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Benefits of Insurance, Principles of Insurance Video Lecture | Principles of Insurance - B Com
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FAQs on Benefits of Insurance, Principles of Insurance Video Lecture - Principles of Insurance - B Com
| 1. What are the benefits of insurance? |  |
Ans. Insurance provides several benefits, including:
- Financial protection: Insurance helps protect individuals and businesses from financial losses due to unexpected events such as accidents, natural disasters, or health issues.
- Peace of mind: Knowing that you have insurance coverage can give you peace of mind, as it provides a safety net in case of emergencies or unforeseen circumstances.
- Risk management: Insurance allows individuals and businesses to transfer the risk of potential losses to the insurance company, reducing their exposure to financial risks.
- Legal compliance: Some types of insurance, such as car insurance or workers' compensation insurance, are mandatory by law in many countries.
- Support for long-term goals: Certain types of insurance, such as life insurance or retirement plans, can provide financial support for long-term goals, such as education or retirement.
| 2. What are the principles of insurance? | |
Ans. The principles of insurance include:
- Principle of utmost good faith: Both the insured and the insurer must act honestly and provide complete and accurate information during the insurance contract formation.
- Principle of insurable interest: The insured must have a financial interest in the subject matter of insurance, meaning they would suffer a financial loss if the insured object is damaged or destroyed.
- Principle of indemnity: The insured should be compensated to the extent of the actual financial loss suffered, but not more. Insurance aims to restore the insured to the same financial position they were in before the loss occurred.
- Principle of proximate cause: The insurance policy covers losses caused by the insured perils or events specified in the policy. The insurer will not pay for losses caused by unrelated events.
- Principle of subrogation: After compensating the insured, the insurer has the right to take legal action against any third party responsible for the loss to recover the amount paid.
- Principle of contribution: If the insured has multiple insurance policies covering the same risk, each insurer will contribute proportionately to the loss based on the sum insured.
| 3. What is the importance of insurance in modern society? | |
Ans. Insurance plays a crucial role in modern society due to the following reasons:
- Economic stability: Insurance helps in maintaining economic stability by providing financial protection against unforeseen events. It reduces the financial burden on individuals, businesses, and the government caused by unexpected losses.
- Risk management: Insurance allows individuals and businesses to transfer the risk of potential losses to the insurance company. This helps in managing and minimizing risks, enabling individuals and businesses to focus on their core activities without worrying about uncertain events.
- Promotes savings and investment: Life insurance and retirement plans encourage individuals to save for the future and provide a source of investment. This helps in building a corpus for long-term goals, such as education, retirement, or starting a business.
- Social welfare: Insurance policies such as health insurance, disability insurance, and social security schemes provide social welfare benefits by ensuring access to affordable healthcare, income support during disability, and financial assistance during retirement.
- Legal compliance: Certain insurance policies, such as car insurance or workers' compensation insurance, are mandatory by law. This ensures compliance with legal requirements and protects individuals and society from potential risks.
| 4. What factors should be considered when choosing an insurance policy? | |
Ans. When choosing an insurance policy, it is important to consider the following factors:
- Coverage: Evaluate the coverage provided by the policy and ensure it aligns with your specific needs. Consider the types of risks covered, the sum insured, and any exclusions or limitations.
- Premiums: Compare the premiums charged by different insurance companies for similar coverage. Ensure that the premium is affordable and fits within your budget.
- Deductibles and co-pays: Understand the deductibles (the amount you need to pay before the insurance coverage kicks in) and co-pays (the portion of expenses you need to pay out of pocket). Evaluate if these costs are reasonable and manageable for you.
- Claim settlement process: Research the reputation of the insurance company regarding claim settlements. Check reviews and ratings to ensure that the insurer has a prompt and hassle-free claim settlement process.
- Financial stability of the insurer: Evaluate the financial strength and stability of the insurance company. Look for credit ratings from reputable rating agencies to ensure that the company will be able to fulfill its obligations in case of a claim.
