybody contributes Rs. 1200/- each as premium to the pool of funds  Total value of the fund = Rs. 60,00,000 (i.e. 5000 persons x Rs. 1,200)  Total value of the fund = Rs. 60,00,000 (i.e. 5000 persons x Rs. 1,200) Insurance company pays Rs. 100,000/- out of the pool to each family of all 50 persons dying in a year. EFFECT OF INSURANCE Risk of 50 persons is spread over 5000 people, thus reducing the burden on any one person.
  10. 10.  Policy claim Life insurance claim can arise either: On the maturity of the policy – Maturity Claim  On death of the policy holder – Death Claim  Survival up to specified period during the term – Survival benefits 
  11. 11.           Terms And Conditions Guarantee Payment of premium Grace period Paid up policies Loans Evidence of age Suicide Travel residence and occupation Liquidated damages
  12. 12.  Main difference between Takaful and Insurance Takaful Companies Conventional Insurance Companies Takaful is based on mutual cooperation. Conventional insurance is based solely on commercial factors. Takaful is free from interest (Riba), gambling, (Maysir), and uncertainty (Gharar). Conventional insurance includes elements of interest, gambling, and uncertainty. All or part of the contribution paid by the Participant is a donation to the Takaful Fund, which helps other Participants by providing protection against potential risks. The premium is paid to conventional insurance companies and is owned by them in exchange for bearing all expected risks Takaful companies are subject to the governing law as well as a Shari’a Supervisory Board. Conventional companies are only subject to the governing laws. There is a full segregation between the Participants Takaful Fund account and the shareholders' accounts Premium paid by the Policyholder is considered as income to the company, belonging to the shareholders. Any surplus in the Takaful Fund is shared among Participants only, and the investment profits are distributed among Participants and shareholders on the basis of Mudaraba or Wakala models. All surpluses and profits belong to the shareholders only.
  13. 13.  Main difference between Takaful and Insurance Takaful Companies Conventional Insurance Companies The Plan Owners’ and shareholders’ capital is invested in investment funds that are Shari’a compliant. The capital of the premium is invested in funds and investment channels that are not necessarily Shari’a compliant.