2. ASSURANCE AND INSURANCE
1) ASSURANCE
• IS A LONG TERM COVER AGAINST AN
EVET THAT WILL DEFINITELY HAPPEN
E.G. LIFE INSURANCE
2) INSURANCE
• IS A SHORT TERM AGREEMENT TAKEN
OUT TO COVER POSSIBLE FUTURE
EVENTS THAT MAY HAPPEN E.G.
THEFT, LOSS OF ABILITY TO WORK
ETC..
3. COMPULSORY AND NON COMPULSORY
INSURANCE
COMPULOSRY I/A
• LEGAL REQUIRMENT SET UP BY THE
GOVERNMENT E.G. ACCIDENT WHILE
WORKING
• IN ASSURANCE THIS COULD BE
RETIREMNET ANNUITIES
NON COMPULSORY I/A
• IS AN OPTIONAL COVER TAKEN BY
THE BUSINESS ONTO THE INSURANCE
COMPANY
• E.G. DAMAGE TO BUILDINGS, THEFT
ETC..
4. THE INSURANCE PROCESS
• STEP 1
• THE BUSINESS OF IDVIDUAL SIGNS A CONTRACT WITH THE INSURNCE COMPANY
• THE CONTRACT INCLUDES TERMS AND CONDITIONS TO BE APPLIED , THE
INSURED AMOUNT AND THE FREQUENCY OF PREMIUMS
5. ………..CONTINUATION………
• STEP 2
• THE INSURED PAYS A CERTAIN AMOUNT TO THE INSURER MONTHLY AS
PREMIUMS
• THIS COULD BE A LIFE INSURANCE AS AN INDIVIDUAL OR A CAR INSURANCE OR
PREMIUMS TO COVER FOR POSSIBLE DAMAGES IN THE FUTURE
6. STEP 3
• THE INSURANCE INVEST THE MONEY SO THAT IT GAINS GREATER VALUE
7. ………..CONTINUATION…………
STEP 4
• WHEN THE UNEXPECTED EVENT OR
EXPECTED EVENT HAPPENS, THE
INSURED CLAIMS TO THE INSURER
E.G. FIRE OR DEATH
•
STEP 5
• THE INSURANCE COMPANY ASSESSES
THE CLAIMS AND CALCULATE THE
AMOUNT DUE TO THE EVENT
8. DETERMINING THE VALUE OF INSURED ITEMS
• MARKET VALUE : AN AMOUNT THE ASSEST IS WORTH IN ITS CURRENT
CONDITION AND CURRENT AGE
• REPLACEMENT VALUE: WHAT IT WOULD COST TO REPLACE THE ITEM WITH A
NEW ONE
• BOOK VALUE: IS THE VALUE AT WHICH THE ASSET WAS BAUGHT
• SUBROGATION: A LEGAL PROCESS USED BY INSURANCE COMPANIES TO RECLAIM
MONEY FROM GUILTY PARTIES
• EXCESS: AN AMOUNT THAT MUST BE PAID BY THE INSURED BEFORE HE OR SHE
CAN CLAI FROM THE INSURANCE
9. ADVANTAGES OF INSURANCE FOR A BUSINESS
PROTECTS BUSINESSES AGAINST SEVERE LOSSES AND UNEXPECTED FINANCIAL
OUTLAY
ENSURES THAT ALL EMPLOYEES ARE GUARANTEED OF PENSION SUPPORT AFTER
THEIR RETIREMENT
CAN BE USED AS A FORM OF SAVING AND INVESTMENT FOR BUSINESS
ENSURE BUSINESS COMPENSATION IF EMPLOYEED ARE INJURED OF DIE WHILE AT
WORK
10. PRINCIPLES OF INSURANCE
IDEMNITY
• MEANS THAT PAY OUTS WILL BE
ISSUED BY INSURANCE IF THERE IS
PROOF THAT THE EVENT HAS
OCCURRED.
• THE INSURER IS ENDEMNIFIED
AGAINST PAYING FRAUDULENT
CLAIMS
UTMOST GOOD FAITH
• IS ABOUT THE HONESTY GIVEN BY
THE ONE BEING INSURED
• GIVE TRUE AND ACCURATE DETAILS
ABOUT YOURSELF
11. …………..CONTINUATION…………
INSURABLE INTEREST
• PEOPLE CAN ONLY CLAIM IF THEY ARE
GOING TO SUFFER A FINANCIAL LOSS
OR LIABILITY
AVERAGE CLAUSE
• MEANS THAT THE PAYMENT WILL BE
ACCORDING TO THE AMOUNT
INSURED