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Principles and Practice of Life Insurance - ICAI. Pages·· This book claims to be about principles and practices. Most of the prin Today, however. PDF Drive is your search engine for PDF files. As of today we have 77,, eBooks for you to download for free. No annoying ads, no download limits, enjoy . Fundamentals of Insurance COP is a compulsory foundational course in insurance technically and practically competent to start a career in the insurance.
This need insurance Liability insurance includes motor, theft, fidelity and machine insurance. In other words, life insurance provides against pre-mature death and a fixed sum at the maturity of policy. With the growth of the insurance business, the insurance companies are creating more and more employment opportunities. Life insurance offers various polices according to the requirement of the persons -. Insurance not only provides protection against risks but also a number of other incentives which encourages people to insure. Encouragement of savings:
Insurance provide capital for society.
Accumulated funds through savings in the form of insurance premium are invested in economic development plans or productivity projects. Insurance increases efficiency: The insurance eliminates the worries and miseries of losses. A person can devote his time to other important matters for better achievement of goals. This also helps in improving their efficiencies.
Solution to social problems: Insurance take care of many social problems. We have insurance against industrial injuries, road accident, old age, disability or death etc.
Encouragement of savings: Insurance not only provides protection against risks but also a number of other incentives which encourages people to insure.
Since regularity and punctuality pf payment of premium is a perquisite for keeping the policy in force, the insured feels compelled to save. Principles of Insurance. The basic principles which govern the insurance are -. Principle of utmost good faith: Both insurer and insured should display the utmost good faith towards each other in relation to the contract. In other words, each party must reveal all material information to the other party whether such information is asked or not.
There should not be any fraud, non disclosure or misrepresentation of material facts. If he does not disclose the true fact while getting his life insured, the insurance company can avoid the contract. Similarly, incase of the insurance of a building against fire, the insured must disclose the details of the goods stored, if such goods are of hazardous nature. A material fact means important facts which would influence the judgment of the insurer in fixing the premium or deciding whether he should accept the risk, on what terms.
All material facts should be disclosed in true and full form.
Principle of Insurable Interest: This principle requires that the insured must have a insurable interest in the subject matter of insurance. Insurance interest means some pecuniary interest in the subject matter of contract of insurance. Insurance interest is that interest, when the policy holders get benefited by the existence of the subject matter and loss if there is death or damage to the subject matter.
So in the life insurance interest exists in the following cases: In life insurance, insurable interest must be present at the time when the policy is taken.
In fire insurance, it must be present at the time of insurance and at the time if loss if subject matter. In marine insurance, it must be present at the time of loss of the subject matter. Principle of Indemnity: This principle is applicable in case of fire and marine insurance only. It is not applicable in case of life, personal accident and sickness insurance. A contract of indemnity means that the insured in case of loss against which the policy has been insured, shall be paid the actual cost of loss not exceeding the amount of the insurance policy.
The purpose of contract of insurance is to place the insured in the same financial position, as he was before the loss. It is burnt down and found that the expenditure of Rs.
The insurer is liable to pay only Rs. In life insurance, principle of indemnity does not apply as there is no question of actual loss.
The insurer is required to pay a fixed amount upon in advance in the event of accident, death or at the expiry of the fixed term of the policy. Thus, a contract of a life insurance is a contingent contract and not a contract of indemnity. Principle of Contribution: The principle of contribution is a corollary to the doctrine of indemnity. It applies to any insurance which is a contract of indemnity. So it does not apply to life insurance. A particular property may be insured with two or more insurers against the same risks.
In such cases, the insurers must share the burden of payment in proportion to the amount insured by each. If one of the insurer pays the whole loss, he is entitled to contribution from other insurers. If the whole amount pf loss is paid by Q, then Q can recover Rs. Sum insured with Individual insurer i.
The right of contribution arises when: Principle of Subrogation: According to doctrine of subrogation, after the insured is compensated for the loss caused by the damage to the property insured by him, the right of ownership to such property passes to the insurer after settling the claims of the insured in respect of the covered loss.
