Life Insurance: Salient Features

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Life Insurance

Insurance is an umbrella term that includes Life Insurance, Motor Insurance, Health Insurance, Property Insurance, Mobile Insurance, Cycle Insurance, Travel Insurance, Pet Insurance etc. Insurance is a way of safeguarding against financial loss. It’s a type of risk management that’s generally utilised to protect against the danger of a speculative or unpredictable loss.

Understanding Life Insurance

On the occurrence of the event insured against, life insurance is a contract that promises the payment of an amount to the person assured (or his nominee).

The contract is valid for payment of the insured sum on the following dates:

» Maturity date

» Specified dates at periodic intervals

» Unfortunate death, if it happens sooner

The policyholder is required to pay premiums to the Corporation regularly, according to the contract. Life insurance is commonly recognized as an institution that eliminates “risk,” replacing uncertainty with certainty, and comes to the family’s aid in the tragic event of the breadwinner’s death.

Common terminologies used

1. Life Assured: The person who is covered by the insurance policy is known as the life assured.

2. Proposer: The proposer is the one who pays the policy’s premiums. If you bought the policy for yourself, for example, you are both the Life Assured and the Proposer. Similarly, if you buy an insurance policy for a relative, you are the proposer and the relative is the Life Assured.

3. Nominee or Beneficiary: This is the person you choose to receive the benefits of your insurance policy in your absence when you purchase it.

4. Insurer: The Insurer is the name of the insurance firm that sells the life insurance policy (for example, LIC).

5. Life Cover: The amount that the Insurer will pay to your Nominee in the event of an unfortunate incident is known as life cover.

6. Maturity Benefit: The insurer pays a lump sum of money at the end of the policy term for Protection + Savings policies. The Maturity Amount is the name given to this sum.

7. Premium: A premium is an amount you pay to the insurer in exchange for the insurance policy’s benefits. These payments can be sent regularly, for a specific number of years, or only once, depending on the options available under the policy you choose.

8. Premium Payment Term: The Premium Payment Term is the number of years for which you will be paying premiums.

9. Policy Term: The length of time that the Life Cover is in effect.

Who Is Eligible To Purchase A Policy?

Anyone who has reached the age of majority and is legally capable of entering into a valid contract can insure himself and those in whom they have an insurable interest.

Policies on the life of one’s spouse or children can also be purchased, subject to specific criteria. The Corporation considers criteria like the policyholder’s health, the proponent’s income, and other pertinent factors while underwriting proposals.

Life Insurance Corporation of India (LIC)

The Life Insurance Corporation of India (LIC) is a government-owned insurance and investment company in India. It is owned by the Ministry of Finance of the Government of India.

The Life Insurance Corporation of India was founded on September 1, 1956, when the Indian Parliament passed the Life Insurance of India Act, which nationalized the Indian insurance business. The state-owned Life Insurance Corporation of India was formed through the merger of over 245 insurance companies and provident societies.

Chairman M R Kumar and Managing Directors Vipin Anand, T. C. Suseel Kumar, Mukesh Kumar Gupta, and Raj Kumar make up the LIC’s executive board.

The Chairman, the four Managing Directors, and all Executive Directors are all located in the LIC Central Office in Mumbai (Department Heads). Delhi, Chennai, Mumbai, Hyderabad, Kanpur, Kolkata, Bhopal, and Patna are the eight Zonal Offices of LIC.

Banks, cement, chemicals, and fertilizers, electricity, and transmission, electrical and electronics, engineering, construction, and infrastructure, fast-moving consumer goods, finance and investments, healthcare, hotels, information technology, metals and mining, motor vehicles, and ancillaries, oil and natural resources, retail, textiles, transportation, and logistics are among the sectors in which LIC invests.

LIC’s position in ITC was reported to be the greatest in terms of value in 2012 (27,326 crores), followed by RIL (21,659 crores), ONGC (17,764 crores), SBI (17,058 crores), L&T (16,800 crores), and ICICI Bank (10,000 crores). LIC suffered a big loss of over 7000 crores during the financial year due to a share price collapse in ITC on July 18, 2017.

LIC also owns a 51 percent share in IDBI Bank, making it India’s only insurance company with a bank. Regulations restrict insurers from owning more than 15% ownership in any enterprise.

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