The difference between a

pension fund and a provident

fund

The main difference is that if a pension
fund member retires, the member gets
one third of the total benefit in a cash
and the other two-third is paid in the
form of a pension over the rest of the
member's life. A provident fund
member can get the full benefit paid in
cash.

1-How general insurance
company handle gratuity
and provident fund..?

Provident fund consists of funds
which are contributed by employers
and employees and sometimes only
by employers.
These funds gain interest when the
insurance company invest them.
Money goes out of the fund to pay
for benefits and also for the expenses
of running the fund. The money in
the fund belongs to the fund and not
to the people who contribute.

How Does A
Pension Or
Provident Fund
Work?

Employers
contribution
Employees
contribution
Provident
fund
How Does A
Pension Or
Provident Fund
Work?

But pension and provident funds exist
for the benefit of their members, who
are workers and pensioners. Usually it
is compulsory to become a member of a
fund. It means that a worker does not
have a choice that whether he wants to
become a member or not. He has to
become the member of the fund and the
worker cannot get money back out of
the fund except as benefits according to
the rules of the fund.

Types Of Benefits

Normally a fund has
these kinds of
benefits:
Withdrawal benefits, paid to
workers who resign or are
dismissed
Retrenchment benefits, paid
to workers who are
retrenched
Retirement benefits, paid to
workers when they retire
Insured benefits, including
benefits paid to a worker who
is disabled and benefits paid
to the dependants of a worker
who dies.

An insurance company's revenue is
generated from two sources: (1)
premium income for policies
written during the year; (2)
investment income resulting from
the investment of both the reserves
established to pay off future claims
and the P&C's surplus (asset less
liabilities).

Major Sources of
Revenue for an
Insurance
Company

Profit is determined by subtracting from
the revenue for the year (as defined
above in question 1a) each of the
following items: (1) claim expenses: funds
that must be added to reserves for new
claims for policies written during the year;
(2) claim adjustment expenses: funds that
must be added to reserves because of
underestimates of actuarially projected
claims from previous years; (3) taxes; (4)
administrative and marketing expenses
associated with issuing policies. If annual
premiums exceed the sum of (1), (2) and
(4), the difference is said to be the
underwriting profit. An underwriting loss
results otherwise.

Profits Determination