Risk Pooling

In insurance, the term "risk pooling" refers to the spreading of financial risks evenly among a large number of contributors to the program. Insurance is the transference of risks from individuals or corporations who cannot bear a possible unplanned financial catastrophe to the capital markets, which can bear them easily -- at least in theory. The capital markets, meanwhile, are generally happy to take on risk from individuals and corporations -- in exchange for a premium they believe is sufficient to cover the risk.

             

                                           Risk pooling is essential to the concept of insurance. The earliest known insurance policies were written some 5,000 years ago, to protect shippers against the loss of their cargo and crews at sea. Any one of them would be devastated by the loss of a ship. But by pooling their resources, these ancient businessmen were able to spread the risks more evenly among their numbers, so each paid a relatively small amount. Under the Babylonians, those receiving a loan to fund a shipment would pay an additional amount in exchange for a rider cancelling the loan if a shipment should be lost at sea.

What Is Life Insurance

Life insurance is a contract that pledges payment of an amount to the person assured (or his nominee) on the happening of the event insured against.

The contract is valid for payment of the insured amount during:

Ø  The date of maturity, or

Ø  Specified dates at periodic intervals, or

Ø  Unfortunate death, if it occurs earlier.

Among other things, the contract also provides for the payment of premium periodically to the Corporation by the policyholder. Life insurance is universally acknowledged to be an institution, which eliminates 'risk', substituting certainty for uncertainty and comes to the timely aid of the family in the unfortunate event of death of the breadwinner.
By and large, life insurance is civilisation's partial solution to the problems caused by death. Life insurance, in short, is concerned with two hazards that stand across the life-path of every person:

1. That of dying prematurely leaving a dependent family to fend for itself.
2. That of living till old age without visible means of support.

About Life Insurance

Life insurance in India made its debut well over 100 years ago.

In our country, which is one of the most populated in the world, the prominence of insurance is not as widely understood, as it ought to be. What follows is an attempt to acquaint readers with some of the concepts of life insurance, with special reference to LIC.

It should, however, be clearly understood that the following content is by no means an exhaustive description of the terms and conditions of an LIC policy or its benefits or privileges.

For more details, please contact our branch or divisional office. Any LIC Agent will be glad to help you choose the life insurance plan to meet your needs and render policy servicing.

Free-Look Period

You have bought a new insurance policy and received the policy document and find that the terms and conditions are not what you wanted.
What do you do? Grin and bear it?
Not at all.
IRDA has built into its regulations a consumer-friendly provision that takes care this problem.
If you have bought a policy and realise you don’t want it you can return it and get a refund.
There are conditions though.

• This applies only to Life insurance policies and
• To Health insurance policy that are for a term of at least 3 years
• You can exercise this option within 15 days of receiving the policy document
• You have to communicate to the company in writing
• The premium refund will be adjusted for
  • proportionate risk premium for the period on cover
  • expenses incurred by the insurer on medical examination and
  • stamp duty charges

How To Make a Claim - Life Insurance

Formalities for a death claim
When a person with a life insurance policy – called a life assured – dies, a claim intimation should be sent to the insurance company as early as possible. The assignee or nominee under the policy can do this. So can any close relative or the agent who handles the policy.
The claim intimation should contain information like the date, place and cause of death. The insurance agent has the duty to help the life assured’s family/ assignee to deal with the insurance company to fulfil the formalities for a claim.
The insurance company will respond to this intimation and will ask for the following documents:

• Filled-up claim form (provided by the insurance company)
• Certificate of death
• Policy document
• Deeds of assignments/ re-assignments if any
• Legal evidence of title, if the policy is not assigned or nominated
• Form of discharge executed and witnessed

Other documents such as medical attendant's certificate, hospital certificate, employer's certificate, police inquest report, post mortem report etc could be called for, as applicable.
Formalities for a maturity claim
Where a life insurance policy is maturing, the insurance company will usually send intimation to the policyholder along with a discharge voucher at least two to three months in advance of the date of maturity giving details like the maturity amount payable.
The policyholder has to sign the discharge voucher – which is like a receipt – have his signature witnessed and send it back to the insurance company along with the original policy bond to enable it to make the payment.
If the policy has been assigned in favour of any other person or entity – like a housing loan company – the claim amount will be paid only to the assignee who will give the discharge.

