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Insurance
 Introduction

Insurance is bought to lend financial protection to you or your dear ones in case tragedy strikes
your family. There are certain risks in our future, in fact in everyone’s life there are some sort of
risks. Insurance will protect your future risk. As everyone is exposed to various risks. Future is
very uncertain, but there is way to protect one’s family and make one’s children’s future safe.
Life Insurance companies help us to ensure that our family’s future is not just secure but also
prosperous.

Life Insurance is particularly important if you are the sole breadwinner for your
family. The loss of you and your income could devastate your family. Life insurance will ensure
that if anything happens to you, your loved ones will be able to manage financially. Consumers
Perception about Life Insurance Policies enables the Life Insurance Companies to understand
how consumer’s perception differs from person to person. How a consumer selects, organizes
and interprets the service quality and the product quality of different Life Insurance Policies,
offered by various Life Insurance Companies. As it is discussed in one of our article how a
person choose a police and company for him.

Insurance is a tool by which fatalities of a small number are compensated out of

funds (premium payment) collected from plenteous. Insurance companies pay back for financial
losses arising out of occurrence of insured events e.g. in personal accident policy death due to
accident, in fire policy the insured events are fire and other allied perils like strike, explosion
etc.
WHAT IS INSURANCE ?
As said before there is always risk in everyone life. So it is a commonly acknowledged
phenomenon that there are countless risks in every sphere of life . For property, there are fire
risk; for shipment of goods. There are perils of sea; for human life there are risk of death or
disability; and so on .the chances of occurrences of the events causing losses are quite
uncertain because these may or may not take place. Therefore, with this view in mind, people
facing common risks come together and make their small contribution to the common fund.
While it may not be possible to tell in advance, which person will suffer the losses, it is possible
to work out how many persons on an average out of the group, may suffer losses. When risk
occurs, the loss is made good out of the common fund. In this way each and every one shares
the risk, in fact they share the loss by payment of premium, which is calculated on the
likelihood of loss . to secure our future insurance co. insure us.

DEFINITION OF INSURANCE
Insurance has been defined to be that in, which a sum of money as a
premium is paid by the insured in consideration of the insurer’s bearings the risk of paying a
large sum upon a given contingency. The insurance thus is a contract whereby:

a. Certain sum, termed as premium, is charged in consideration.

b. Against the said consideration, a large amount is guaranteed to be paid by the insurer who
received the premium.

c. The compensation will be made in certain definite sum, i.e., the loss or the policy amount
which ever may be.

d. The payment is made only upon a contingency More specifically, insurance may be defined
as a contact between two parties, where in one party (the insurer) agrees to pay to the other
party (the insured) or the beneficiary, a certain sum upon a given contingency (the risk) against
which insurance is required.
TYPES OF INSURANCE
Insurance occupies an important place in the modern world because of the risk, which can be
insured, in number and extent owing to the growing complexity of present day economic
system. The different type of insurance have come about by practice within insurance
companies, and by the influence of legislation controlling the transacting of insurance business,
broadly, insurance may be classified into the following categories:

1.Classification from business point of view

a) Life insurance, and

b) General insurance

2.Classification on the basis of nature of insurance

a) Life insurance
b) Fire insurance
c) Marine insurance
d) Social insurance, and
e) Miscellaneous insurance

3.Classification from risk point of view

a) Personal insurance
b) Property insurance
c) Liability insurance
d) Fidelity general insurance

THE IMPORTANCE OF INSURANCE

Insurance benefits society by allowing individuals to share the risks faced by many people. But
it also serves many other important economic and societal functions. Because insurance is
available and affordable, banks can make loans with the assurance that the loan’s collateral
(property that can be taken as payment if a loan goes unpaid) is covered against damage. This
increased availability of credit helps people buy homes and cars. Insurance also provides the
capital that communities need to quickly rebuild and recover economically from natural
disasters, such as tornadoes or hurricanes. Insurance itself has become a significant economic
force in most industrialized countries. Employers buy insurance to cover their employees
against work-related injuries and health problems. Businesses also insure their property,
including technology used in production, against damage and theft. Because it makes business
operations safer, insurance encourages businesses to make economic transactions, which
benefits the economies of countries.

In addition, millions of people work for insurance companies and related businesses. In 1996
more than 2.4 million people worked in the insurance industry in the United States and Canada.
Insurance as an investment that offers a lot more in terms of returns, risk cover & as also that
tax concessions & added bonuses. Not all effects of insurance are positive ones. The possibility
of earning insurance payments motivates some people to attempt to cause damage or losses.
Without the possibility of collecting insurance benefits, for instance, no one would think of
arson, the willful destruction of property by fire, as a potential source of money.

