TOP INSURANCE COMPANIES IN INDIA
Top Insurance Companies In India and What is Insurance
INSURANCE:
The insurance
industry is an integral part of the financial services industry and profound
changes have been taking place in this sector in India. This is because a
well-developed and properly evolved insurance sector is needed for economic
development. It not only provides long term funds needed for infrastructural
development but also strengthens the risk taking ability of individuals and
institutions
.
THE
CONCEPT OF INSURANCE:
Insurance is
a form of risk management primarily used to hedge against a risk of a contingent
loss. It is defined as the transfer of the risk of a potential loss. From one
entity to another, in exchange for a premium. Insurance applies to situations
where a loss may or may not occur. It con not applies to situation where the
loss is expected to happen. While an insurer is a company that sells the
insurance services, an entity seeking to transfer the risk becomes an insured
party. Insurance policy is a contract between an insured and insurer where the
latter assumes a risk. Generally, an insurance contract includes the following
elements:
Parties
(insurer, insured and the beneficiaries)
Premium (the
amount charged for insurance coverage)
Period of
coverage (the duration for which a particular loss is covered)
Amount of
coverage and
Exclusion
(the event not covered)
Principles
of Insurance
Insurance is
based on the principle of probability and co-operation. This can be explained
as:
Principle
of probability: The
degree of loss is depends upon various factors. All the affecting factors are
analyzed and the probability of loss is calculated. Probability helps to find
the chance of occurrence of loss.
Principle
of co-operation: In
insurance, the loss is shared by a group of persons who are willing to
co-operate. The insurer collects the shares of the insured members in advance
and accumulates a fund.
FEATURES OF
INSURABLE RISKS:
The features
of insurable risk are as follows:
A Large
number of homogeneous exposure units
Loss is
Definite
Loss is
accidental
Premium
should be affordable
Loss is
calculable
Risk
exposure is limited
Advantage
of Insurance
Some of the
advantages of insurance are as follows:
It involves
p[roper planning and administration to reduce the loss due to uncertainties.
It ensures
certainty of payment at an uncertain event of loss and there by provides
protection.
All the
persons who are exposed to the risk share the loss.
The insurer
employs the funds in productive channels.
It improves
the efficiency of the insured person because it liberates him from the worry of
the loss.
Categories
of Insurances:
Three broad
categories of insurance are offered.
(a)
Life Insurance:
It deals with various plans connected with the life of a person.
(b)
General insurance: All kind of insurance policies that are not related to life are known
as general Insurance
(c)
Reinsurance:
It is insurer’s insurance.
LIFE
INSURANCE:
It is
different from other types of insurances. The subject matter of insurance is
the life of human beings. Life insurance is contract, which provides risk
coverage to the insurer. Usually the contract provides for:
The payment
of an amount on the date of maturity or at specified periodic intervals, or at
death, if it occurs earlier
Periodical
payments of insurance premium by the insured, to the corporation which provides
the insurance
Any person
above 18 years of age is eligible to enter into a valid contract. Subject to
certain conditions, a policy can be taken on the life of a spouse or children.
LIFE
INSURANCE POLICIES:
Some the
common life insurance policies have been discussed here:
Endowment
Policy: An
endowment policy covers the risk for a period specified by the insurer. At the
end of the specified period, the sum assured is paid back to the policy holder,
along with the bonus accumulated during the term of the policy. in an endowment
policy, capital is accumulated for a specific purpose and it is a protection
against the saver’s premature death. Premium for an endowment life policy is
much higher than that of a whole life policy. Many investors use endowment life
insurance to fund anticipated financial.
Whole
life policy: A
typical whole life policy remains as long as the policyholder is alive. The
risk is covered for the entire life of the policyholder. Hence it is known as a
whole life policy. The whole life policy amount and bonus are payable only to
the nominees upon the death of the policyholder. The policyholder is not
entitled to receive any money during his or her own lifetime, i.e., there is no
survival benefit.
