- Insurance policy:- An entity (an individual, corporation, or association of any type, etc.) seeking to transfer risk becomes the 'insured' party once risk is assumed by an 'insurer', the insuring party, by means of a contract, called an insurance policy.
- It is the document issued by the insurance company containing terms of the insurance contract. It specifies the losses that are covered by the Policies and also the maximum amount that can be paid out in the event of a loss/death. This is called Policy Amount.
- Premium:- the fee paid by the insured to the insurer for assuming the risk is called the premium.
- The payment made by the insured to the Insurance Company in consideration of the contract of Insurance. The premium is generally paid annually. In some cases, it may be paid at shorter intervals. A point to be noted is the premium amount has to be paid “front end” i.e. before the commencement of the insurance cover/policy.
- Reserves:- insurer maintains adequate funds set aside for anticipated losses are called reserves
- insurer's profit:- insurer maintains adequate funds set aside for anticipated losses (called reserves), the remaining margin is an insurer's profit.
- Reinsurance companies:- insurance companies that sell policies to other insurance companies, allowing them to reduce their risks and protect themselves from very large losses
- Captive insurance companies:- are limited-purpose insurance companies established with the specific objective of financing risks emanating from their parent group or groups. This ....Read More....
- To "indemnify":- means to make whole again, or to be reinstated to the position that one was in, to the extent possible, prior to the happening of a specified event or peril
- Perils:- means specific kinds of risk that may give rise to claims
- Claims:- A claim occurs when a policy fall due for payment. In Life Insurance it arises on death or on the maturity of the policy. In case of General Insurance, the claim arises only when the loss ....Read More....
- Surrender Value:- When the policyholder wishes to realize the amount of policy before the expiry of the full period of the policy, he surrenders his right under the policy and is paid an amount ....Read More....
- Commission:- Generally, Insurance Companies get business through agents; these agents receive the commission on the basis of the amount of premium they generate for the ....Read More....
- Bonus:- (applicable only to Life Insurance): A life insurance policy may be “with profit” or “without profits”. The holder of a “without profits policy is entitled to receive on maturity only the amount ....Read More....
- Interim Bonus:- It is a bonus paid to a policyholder for a period for which valuation is not complete and, therefore, the exact profit or bonus has not been determined. Such a bonus is also included in claims.
- Reinsurance:- If Insurance Company does not wish to bear the whole of the risk of a policy, then it will reinsure a part of the risk with some other insurer. In such a case the insurer is said to have ceded a part of ....Read More....
- Ceding Company:- An insurance company that shifts part or all of a risk it has assumed to another insurance company. The Ceding company shares the premium amount it has received to cover ....Read More....
- Commission on re-insurance ceded /accepted:- Insurance companies get business through its agents. Such agents receive the commission on the basis of the amount of business they generate for the ....Read More....
- Paid-Up Policy (Applicable only to Life Insurance):- If an insured is unable to continue to pay premiums on his life policy, he may discontinue the payment and convert the policy into ....Read More...
- Annuity:- It is a contract that provides an income for a specific period of time to say for a number of years or for life. The person receiving the payment is called an annuitant. Annuity payments ....Read More....
- Catastrophic Loss:- A loss (or related losses) which is unbearable i.e. it causes severe consequences such as bankruptcy to a family, organization, or insurer.
- Bonus in Reduction of Premium:- In all the cases of general insurance the policy is always taken for one year and it is to be renewed after the expiry of the policy. Whether the policy is renewed with ....Read More....
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