“Kinds of Insurance”

PROJECT REPORT

Submitted in partial fulfillment of the

Requirements for the degree of

LLB 3 YEARS

To the

AMITY UNIVERSITY

By

NAME: ANUJ RANA

ENROLMENT NO. : A3256113123

CLASS: SEMESTER 5

TO

MISS Mahima Chaudhary

AMITY LAW SCHOOL

AMITY UNIVERSITY

NOIDA

2015

ACKNOWLEDGEMENT

I owe a great many thanks to great many people who helped me and supported me during the

making of this project.

My deepest thanks to my lecturer Miss Mahima Chaudhary, the guide of the project for

guiding and correcting various documents of mine with attention and care. She has taken pain

to go through the project and make necessary corrections as and when needed.

I express my thanks to the director of Amity Law School, Major Gen N Kumar for extending

his support.

I would also like to thank my institution and my faculty members without whom this project

would have been a distant reality.

ANUJ RANA

A3256113123

1.1

INTRODUCTION

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. This study titled “Study of 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.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 riot and strike, explosion etc. hence insurance safeguard against uncertainties. It provides financial recompense for losses suffered due to incident of unanticipated events, insured with in policy of insurance. Moreover, through a number of acts of  parliament, specific types of insurance are legally enforced in our country e.g. third party insurance under motor vehicles Act, public liability insurance for handlers of hazardous substances under environment protection Act. Etc.

1.2

WHAT IS INSURANCE

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 .in olden time, the contribution make the above-stated notion of insurance

1.3

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, andd. 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

1.4

KINDS 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 with in 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 - Life insurance (or commonly final expense insurance or life

assurance) is a contract between an insured (insurance policy holder) and an insurer

or assurer, where the insurer promises to pay a designated beneficiary a sum of

money (the "benefits") in exchange for a premium, upon the death of the insured

person. Depending on the contract, other events such as terminal illness or Critical

Illness can also trigger payment. The policy holder typically pays a premium, either

regularly or as one lump sum. Other expenses (such as funeral expenses) can also

be included in the benefits.

Life policies are legal contracts and the terms of the contract describe the limitations

of the insured events. Specific exclusions are often written into the contract to limit

the liability of the insurer; common examples are claims relating to suicide, fraud,

war, riot, and civil commotion.

Life-based contracts tend to fall into two major categories:

Protection policies – designed to provide a benefit, typically a lump sum

payment, in the event of specified event. A common form of a protection policy

design is term insurance.

Investment policies – where the main objective is to facilitate the growth of capital

by regular or single premiums. Common forms (in the U.S.) are whole

life, universal life, and variable life policies, and

b) General insurance - General insurance or non-life insurance policies, including

automobile and homeowners policies, provide payments depending on the loss from

a particular financial event. General insurance is typically defined as any insurance

that is not determined to be life insurance.

It is called property and casualty insurance in the U.S. and Canada and Non-Life

Insurance in Continental Europe.

In the UK, insurance is broadly divided into three areas: personal lines, commercial

lines and London market.

The London market insures large commercial risks such as supermarkets, football

players and other very specific risks. It consists of a number of insurers,

reinsurers, P&I Clubs, brokers and other companies that are typically physically

located in the City of London. The Lloyd's of London is a big participant in this

market.[1] The London Market also participates in personal lines and commercial

lines, domestic and foreign, through reinsurance.

Commercial lines products are usually designed for relatively small legal entities.

These would include workers' comp (employers liability), public liability, product

liability, commercial fleet and other general insurance products sold in a relatively

standard fashion to many organisations . There are many companies that supply

comprehensive commercial insurance packages for a wide range of different

industries, including shops, restaurants and hotels.

Personal lines products are designed to be sold in large quantities. This would include autos (private car), homeowners (household), pet insurance, creditor insurance and others.

2. Classification on the basis of nature of insurance

a) Life insurance - Life insurance (or commonly final expense insurance or life

assurance) is a contract between an insured (insurance policy holder) and an insurer

or assurer, where the insurer promises to pay a designated beneficiary a sum of

money (the "benefits") in exchange for a premium, upon the death of the insured

person. Depending on the contract, other events such as terminal illness or Critical

Illness can also trigger payment. The policy holder typically pays a premium, either

regularly or as one lump sum. Other expenses (such as funeral expenses) can also

be included in the benefits.

