Which of the following is not a function of insurance?

Insurance is a means of protection from financial loss. It is a form of risk management primarily hedged against any uncertain future loss. The functions of insurance are risk sharing, assisting in capital formation, economic progress, etc. Lending of funds is not a function of insurance. It is a function of banks.

State the following statement is True or False:All insurance contracts are contracts of indemnity, except the contract of life insurance.

Uncertainties have led to the formation of the concept of insurance. Insurance is a contract where one party agrees to indemnify the loss of other party at the time of loss, for consideration. The principle of indemnity in an insurance contract safeguards the insured to put him in the same position that he/she would have been in if the loss had not occurred. However, the principle of indemnity does not apply to life insurance contracts. Thus it can be said that all contracts of insurance, except that of life insurance, are contracts of indemnity.Hence, the following statement is true.

Which of the following is not applicable in life insurance contact?

The contract of indemnity is defined as, " A contract where one party promises to save the other from the loss caused by the conduct of the promisor himself or by the conduct of any other party." In a life insurance contract, nobody can save the life of the person. Hence, contract of indemnity does not apply here.

Essay type questions:What is indemnity? Why the principle of indemnity is not applicable to life insurance?

Indemnity refers to make good the loss or damage caused due to an uncertain event. The principle of indemnity states that the insured has to be compensated by the insurer for the loss caused to him and bring him back to the same position in which he was before the loss. The principle of indemnity is not applicable to life insurance because the insurer may pay any amount but the insured cannot be brought back to the same state. Also, the loss of a life is not measurable and no money can indemnify the loss of a life.

Write short notes on the following : Principle of indemnity.

All the fire and marine insurance contracts are contracts of indemnity. The principle of indemnity states that the insured must be compensated for any loss or damage cause to the goods insured by the insurer. This loss has to be measured in terms of money. According to this principle, the insurer must put the insured in the same position in which he was before the loss or damage occurred. It is not applicable to the life insurance contracts.

What is the difference between a Whole Life Policy and Endowment Policy?

In whole life policy, there is no period of maturity as it is payable on death, but endowment policy has a maturity period. Rate of premium is low for whole life policy as compared to endowment policy. Premium is payable throughout the life for whole life policy while only for a specified period in endowment policy.

What do you mean by Insurance?

Insurance is a contract under which the insurer undertakes the responsibility to indemnify the insured against any damage for which it has taken insurance. The insured needs to pay a certain amount of premium to the insurer to avail insurance. Insurance is a contract of indemnity and also is based on utmost faith. There are three types of insurance viz., life, fire, and marine.

The main element(s) of a fire insurance contract is/are _________________.

All the above are strictly the features of a contract of insurance. Fire Insurance contract is no different from an insurance contract and thus, these are also the features of a fire insurance contract. The insured must have an insurable interest in the subject matter of the contract both at the time of taking the policy and as well as at the time of taking the claim for loss or damage. In this case also the insured must disclose all the material facts such as fire detection and fire fighting equipment, nature of their use, etc. It is a contract of indemnity as the insured can claim only the actual damages from the insurer.

Letter Writing : Write a letter enquiring about fire insurance policy.

J.K.L. CO. LTD. Registered Office: '2', Bombay House, Modi Street, Fort, Mumbai - 400 001.Tele No.: 67345621 Date: 18th August, 2011Fax No.: 67345621Ref. No.: A5-102The Manager,ABC fire Insurance Company24, Nariman Point,Mumbai - 400 021 Sub. Inquiry about fire policy.Sir, We write this to inform you that our factory is located at Malad which is going to start commercial production shortly. Hence, we would like to insure our goods and factory property and premises against risk of loss due to fire. The value of property is worth Rs. 5 crores. We would like to obtain a fire insurance policy for a period of one year. Kindly let us know the terms and conditions of your company for fire insurance. Thanking You, Yours faithfully, sd/- secretary.

Life Insurance | Definition, Examples, Diagrams

definition

Main elements of Life Insurance

Since life itself is uncertain, all individuals try to assure themselves of a certain sum of money.
Life insurance is taken not only to take of an individual but also family members in case of death.
The insurance company undertakes to insure the life of a person in exchange for a sum of money called premium. This premium may be paid in one lump sum, or monthly, quarterly, half yearly or yearly.
The company promises to pay a certain sum of money either on the death of the person or on his attaining a certain age (i.e., the expiry of certain period).
Thus, the person is sure that a specified amount will be given to him when he attains a certain age. His children will get that sum in the event of his death.
The different types of life insurance policies are whole life insurance, annuity policy, etc.

definition

Types of Life Insurance policies

Following are the types of Life Insurance policies.
(i) Whole Life Policy: In this kind of policy, the amount payable to the insured will not be paid before the death of the assured. The sum then becomes payable only to the beneficiaries or heir of the deceased.
(ii) Endowment Life Assurance Policy: The insurer (Insurance Company) undertakes to pay a specified sum when the insured attains a particular age or on his death whichever is earlier. The endowment policy matures after a limited number of years.
(iii) Joint Life Policy: This policy is taken up by two or more persons. The premium is paid jointly or by either of them in installments or lump sum.
(iv) Annuity Policy: Under this policy, the assured sum or policy money is payable after the assured attains a certain age in monthly, quarterly, half yearly or annual installments.

definition

Concept of Life Insurance

A life insurance policy was introduced as a protection against the uncertainty of life.
Life insurance may be defined as a contract in which the insurer inconsideration of a certain premium, either in a lump sum or by other periodical payments, agrees to pay to the assured, or to the person for whose benefit the policy is taken, the assured sum of money, on the happening of a specified event contingent on the human life or at the expiry of certain period.
Life insurance may be defined as a contract in which the insurer inconsideration of a certain premium,either in a lump sum or by other periodical payments, agrees to pay to the assured, or to the person for whose benefit the policy is taken, the assured sum of money, on the happening of a specified event contingent on the human life or at the expiry of certain period.
The insurance company undertakes to insure the life of a person in exchange for a sum of money called premium. This premium may be paid in one lump sum, or periodically i.e. monthly, quarterly, half yearly or yearly. At the same time, the company promises to pay a certain sum of money either on the death of the person or on his attaining a certain age (i.e., the expiry of certain period).

Life Insurance

definition

Main elements of Life Insurance

definition

Types of Life Insurance policies

definition

Concept of Life Insurance

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Life Insurance

Which of the following is not a function of insurance?

State the following statement is True or False:
All insurance contracts are contracts of indemnity, except the contract of life insurance.

Which of the following is not applicable in life insurance contact?

Essay type questions:
What is indemnity? Why the principle of indemnity is not applicable to life insurance?

Write short notes on the following :
Principle of indemnity.

What is the difference between a Whole Life Policy and Endowment Policy?

What do you mean by Insurance?

The main element(s) of a fire insurance contract is/are _________________.

An assessee has paid life insurance premium of Rs. 25, 000 during the previous year for a policy of Rs. 1, 00, 000. He shall __________________________.

Letter Writing :
Write a letter enquiring about fire insurance policy.