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INSURANCE

The document discusses the fundamentals of insurance, including principles, types (life and non-life), benefits and disadvantages. It outlines the workings of insurance, the rights and responsibilities of both insurers and insured parties, and the functions and powers of the Insurance Regulatory Development Authority of India (IRDAI). Additionally, it highlights the benefits and limitations of insurance in providing economic protection and risk sharing.

Education◦
WHAT IS INSURANCE ?
PRINCIPLES OF INSURANCE • PRINCIPLE OF LOSS MINIMIZATION. • PRINCIPLE OF UTMOST GOOD FAITH. • PRINCIPLE OF INSURABLE INTEREST. • PRINCIPLE OF INDEMNITY. • PRINCIPLE OF CONTRIBUTION. • PRINCIPLE OF SUBROGATION. • PRINCIPLE OF PROXIMATE CAUSE.
What is Life Insurance ?
TYPES OF LIFE INSURANCE TERM LIFE INSURANCE. ENDOWMENT INSURANCE. WHOLE LIFE INSURANCE.
ADVANTAGES OF LIFE INSURANCE • Covers risk of death. • Encouragement of compulsory saving. • Facilitation of liquidity. • Provision of profitability. • Tax relief. • Mental Peace.
DISADVANTAGES OF LIFE INSURANCE • Arises when it is used as an investment product. • Buying when you have no need. • Buying complex life insurance products which give sub optimal results. • Buying expensive policies.
What is Non-Life Insurance ?
TYPES OF NON-LIFE INSURANCE FIRE INSURANCE. MARINE INSURANCE. PERSONAL ACCIDENT INSURANCE. .
MOTOR INSURANCE. BURGLARY INSURANCE. RURAL INSURANCE.
BENEFITS OF NON-LIFE INSURANCE • Peace of Mind. • Stability. • Financial Security. • Self – dependency. • Savings. • Investment.
HOW INSURANCE WORKS ?
RIGHTS AND RESPONSIBILITY OF THE INSURER • Right to collect premium from the insured. • Right to specify the rules and conditions that govern the promise made under the policy. • Responsibility to pay for the losses occurred and claimed by the insured.
RIGHTS AND RESPONSIBILITY OF THE INSURED • Obligation to pay premium to the insurer • Right to collect payment from the insurer if a covered loss occurs. • Obligation to comply with the terms and conditions prescribed by insurer.
BENEFITS OF INSURANCE • Provides Economic Protection. • Shares Risks. • Maintain Standard of People. • Encourages Savings. • Eliminates Dependency. .
BENEFITS OF INSURANCE(Contd.) • Grants Loans. • Creates Employment Opportunities. • Promotes Foreign Trade. • Helps to Operate Business Smoothly. • Helps to Reduce Inflation.
LIMITATIONS OF INSURANCE • Baisness to insured. • Lengthy Legal Formalities. • Does not provide all Financial Services. • Compensate as less as possible. • Tempt to commit Crimes. • High Price for Low Benefit.
INSURANCE REGULATORY DEVELOPMENT AUTHORITY OF INDIA, 1999. • Meaning • Establishment
OBJECTIVES OF IRDAI • To protect the interest and fair treatment of the policy holder. • To regulate fairness and ensure the financial soundness of the industry. • To regularly frame regulations to ensure the industry operates without any ambiguity.
FUNCTIONS OF IRDAI • Authority responsible for registration of Insurance Company. • Protects the interest of the Policyholder. • Provides assistance to Intermediaries. • Regulates and control Insurance Companies.
POWERS OF IRDAI • All Insurance company have to register with IRDAI compulsorily. • Capital structure will be determined by IRDAI. • Amount stipulated by IRDAI must be deposited with RBI. • Audit Reports must be submitted to IRDAI.
POWERS OF IRDAI (Contd.) • Actuaries appointed by the company should report to IRDAI. • Investments must be approved by IRDAI. • Nature of general insurance will be prescribed by IRDAI. • Statements of investment of assets should be submitted every financial year to IRDAI.
INSURANCE