Life policies are legal contracts and the terms of the contract describe the limitations

of the insured events. Specific exclusions are often written into the contract to limit

the liability of the insurer; common examples are claims relating to suicide, fraud,

war, riot, and civil commotion.

Life-based contracts tend to fall into two major categories:

Protection policies – designed to provide a benefit, typically a lump sum

payment, in the event of specified event. A common form of a protection policy

design is term insurance.

Investment policies – where the main objective is to facilitate the growth of capital

by regular or single premiums. Common forms (in the U.S.) are whole

life, universal life, and variable life policies,

b) Fire insurance - Insurance that is used to cover damage to a property caused by

fire. Fire insurance is a specialized form of insurance beyond property insurance,

and is designed to cover the cost of replacement, reconstruction or repair beyond

what is covered by the property insurance policy. Policies cover damage to the

building itself, and may also cover damage to nearby structures, personal

property and expenses associated with not being able to live in or use the property if

it is damaged.BREAKING DOWN 'Fire Insurance' Homeowners and property owners may consider fire insurance in addition to a property insurance policy if the property contains valuable items. A best practice would be to document the property and its related contents, which makes identifying the value of items damaged or lost much easier after a fire has taken place. A fire insurance policy may contain exclusions based on the cause of the fire, such as not covering fires caused by wars.

c) Marine insurance - Marine insurance covers the loss or damage of ships, cargo, terminals, and any transport or cargo by which property is transferred, acquired, or held between the points of origin and final destination. Cargo insurance — discussed

here — is a sub-branch of marine insurance, though Marine also includes Onshore and Offshore exposed property, (container terminals, ports, oil platforms, pipelines), Hull, Marine Casualty, and Marine Liability. When goods are transported by mail or courier, shipping insurance is used instead.

d) Social insurance - Social insurance is any government-sponsored program with the following four characteristics:

the benefits, eligibility requirements and other aspects of the program are defined by statute;

explicit provision is made to account for the income and expenses (often through a trust fund);

it is funded by taxes or premiums paid by (or on behalf of) participants (although additional sources of funding may be provided as well); and

the program serves a defined population, and participation is either compulsory or the program is subsidized heavily enough that most eligible individuals choose to participate.[1]

Social insurance has also been defined as a program where risks are transferred to and pooled by an organization, often governmental, that is legally required to provide certain benefits.[2]

In the U.S., programs that meet these definitions include Social Security, Medicare, the PBGC program, the railroad retirement program and state-sponsored unemployment insurance programs.[1] The Canada Pension Plan (CPP) is also a social insurance program , and

e) Miscellaneous insurance - The accident or miscellaneous department covers those types of risk which are not covered either under Fire or Marine or Life or Social Departments. Its scope is therefore, very vide and extensive and includes such a wide range of contingencies as may not be included in the strict interpretation of the term ‘Accident’. The Accident or the miscellaneous insurance includes many sub-sections under which different classes of business are transacted. A special feature of this department is that it covers many branches which are grouped together in it which are apparently unrelated to each other. However in practice, unrelated risks are grouped together for the convenience of the insured.

The various Policies under it are as follows:

All risk Insurance

Burglary Insurance Policy

Cash in Transit Insurance

Fidelity Guarantee Insurance Policy

Householder's Insurance

Shopkeeper's Insurance

Television Insurance

Special Contigency Insurance

Suhana Safar Insurance

Baggage Insurance

Plate Glass Insurance

Jeweller's Block Insurance

3. Classification from risk point of view

a) Personal insurance - Insurance is a way of managing risk by sharing the monetary damages of catastrophic events among a large number of parties. Various types of entities can purchase insurance policies, including LLCs, corporations, professional associations, non-profit organizations and individuals. Insurance policies can cover damages incurred on virtually any type of property. Personal insurance is insurance for individuals rather than companies or organizations.

