Definition of General Insurance – The Economic Times #insurance #definition

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General Insurance

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Definition of ‘General Insurance’

Definition: Insurance contracts that do not come under the ambit of life insurance are called general insurance. The different forms of general insurance are fire, marine, motor, accident and other miscellaneous non-life insurance.

Description: The tangible assets are susceptible to damages and a need to protect the economic value of the assets is needed. For this purpose, general insurance products are bought as they provide protection against unforeseeable contingencies like damage and loss of the asset. Like life insurance, general insurance products come at a price in the form of premium.

These are funds from the policyholder’s accounts that are not allocated among them for reasons like delays in approvals etc.

Group policy provides coverage to a group of people which can be a professional or an informal group.

Risk assessment, also called underwriting, is the methodology used by insurers for evaluating and assessing the risks associated with an insurance policy. The same helps in calculation of the correct premium for an insured. Description: There are different kinds of risks associated with insurance like changes in mortality rates, morbidity rates, catastrophic risk, etc. This assessment is impleme

Under a settlement option, the maturity amount entitled to a life insurance policyholder is paid in structured periodic installments (up to a certain stipulated period of time post maturity) instead of a ‘lump-sum’ payout. Such a payout needs to be intimated to the insurer in advance by the insured. The primary objective of settlement option is to generate regular streams of income for the insured

Switching is the option provided to the insured by the insurer wherein the insured is entitled to move to a different policy or transfer from one fund to another within the same policy. In switching, a certain stipulated number of switches can be made free of charges, but post that, switching charges are levied. For switching to take place, the insured has to intimate the insurer in advance. Desc

First Unpaid Premium

First time default on premium payments by a policy holder is termed as First Unpaid Premium. Description: With each premium payment a receipt is issued which indicates the next due date of premium payment. If the premium is not paid, this date becomes the date of first unpaid premium. Also See: New Business Premium, Return, Annuity, Insurable Interest, Insurability

First Class Life is a categorical term present in the classification of life insurance risk. It denotes low life risk. Description: First class life comes under low risk category of life insurance and thus is charged normal premium charges. An individual identified as first class life is subject to normal premium rates for an insurance policy. Also See: Return, Annuity, Insurable Interest, Insur

Insurance policy lapses when the insured defaults on the payments of renewal premium beyond a grace period. Insurance companies provide an option of reactivating the lapsed policy, within a specific period of time post the grace period. This period offered by the insurer to revive the policy and avail benefits pertaining to it is termed as revival period. Description: During the revival period, t

Mitigation means reducing risk of loss from the occurrence of any undesirable event. This is an important element for any insurance business so as to avoid unnecessary losses. Description: In general, mitigation means to minimize degree of any loss or harm. In insurance contracts, various clauses and conditions are specified so as to ensure minimum losses to the insurer. The actuaries are entrust

Renewal premiums are the subsequent premiums that are paid by the insured to the insurer in order to keep the policy in operation and avail the benefits of the policy accordingly. Description: If a policy holder fails to pay the premiums, then his policy lapses after a grace period. The renewal premiums are paid after the initial premium and are indispensable for the continuation of the policy.

An agent is a person who represents an insurance firm and sells insurance policies on its behalf. Description: Generally, there are two types of such agents who reach the prospective parties that may be interested in buying insurance. These are independent agents and captive or exclusive agents. Independent agents may represent many insurance firms and receive commission for their services accor

Subrogation is a right with the insurance company to sue a person or entity responsible for any damage or disability suffered by the insured. Description: Subrogation gives an insurer the right to recover the amount of loss suffered by the insured from a third party. Also See: Life Assured, Non-Standard Life, Premium, Premium Paying Term, Adverse Selection, Paid-Up Policy, Mitigation