- Additional benefits: Consider any additional benefits or riders offered by the policy, such as cash value accumulation, accident riders, or critical illness coverage. Assess if these additional benefits are relevant to your needs.
| 5. Is it possible to have multiple insurance policies covering the same risk? | |
Ans. Yes, it is possible to have multiple insurance policies covering the same risk. This is known as "double insurance" or "overinsurance." However, there are certain principles that apply in such cases:
- Principle of contribution: If a loss occurs, each insurer will contribute proportionately towards the claim based on the sum insured. The total claim amount cannot exceed the actual loss suffered.
- No profit from insurance: The insured cannot make a profit from insurance by claiming the same loss from multiple insurers and receiving a higher amount than the actual loss. Insurance aims to indemnify the insured for the actual loss suffered, not to provide a source of profit.
- Policy terms and conditions: It is important to review the terms and conditions of each insurance policy to ensure there are no exclusions or limitations regarding overlapping coverage. Some policies may have clauses specifying that they are excess coverage and will only pay if the primary coverage is exhausted.
It is advisable to inform all insurers about the existence of multiple insurance policies to avoid any potential complications during the claim settlement process.
Text Transcript from Video
meet Maxine like everyone she wants to
know that her family is secure we can't
always stop bad things from happening so
Maxine buys insurance policies to
protect herself and her family
insurers pull the risks faced by
policyholders like Maxine this spreads
the financial impact of an event that
would be disastrous for one policyholder
across a wider group doing this provides
important benefits for society it allows
people to live fuller lives and to
engage in economic activity which drives
growth in our economy the amount of
protection insurers provide is
significant in recent years European
insurers have paid out around 900
billion euros in benefits and claims
annually that's equal to over 2.5
billion euros every day insurers provide
a wide range of products that allow our
society to function in a safe
environment
these include everyday policies like
home motor and life insurance as well as
pension savings products however
insurers also offer cover to companies
that provide our energy food and clothes
additionally insurers engage with
governments to try to avoid people
experiencing losses in the first place
for example insurers have called for and
contributed to improvements in society's
infrastructure such as better flood
defences given the important role
Insurance plays in our daily lives it is
vital that this protection remains
affordable for everybody
luckily there are preventative steps
that people can take to potentially
reduce their premiums for example if a
smoker stops smoking they can get access
to cheaper health insurance in the same
way if a person drives safely their
motor premiums could go down other
factors can also affect the cost of
premiums these include local medical
costs national and regional laws as well
as international rules that's why it's
so important for policy makers to keep
legislation as a
and fair as possible for more
information visit
know that her family is secure we can't
always stop bad things from happening so
Maxine buys insurance policies to
protect herself and her family
insurers pull the risks faced by
policyholders like Maxine this spreads
the financial impact of an event that
would be disastrous for one policyholder
across a wider group doing this provides
important benefits for society it allows
people to live fuller lives and to
engage in economic activity which drives
growth in our economy the amount of
protection insurers provide is
significant in recent years European
insurers have paid out around 900
billion euros in benefits and claims
annually that's equal to over 2.5
billion euros every day insurers provide
a wide range of products that allow our
society to function in a safe
environment
these include everyday policies like
home motor and life insurance as well as
pension savings products however
insurers also offer cover to companies
that provide our energy food and clothes
additionally insurers engage with
governments to try to avoid people
experiencing losses in the first place
for example insurers have called for and
contributed to improvements in society's
infrastructure such as better flood
defences given the important role
Insurance plays in our daily lives it is
vital that this protection remains
affordable for everybody
luckily there are preventative steps
that people can take to potentially
reduce their premiums for example if a
smoker stops smoking they can get access
to cheaper health insurance in the same
way if a person drives safely their
motor premiums could go down other
factors can also affect the cost of
premiums these include local medical
costs national and regional laws as well
as international rules that's why it's
so important for policy makers to keep
legislation as a
and fair as possible for more
information visit
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About this Video
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Dec 23, 2024 Last updated |
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