INSURANCE COMPANIES ACCOUNTS
LIFE INSURANCEGENERAL INSURANCE
1. LIFE INSURANCE: TYPES OF ISURANCE
CORPORATION GURANTEES TO PAY A CERTAIN SUM OF MONEY TO THE POLICY HOLDER ON REACHING A CERTAIN AGE OR DEATH WHICHEVER IS EARLIER.
2. GENERAL INSURANCE: OTHER TYPES OF INSURANCE EXCEPT LIFE INSURANCE; EX. FIRE,MARINE ,ACCIDENT,FIDELITY, THIRDPARTY AND CONSEQUENTIAL LOSS INSURANCE.
ACCOUNTS TWO TYPES OF BOOKS 1. STATUTORY BOOKS:
A. REGISTER OF POLICIESB. REGISTER OF CLAIMSC. THE REGISTER OF LICENCED INSURANCED
INSURANCE AGENTS2. SUBSIDIARY BOOKS
CASH BOOK, PREMIUM CASH BOOK, BRANCH CASH BOOK, PETTY CASH BOOK,CLAIM CASH BOOK, COMMISSON REGISTER, LAPSED AND CANCELED OLICIES BOOK, INVESTMENT LEDGER.
Annual accounts:form of revenue account of life insurance DEBIT SIDE1.CLAIM2.ANNUITY3.SURRENDER VALUE4.BONUS INCASH5. BONUS IN REDUCTION
OF PREMIUM6.EXPENSES OF MGT.7-9.BAD DEBTS,TAXESAND
OTHER EXP.10.LIFE ASSURANCE FUND
CREDIT SIDE1. LIFE ASSURANCE
FUND2. PREMIUM3. CONSIDERATION FOR
ANNUITIES GRANTED4. INTEREST, DIVIDEND
AND RENT5. REGISTRATION FEES6. REINSURANCE
1.CLAIMSALL CLAIMS INTIMATED AND
ACCEPTED+NOT ACCEPTED AT THE END+EXPENSES RELATING TO CLAIM- REINSURANCE RECOVERY
AMOUNT PAYABLE BY INSURANCE COMPANY
2.ANNUITIES IT IS AN EXPENSEANNUAL PAYMENTS BY INSURANCE
COMPANY TO THE PERSONS FOR A LUMP SUM RECEIVED SOME YEARS BACK
SURRENDER VALUE IF THE PREMIUM CAN NOT BE PAID ANY
MORE BY THE PERSON WHO HAD TAKEN INSURANCE THEN HE/SHE IS ALLOWED TO SURRENDER TO THE INSURANCE COMPANY AFTER THREE YEARS FROM THE DATE OF INSURANCE POLICY TAKEN. INSURANCE COMPANY PAYS A LUMP SUM BASED ON SOME CALCULATIONS. CALCULATION:SURRENDER-
REINSURANCE
BONUS IN CASHBONUS PAID TO THE POLICY
HOLDER BY THE INSURANCE COMPANY
CALCULATION:(BONUS IN CASH)MINUS(REINSURANCE FROM OTHER INSURANCE COMPANIES)
BONUS IN REDUCTION OF PREMIUM INSURANCE COMPANY MAY REDUCE
PREMIUM INSTEAD OF GIVING BONUS IN CASH TO THE POLICY HOLDER
METHODS:1. Bonus is an expense-debit revenue a/c
2. Add to the premium in the credit side with the premium
6.EXPENSES OF MANAGEMENT
They can be given either in the revenue account or a separate schedule can be prepared and the net amount can be shown in the revenue account
7-9. BAD DEBTS,TAXES AND OTHER EXPENDITURE
THEY ARE SHOWN SEPARATELY ON THE DEBIT SIDE OF THE REVENUE ACCOUNT
10.LIFE INSURANCE FUND
THE DIFFERENCE BETWEEN THE CREDIT SIDE AND THE DEBIT SIDE IS NOT PROFIT.
IT IS KNOWN AS LIFE ASSURANCE FUND
CREDIT SIDE1.LIFE ASSURANCE FUND:
THE BALANCE IN THE LAST YEAR REVENUE ACCOUNT CREDIT BALANCE
2. premium Premium received from policy holderADD: Premium yet to be received at the end BONUS IN REDUCTION OF PREMIUMLESS:OUTSTANDING PREMIUM AT THE
BEGINNINGPREMIUM PAID FOR REINSURANCE TO
OTHER INSURANCE COMPANIES
CONSIDERATION FOR ANNUITIES GRANTED
LUMPSUM RECEIVED BY INSURANCE COMPANY INORDER TO GIVE ANNUITIES IN FUTURE
IT IS AN INCOME
4. INTEREST DIVIDEND AND RENT RECEIVED /RECEIVABLE
DEDUCT: INCOME TAX PAID ON SUCH INCOME
REGISTRATION FEES
APPLICATION FORM FEES COLLECTED
AGENTS’ REGISTRATION FEES COLLECTED
INCOME
RE-INSURANCE ACCEPTED INSURANCE COMPANY ACCEPTS A
BUSINESS FROM OTHER COMPANIES AND RECEIVES PREMIUM THEN IT IS AN INCOME
IF COMPANY RE INSURANCE TO OTHER INSURANCE COMPANY IT PAYS PREMIUM THEN IT IS AN EXPENDITURE
BUT RECEIVES COMMISSION FOR GIVING BUSINESS TO OTHER COMPANIES THEN THE COMMISSION IS INCOME KNOWN AS COMMISSION ON REINSURANCE CEDED THEN IT IS INCOME
BALANCE SHEETLIABILITIES
1. SHARE CAPITAL2.RESERVE OR CONTINGENCY
ACCOUNTS3.BALANCE OF FUND ACCOUNT4. LOANS AND ADVANCES
BALANCE SHEET ASSETS
1.LOANS GIVEN TO OTHERS 2.INVESTMENTS IN GOVERNMENT SECURITIES,
SHARES IN OTHER COMPANIES 3.AGENTS’ BALANCES 4.OUTSTANDING PREMIUMS 5.INTEREST, DIVIDENDS AND RENT DUE BUT
NOT RECEIVED AT THE END OF THE YEAR 6.AMOUNTS DUE FROM OTHERS AND OTHER
INSURANCE COMPANIES FOR COMMISSION OR PREMIUM YET TO BE RECEIVED
LOSSTRANSFERRED TO P/L A/C
DEBIT SIDE CAN NOT BE MORE THAN THE CREDIT SIDE
EXERCISE-1 COMMISSION TO AGENTS? BONUS TO POLICY HOLDERS? CONSIDERATION FOR ANNUITIES? LIFE ASSURANCE FUND? RENT OUTSTANDING? BONUS UTILISED IN REDUCTION OF
PREMIUM? SURRENDERS?
EXERCISE 2 CLAIMS INTIMATED AND ADMITTED BUT
NOT YET PAID? CLAIMS INTIMATED BUT NOT ADMITTED? PROVISION FOR INCOME TAX? INCOME TAX PAID? CONSIDERATION FOR ANNUITIES
GRANTED? REGISTRATION FEES ? CONTINGENCY RESERVE?