Term
life policy: It
is policy for a chosen period. The risk is covered only for that period. A term
plan meets the needs of people who are initially unable to pay a larger premium
required for a whole life or an endowment assurance policy, but would be able
to pay for a policy in the reserves are not accumulated. If the premium is not
paid within the grace period, a policy will lapse without acquiring any paid-up
value. The policyholder may survive the term but the risk cover comes to an
end.
Money
back Policy: This is basically an endowment policy for
which a part of the sum assured is paid to the policyholder in the form of
survival benefits, at fixed intervals before the maturity date. The risk cover
on life continues for the full sum assured even after the payment of survival
benefits and bonus is calculated on the full sum assured. If the policyholder
survives till the end of the policy term, the survival benefits would be
deducted from the maturity value. An important feature of this type of policy
is that in the event of death at any time with in the policy term, bonus is
also calculated on the full sum assured.
Joint
life policy: These
are similar to endowment policies. They too offer maturity benefits to the
policyholder, apart from covering the risk just like all the other life
insurance policies. However, joint life policies are categorized separately as
they cover two lives simultaneously. They offer a unique advantage for a
married couple or for the partner in a business firm.
Children’s
Insurance Policy: Children’s insurance policies includes those
through which parents or legal guardians provide for life insurance for their
child from birth. The risk cover commences when the child attains the age of
12, 17, 18 or 21, as per the policy document.
Group
Policy: Life Insurance protection under policies is
provided to various groups such as employers-employees, professionals,
cooperatives, weaker section of the society, etc. It also provides insurance
coverage at the lowest possible premium cost for people in certain approved
occupations. Besides providing insurance coverage, it also offers group schemes
to employers who allow the funding of gratuity and pension liability of the
employers.
LIFE
INSURANCE PROVIDERS
Public
sector providers:
1.
Life Insurance Corporation (LIC) of India
Private
Sector providers:
1.
Allianz Bajaj Life Insurance company Limited
2.
Birla Sun-Life Insurance Company Limited
3.
HDFC Standard Life Insurance Company Limited
4.
ICICI Prudential Life Insurance Company Limited
5.
ING Vysya Life Insurance Company Limited
6.
Max New York Life Insurance company Limited
7.
MetLife Insurance company Limited
8.
Om Kotak Mahindra Life Insurance company Limited
9.
SBI Life Insurance company Limited
10.
TATA AIG Life Insurance company Limited
11.
AMP Sanmar Assurance Company Limited
12.
Dabur CGU Life Insurance company
Private Limited
BharatiAxa life insurance company Private Limited
GENERAL
INSURANCE:
It covers
the loss due to unforeseen events such as accidents, illness, fire and
burglary. Unlike Life Insurance, general insurance is not meant to offer any
return but is a protection against contingencies. General insurance policy may
be termed as a contract of indemnity as the insurer normally makes goo the
actual amount of the loss suffered.
General
insurance includes property insurance and various other forms of insurance.
Fire and marine insurance are strictly called property insurances. There is no
certainty in the loss of the asset, which is insured against. Hence the premium
is decided by the value of the asset and the probability of such a loss. Under
certain Acts of parliament, some types of insurances like motor insurance and
public liability insurance have been made compulsory.
General
Insurance Products:
The broad
categories of general insurance are:
·
Fire Insurance
·
Marine Insurance
·
Motor Insurance
·
Health Insurance
·
Miscellaneous Insurance
General
Insurance Providers:
Public
sector providers
1.
National Insurance company Limited
2.
New India Assurance Company Limited
3.
Oriental Insurance company Limited
4.
United India Insurance company Limited
Private
sector providers
1.
Bajaj Allianz general Insurance Company Limited
2.
ICICI Lombard General Insurance Company Limited
3.
IFFCO-Tokio General Insurance Company Limited
4.
Reliance General Insurance Company Limited
5.
Royal Sundaram Alliance Insurance Company Limited
6.
Cholamandalam General Insurance
Company Limited
7.
Export Credit Guarantee Corporation
8.
HDFC Chubb General Insurance Company Limited
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