The insurer is entitled to receive the sum of Rs. A loss may occur accidentally or by the action or negligence of third party. If the insured suffer a loss because of action of third party and he is in a position to recover the loss from the insurer then insured can not take action against third party, his right is subrogated substituted to the insurer on settlement of the claim.
The insurer, therefore, can recover the claim from the third party. If the insured recovers any compensation for the loss due to third party , from the third party, after he has already been indemnified by the insurer, he holds the amount of such compensation as the trustee if the insurer. The insurer is entitled to the benefits out of such rights only to the extent of the amount he has paid to the insured as compensation.
Principle of Causa Proxima: Causa proxima, means proximate cause or cause which, in a natural and unbroken series of events, is responsible for a loss or damage. The insurer is liable for loss only when such a loss is proximately caused by the peril insured against.
The cause should be the proximate cause and can not the remote cause. If the risk insured is the remote cause of the loss, then the insurer is not bound to pay compensation. The nearest cause should be considered while determining the liability of the insured.
The insurer is liable to pay if the proximate cause is insured. Here, the proximate cause of loss is sea water which is covered by the policy and the hole made by the rats is a remote cause. Therefore, the insured can recover damage from the insurer. A collision took palce resulting in a few days delay. Because of the delay, a cargo of oranges becomes unsuitable for human consumption.
It was held that the insurer was not liable for the the loss because the proximate cause of loss was delay and not the collision of the ship.
Principle of Mitigation of Loss: An insured must take all reasonable care to reduce the loss. We must act as if the property was not insured.
He is supposed to take all steps which a man of ordinary prudence will take under the circumstances to save the insured property. Benefits of Insurance or Role and Importance of Insurance. Benefit of insurance can be divided into these categories -. Benefits to Individual. Benefits to the Society. It can be explained as under -. Insurance gives a sense of security to the policy holder. Insurance provide security and safety against the loss of earning at death or in old age, against the loss at fire, against the loss at damage, destruction of property, goods, furniture etc.
Life insurance provides protection to the dependents in case of death of policyholders and to the policyholder in old age. Fire insurance insured the property against loss on a fire. Similarly other insurance provide security against the loss by indemnifying to the extent of actual loss. Life insurance is best form of saving. The insured person must regularly save out of his current income an amount equal to the premium to be paid otherwise his policy get lapsed if premium is not paid on time.
Life insurance provide different policies in which individual can invest smoothly and with security; like endowment policies, deferred annuities etc. There is special exemption in the Income Tax, Wealth Tax etc. Insurance is a social device whereby businessmen shift specific risks to the insurance company.
This helps the businessmen to concentrate more on important business issues. An insured businessman or policyholder can enjoy normal expected profits as he would not be required to make provisions or allocate funds for meeting future contingencies. Insured assets are easily accepted as security for loans by the banks and financial institutions so insurance improve credit standing of the business firm.
As institutional investors, insurance companies provide funds for financing economic development. They mobilize the saving of the people and invest these saving into more productive channels. With the growth of the insurance business, the insurance companies are creating more and more employment opportunities. Policies like old age pension scheme, policies for education, marriage provide sense of security to the policyholders and thus ensure social welfare.
What a pleasure it is to discover the second edition of the Handbook of Insurance, twelve years after the first! Many key concepts at the core of risk, uncertainty and insurance economics have been further refined, reassessed, and reanalyzed.
New issues have emerged, including systemic risk, longevity risk, long-term care, the corporate governance of insurance companies, capital allocation within insurance companies and alternative risk transfer devices.
Provides a single reference source on insurance for professors, researchers, graduate students, regulators, consultants and practitioners Includes 37 chapters written by leading authorities in insurance, all of which have been peer reviewed Presented in a format where each chapter can be read independently of the others see more benefits.
Buy eBook. Buy Hardcover. Buy Softcover. FAQ Policy. About this book This new edition of the Handbook of Insurance reviews the last forty years of research developments in insurance and its related fields. Show all. Table of contents 37 chapters Table of contents 37 chapters Developments in Risk and Insurance Economics: Pages