How Personal Insurance Works

When you purchase any personal insurance policy, you pay regular premiums in exchange for an agreement of financial protection on the part of the insurer. The insurance company takes all of the money it gathers from policy holder premiums and uses it to pay whatever it owes to clients who actually do incur losses that their policies cover. Whatever money is left remains with the insurance company, which uses that money to pay for normal operating costs, pay dividends to owners or shareholders or make investments.

b) Property insurance - Property insurance provides protection against most risks

to property, such as fire, theft and some weather damage. This includes specialized forms

of insurance such as fire insurance, flood insurance, earthquake insurance, home insurance,

or boiler insurance. Property is insured in two main ways—open perils and named perils.

Open perils cover all the causes of loss not specifically excluded in the policy. Common

exclusions on open peril policies include damage resulting from earthquakes, floods, nuclear

incidents, acts of terrorism, and war. Named perils require the actual cause of loss to be listed

in the policy for insurance to be provided. The more common named perils include such

damage-causing events as fire, lightning, explosion, and theft.

c) Liability insurance - Liability insurance is a part of the general insurance system of risk financing to protect the purchaser (the "insured") from the risks of liabilities imposed by lawsuits and similar claims. It protects the insured in the event he or she is sued for claims that come within the coverage of the insurance policy. Originally, individuals or companies that faced a common peril, formed a group and created a self-help fund out of which to pay

compensation should any member incur loss (in other words, a mutual insurance arrangement). The modern system relies on dedicated carriers, usually for-profit, to offer protection against specified perils in consideration of a premium. Liability insurance is designed to offer specific protection against third party insurance claims, i.e., payment is not typically made to the insured, but rather to someone suffering loss who is not a party to the insurance contract. In general, damage caused intentionally as well as contractual liability are not covered under liability insurance policies. When a claim is made,[1] the insurance carrier has the duty (and right) to defend the insured. The legal costs of a defense normally do not affect policy limits unless the policy expressly states otherwise; this default rule is useful because defense costs tend to soar when cases go to trial.

d) Fidelity general insurance - under it, the insurer undertakes to compensate the insured i.e. the employers against the losses suffered by him due to the employees. The losses may be due to fraud, dishonesty, misappropriation of funds, goods or damages to property caused by the employees. In order to avail the protection under it, the employer is required to provide all material facts about their employees to the insurer and also, notify all changes in the condition of their service. For example, fidelity insurance by New India Assurance Company Limited. Under this policy, the insurance company agrees to indemnify the insured (employer) against a direct pecuniary loss sustained by reason of any act of fraud/dishonesty committed by employee:-

On or after the date of commencement of this policy. During uninterrupted service with the Insured and discovered during the continuance

of this policy or within twelve calendar months of the expiration thereof. In the case of death, dismissal or retirement of the employee with twelve calendar

months of such death, dismissal or retirement whichever of these events shall first happen.

CONCLUSION

An Insurance policy is an investment oriented plan. As compared to other investment plans, the investment portfolio of the Insurance Policy functions like a mutual fund and other investment. It is invested in a portfolio of debt and equity instruments, inconformity with the announced investment policy. Hence it grows or erodes in line with the performance of that portfolio. From this study it reveals that the consumer’s attitude towards Insurance Policy and Insurance Company changed a lot. A 5 years before the consumers and the general public were not interested to take an Insurance Policy but now days there are many options and choices in front of the customers. They are interested to take high return policies in order  to secure their lives. People are aware of all the benefits and returns of insurance policies. As a result of this new international and domestic companies are coming to the Indian Market. Since there are many players in the Indian Insurance Market the competition level is very high. So the companies are introducing new schemes. From this it is found that The LIC is the major market share holder in the insurance field. Even if there are many players in this field still it is an untapped market. Only a few portion of Indian population is insured.

Bibliography

1.B.M.Gandhi,‘Law of Torts- with Law of Statutory Compensation', Eastern Book Company, 2nd edi,311-330

2.Avtar Singh, ‘Law of Insurance' Eastern Book Company, first edition,134-139

3.www.legalserviceindia.com

4.Course material supplied for Kinds of Insurance

5.Motor Vehicles Act,1988

6.Motor Vehicles Act,1939