Characteristics and nature of insurance

Characteristics and nature of insurance

1. Security from Risk - Insurance is a powerful way to deal with risks. All uncertainties prevailing in life make the person relentless. These risks can be related to life, health, rights and financial resources, property. Therefore, one way to protect against all these risks is insurance.

2. Ways to spread risks - Based on the spirit of co-operation in insurance "one is working for everyone and for all one. A corpus is collected by collecting the people surrounded by similar types of risks so that the risk of one person is divided among all the members and if any member is exposed to the risk, then that person is paid specially from that fund.

3. Transferring risk from insurers to insurers - The risks of all insureds in insurance are transferred to the insurer. An insurer gets fixed payment on the loss to the insured.

4. Insurance is a process - insurance is also a procedure that is operated by the preset method. The transfer of your risk insured first, in return for the fixed premium, to the insurer, then there is protection against that risk by insurance duty.

5. Insurance A contract - It is a valid contract because of the property of legality in insurance. In this, the proposal is given to the insurer by the insurer, and the acceptance by the insurer will result in a valid contract between them, instead of a fixed return (premium). In which case the insurer promises to fulfill his loss after the occurrence of a certain event.

6. Insurance is the cooperative way - insurance is based on the spirit of co-operation. The person surrounded by similar types of risks contribute to a fixed fund, any of them is paid by that fund upon risk arising.

7. Determination of losses' risks - Risks can not be eliminated in insurance, but uncertainty of risks is reduced and fixed. Risks are transferred to the insurance company by the insured and the value of that risk is fixed by a fixed return / premium. That is, the uncertain losses for fixed premiums are fixed as the sum insured received by the insurance company. This amount is called insurance claim amount.

8. Payments only when the event occurs - Payment is made only on the occurrence of the event in insurance. It is certain that the incident happening in life insurance, such as the death of a person, being afflicted by a particular disease, the completion of the insurance period, in such a case the insured is paid only. But in normal beams, the payment will only be made on the occurrence of the incident, otherwise it will not be held liable for the insured payment.

9. Risk assessment and risk assessment - The risk assessment of the risk is done before the insurance contract. On the basis of the amount of risk and the likelihood of the risk being generated, the premium is decided in advance. Fixed Sum Assured is paid when there is a fixed risk for this fixed return / premium.

10. Payment base - Life insurance contains an investment element, so if the death of the party or the duration is completed, the fixed amount is paid to the insured. But other insurance will be paid equal to actual damage. It will be paid in the limit of the sum insured, due to insured reasons, due to insurable reasons and due to insured reasons, the excess amount is not paid.

11. Extensive area - The area of ​​insurance is now very wide. Earlier insurance was only for life insurance, marine insurance and fire insurance but now traditional risks are also insured against conventional risks. Now the area of ​​diversified insurance has become very widespread. In this case, many types of beams have been included in theft insurance accident insurance, livestock insurance, crop insurance etc.

12. Institutional framework - In the whole world, large companies are engaged in insurance work. Life Insurance Corporation, general insurance corporation and its four subsidiary companies and many private companies in India are engaged in the work of insurance.

13. Insurance is not gambling - Damage is compensated only if there is only compensation or normal damage to the actual damage in the insurance, so it is wrong to compare insurance against gambling. In the case of gambling in one party benefit, the other party remains in danger, but this does not happen in insurance.

14. Insurance is not a gift, it is the right - the insurance is obtained by giving the sum insured by the insured. On the basis of contractual relations, the insurer pays the insurance money / claim after the fixed period of time to the insured instead of a fixed rate (premium).

15. Measures for redressing social problems - Many social problems in the society are redressed through insurance because the uncertainties of society from insurance are reduced in the chances and risks.

16. Insurance law compulsory - In the modern era, the area of ​​insurance is expanding, as well as the duty of the governments is to create a regulatory act related to insurance. In India also, legislation has been enacted for life insurance, marine insurance, general insurance.

17. Essentials of insurance principles - Some principles must be mandatory for insurance contract