I Points to Remember
- Insurance is concerned with risk.
- Insurance is an agreement or a contract between the insured and insurer
- Policy is the written contract between the insurer and insured and insured
- claim is a request for payment by the beneficiary , or nominee or legal heir of the insured to the insurer
- Premium is the consideration the insured pays to the insurer periodically for undertaking the risk.
- Life insurance is an insurance of a person‟s life
- General insurance is a non –life insurance.
- The person who has accepted to pay the loss is called insurer in insurance
- The person who receives the benefit is called insured is insurance.
- Vehicle insurance is an uncertain insurance.
II Multiple choice Questions
1. Insurance is an agreement between
a)Insured and Insurer b)Insured and Agent
c)Agent and Insurer d)None of the above
2. Other names for Insured are
a)Policy holder and Agent
b)policy holder and designated beneficiary
c)Insured and Insurer
d)All of the above
3. The written contract between the insurer and insured is
a)Claims b)Premium c)Policy d)Agency
4. The main objective of every Insurance contract is to give:-
a)Salary b)Financial support
c)Protection d)Financial security and protection
5. Life Insurance is an Insurance of
a)A Person‟s life b)Live of all the members in a family
c)Lives of two persons d)None of the above
6. Insurance interest is one of the
a)Kinds of life insurance b)Advantages of Insurance
c)Procedures to obtain insurance policy d)Principles of Insurance
7. An application form in insurance is called
a)Receipt b)Proposal form c)Admission form d)Fill in slip
8. Whose help is to be sought to fill the proposal form ?
c)Policy holder d)All of the above
III Match the following
1. Insurer a. Insurance That covers the life b
2. Insured b. Insurance company c
3. Life insurance c. Policy holder a
4. Claim d. Money paid by the insured periodically e
5. Premium e. Request for payment d
IV Fill in the blanks with suitable words
1 The person who has accepted to pay the loss is called insurer in insurance.
2. The person who receives the benefit is called Insured in Insurance.
3. The insurance that covers the life is called life insurance.
4. Vehicle insurance is an uncertain insurance.
5. Insurance is concerned with risk.
6. Policy is the written contract between the insurer and insured.
7. Premium is the consideration the insured pays to the insurer periodically for undertaking the risk.
8. Insurance is an agreement or a contract between the insured and insurer.
V. Answer the following Questions.
1. What is insurance ?
Insurance is an agreement, where for a stipulated payment called premium, one party (The insurer) agrees to pay to the other (Insured or the policy holder or his designated beneficiary) a defined amount (the claim payment or benefit) upon the occurance of a specific loss. Or
Insurance is an agreement or a contract between the insured and insurer.
2. Explain the importance of insurance.
- It covers the risk of death, disability or loss.
- It encourages compulsory savings.286
- It achieves the purpose of the life assured.
- It gives peace of mind of getting coverage for life and property.
- It helps when loss of life occurs.
- It helps for social benefits.
- It promotes investment of funds.
- It facilitates for the payment or debits (to liquidate debts)
- It provides loan facility and tax relief.
3. List out the points included in insurance policy.
Policy : It is the written contract between the insurer and insured.
Claims: It is a request for payment by the beneficiary or nominee or legal heir of the insured to the insurer as per the terms and conditions of the policy.
Premium: It is the consideration the insured pays to the insurer periodically for undertaking the risk.
4. Explain the importance of life insurance.
- To ensure the financial support to the family of a person in the event of unexpected death or disability of a person.
- To provide finance for children‟s educational and other needs.
- To have a savings plan for the future, so that a person can have a constant source of income after his retirement.
- To ensure a person to have monetary help when the earnings are reduced or stopped due to accident or serious disease.
- To provide financial contingencis when life styles are changed or in the event of any unexpected happenings.
5. What are the principle to be followed by the insured?
There are seven principles which need to be taken note of :
- Principle of utmost good faith
- Insurance interest.
- Principle of indemnity.
- Principle of contribution.
- Principle of subrogation. (extension of the principle of indemnity)
- Principle of loss minimization.
- Principle of Proximate cause.
6. Make a List of the differences between Life Insurance and General Insurance.
7. What are the advantages of insurance companies?
- Provides reasonable profit to many.
- Provides a sense of security.
- Creates employment opportunities to many people.
- Provides protection to property.
- Solves the social problems.
- Equitable premium to rich and poor.
- Helps for research facilities.
- Removes the risk of loss.
- Encourages economic growth.
- Gives a sense of security.
- Encourages business competition.
- Promotes International Trade.
8. What are the steps to be taken at the time of taking an insurance policy?
- Short list the insurance company from which you wish to buy the insurance policy.
- Enquire about the insurance cost and premium to be paid (based on the age).
- Obtain the application form. It is called proposal form.
- Complete the proposal form in all respects. The proposal form asks for basic information such as your name, address, employer, personal information such as height, weight, date of birth, life styles, financial information, family particulars etc.,
- Take the help of the agent to fill the proposal form.
- Submit the proposal form directly or through the agent.
- The proposal form will be throughly scrutinised by the officer of the insurance company and you will be asked to pay the first premium amount.
- The insurance company will issue a bond within few days.
- After receiving the bond, it is confirmed that your policy is accepted. Preserve the bond safely.
9. Mention the kinds of life insurance policy .
- Term Insurance
- Whole life Insurance Endoment policy.
- Money back or cash back plans.
- Children‟s Policies.
- Annunity (Pension) plans.
- Unit linked insurance policy.