Question 4

Describe various types of insurance and examine the nature of risks protected by each type of insurance.


Different types of insurance that are as follows:

1. Life Insurance: Life Insurance is a contract based under which one person, in consideration of a premium paid either in smaller amounts or by monthly, quarterly, yearly payments, undertakes to pay to the person for whose benefit the insurance is made, certain amount of money either on the death of a person whose life is insured or on the expiry of particular period of time.

2. Fire Insurance: Fire Insurance is a contract where the insurer, in consideration of the premium paid, undertakes to make good any loss or any harm caused by fire during a particular period of time. Normally, the fire Insurance policy is for a period of one year after which it has to be renewed from time to time.

3. Marine Insurance: Under marine insurance's contract, the insurer undertakes to indemnify the insured in the manner and to the extent thereby agreed against it. Marine insurance is defined as an agreement by which the insurer undertakes to compensate with the owner of a ship or cargo for complete or partial loss at the sea.

4. Other Insurance : Other Insurances are as given below :

(I) Health Insurance: Health Insurance is a safeguard against maximising the medical cost. A health insurance policy is a contract between an insurer and an individual or group in which the insurer agrees to provide the specific health insurance at an agreed price. Depending upon the policy, premium may be payable either in the smaller amounts or in installments. Health insurance usually supplies either direct payment or reimbursement for expenses which is associated with illness and injuries. The cost and range of protection which is provided by health insurance depends on the provider and the policy purchased.

(II) Motor Vehicle Insurance : In Motor Vehicle Insurance the owner’s liability is to compensate with the people who were killed or insured through the negligence of the motorists or drivers is passed over the insurance company. The rate of premium under motor insurance is standardized because of business's tariff.

(III) Burglary Insurance: Burglary insurance comes under the insurance of property's classification. In case of burglary policy, the loss of damages of household goods and properties and personal effects due to theft larceny, burglary, house-breaking and fact of such nature are covered. The actual loss is then compensated.

(IV) Cattle Insurance: Cattle insurance is a contract whereby an amount of money is secured to assured in the event of death of animals such as bulls, buffaloes, cows and heifers etc. It is a contract against death which happens from accident, disease, parturitions or pregnant condition as the case maybe.

(V) Crop Insurance: Crop insurance is a contract to give a measure of financial support to the farmers in the event of a crop failure happens due to drought or flood. This insurance covers adjacent all risks of loss or damages relating to the production of rice, wheat, millets, oil seeds and pulses etc.

(VI) Sport Insurance: This policy ensures a comprehensive cover that is available to amateur sportsmen covering their sporting equipment, personal effect, legal liability and personal accident risks. If required, the cover can also be made available in respect of the named member of insurer’s family residing with him. This cover is not available to the professional sportsmen. The cover is available in respect of any one or more the following sports such as Angling, badminton, cricket, golf, lawn tennis, squash, use of sporting guns.

(VII) Amartya Sen Siksha Yojana Insurance : This policy is offered by the General Insurance Company that secures the education of dependent children. If the insured parent/legal guardian shall sustain any bodily injury that occurs solely and directly from accident, or by external violent and visible means and if this type of injury shall within twelve calendar months of its occurrence be the sole and direct cause of his/ her death or permanent total disablement, the insurer shall compensate the insured student, in respect of all covered expenses to be incurred from the date of occurrence of such accident till the expiry date of policy or completion of the duration of covered course whichever occurs primarily and such compensate shall not exceed the sum that is insured as stated in the policy schedule.

(VIII) Rajeshwari Mahila Kalyan Bima Yojana : This policy has been planned to give relief to the family members of insured women in case of their death happens or disablement arising due to all kinds of accidents arising out of problems incidental to the women only.

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