THE INSURANCE INDUSTRY TODAY

Since the 1980s, the insurance business has grown dramatically and undergone tremendous
changes. As a result of the deregulation of financial services businesses— including insurance,
banking, and securities trading—the roles, products, and services of these formerly distinct
businesses have become blurred. For instance, citizens in the U.S. state of California voted in
1988 to allow banks to sell insurance in that state. In Canada, banks may also soon be allowed
to sell insurance. Advances in communications technology have also allowed traditionally
distinct financial businesses to keep instantaneous track of developments in other businesses
and compete for some of the same customers. Some insurance companies now offer deposit
accounts and mortgages. In the United States, life insurance companies now sell more pension
plans and other asset management services than they do conventional life insurance.

Developments in computer technology that have given insurance providers the ability to quickly
access and process information have allowed them to custom-design policies to fit the needs of
individual customers. But the increasing complexity of policies has also made some aspects of
buying and selling insurance more difficult.

In addition, improvements in geological and meteorological technology have the potential to

change the way property insurers calculate risks of damage. For example, as scientists improve
their abilities to predict severe weather patterns, such as hurricanes, and geological
disturbances, such as earthquakes, insurers may change how they provide protection against
losses from such events.
 There are a number of policies for specific insurance needs. Some of these
include:
1. Family income life insurance.

This is a decreasing term policy that provides a stated income for a fixed period of
time, if the insured person dies during the term of coverage. These payments
continue until the end of a time period specified when the policy is purchased.

2. Family insurance
A whole life policy that insures all the members of an immediate family --
husband, wife and children. Usually the coverage is sold in units per person, with
the primary wage-earner insured for the greatest amount.

3. Senior life insurance

Also known as graded death benefit plans, they provide for a graded amount to be
paid to the beneficiary. For example, in each of the first three to five years after
the insured dies, the death benefit slowly increases. After that period, the entire
death benefit is paid to the beneficiary. This might be appropriate if the
beneficiary is not able to handle a large amount of money soon after the death, but
would be in a better position to handle it a few years later.

4. Juvenile insurance
This is life insurance on a child. Coverage is paid for by an adult, usually the
parents or guardians. Such policies are not considered traditional life insurance
because the child is not producing an income that needs to be protected. However,
by buying the policy when the child is young, the parents are able to lock in an
extremely low premium rate and allow many more years of tax-deferred cash
value buildup.
5. Credit life insurance
This insurance is designed to pay off the balance of a loan if you die before you
have repaid it. Credit life insurance is available for many kinds of loans including
student loans, auto loans, farm equipment loans, furniture and other personal
loans including credit cards. Credit life insurance can be purchased by an
individual. Usually it is sold by financial institutions making loans, like banks, to
borrowers at the time they take out the loan. If a borrower dies, the proceeds of
the policy repay the loan directly to the lender or creditor.

6. Mortgage insurance

This decreasing term coverage is designed to pay off the unpaid balance of a
mortgage if you die before the mortgage is paid off. Premiums are generally level throughout the
term of the policy. The policy is usually independent of the mortgage, meaning that the financial
institution granting the mortgage is separate from the insurance company issuing the policy. The
proceeds of the policy are paid to the beneficiaries of the policy, not the mortgage company. The
beneficiary is not required to use the proceeds to pay off the mortgage.

7. Annuity
An annuity is a form of insurance that enables you to save for your retirement. Basically, you give
the insurance company money for a certain period of time, and then after you retire they will pay
you a certain amount of money every year until you die. There are many different forms of
annuities. Most people who buy annuities are 55 or older. Example of this is article, topic is what is
fixed annuity? That is attached with the report.
Recently Development in Insurance:

 There is an development in car insurance. Now car insurance protects your other parts
of a car like DVD player etc.
 In health insurance, Preferred provider organizations themselves earn money by
charging an access fee to the insurance company for the use of their network.
 It offers its services to these needs (Health insurance) through a group of doctors,
medical personnel and facilities that work directly for the HMO.
 Fixed Annuity is another development in insurance companies. Now you can deposit
fixed amount get advantages from it in future.
 Now the car insurance company fulfill your liability on another person due to accident if
he is injured or any death. Insurance company will cover it.

Conclusion

There is no anyone who is free from risk. There is always risk in everyone’s life. While
you are driving a car or running a business. To protect you from these risks, insurance
company helps you. They protects your future from those risks. Insurance is a contract
between insured and insurer. They fulfill your damages. It can be home insurance,
business insurance or car insurance etc. There is a fixed annuity also in it. When you gets
retire this annuity will help you in financial problem. Some articles attached with the
report and their reviews also, to more explain terms which used in the insurance and
something more about the insurance company.

Reference:
 www.google.com.pk

http://www.allinsuranceinfo.info/2011/04/what-is-a-fixed-annuity/

www.articlesoninsurance.com

en.wikipedia.org/wiki/Insurance