Why Buy Life Insurance

Life Insurance is a financial cover for a contingency linked with human life, like death, disability, accident, retirement etc. Human life is subject to risks of death and disability due to natural and accidental causes. When human life is lost or a person is disabled permanently or temporarily, there is loss of income to the household.

Though human life cannot be valued, a monetary sum could be determined based on the loss of income in future years. Hence, in life insurance, the Sum Assured ( or the amount guaranteed to be paid in the event of a loss) is by way of a ‘benefit’.  Life Insurance products provide a definite amount of money in case the life insured dies during the term of the policy or becomes disabled on account of an accident.

Why you should buy Life Insurance:
All of us face the following risks:
Dying too soon
Living too long

Life Insurance is needed :

• To ensure that your immediate family has some financial support in the event of your demise
• To finance your children’s education and other needs
• To have a savings plan for the future so that you have a constant source of income after retirement
• To ensure that you have extra income when your earnings are reduced due to serious illness or accident
• To provide for other financial contingencies and life style requirements

Who needs Life Insurance:
Primarily, anyone who has a family to support and is an income earner needs Life Insurance. In view of the economic value of their contribution to the family, housewives too need life insurance cover. Even children can be considered for life insurance in view of their future income potential being at risk.

How much Life Insurance is needed:
The amount of Life Insurance coverage you need will depend on many factors such as:

• How many dependents you have <="" li="">
• What kind of lifestyle you want to provide for your family
• How much you need for your children’s education
• What  your investment needs are
• What your affordability is

You should seek the help of an insurance agent or broker to understand your insurance needs and suggest the right type of cover

How to make a complaint

If you are unhappy with your insurance company

• Approach the Grievance Redressal Officer of its branch or any other office that you deal with. Click here for contact details of Grievance Redressal Officers, GRO, of all insurance companies
• Give your complaint in writing along with the necessary support documents
• Take a written acknowledgement of your complaint with the date.

The insurance company should deal with your complaint within 15 days.

• If that does not happen or if you are unhappy with their solution you can:
• Approach the Grievance Redressal Cell of the Consumer Affairs Department of IRDA:
• Call Toll Free Number 155255 (or) 1800 4254 732 or
• Send an e-mail to complaints@irda.gov.in
• Make use of the Integrated Grievance Management System:
• Register and monitor your complaint at www.igms.irda.gov.in
• Send a letter or fax to IRDA with your complaint:
• Click here to download Complaint Registration Form
• Fill and send by post or courier to:
  Consumer Affairs Department
  Insurance Regulatory and Development Authority
  3-5-817/818, United India Towers, 9th Floor
  Hyderguda, Basheerbagh
  Hyderabad – 500 029
• Or Fax to
  040-66789768

Ombudsman

The Insurance Ombudsman scheme was created by Government of India for individual policyholders to have their complaints settled out of the courts system in a cost-effective, efficient and impartial way.
There are 12 Insurance Ombudsman in different locations and you can approach the one having jurisdiction over the location of the insurance company office that you have a complaint against.

You can approach the Ombudsman with complaint if:

• You have first approached your insurance company with the complaint and
• They have not resolved it
• Not resolved it to your satisfaction or
• Not responded to it at all for 30 days
• Your complaint pertains to any policy you have taken in your capacity as an individual and
• The value of the claim including expenses claimed is not above Rs 20 lakh

Your complaint to the Ombudsman can be about:

• Any partial or total repudiation of claims by an insurer
• Any dispute about premium paid or payable in terms of the policy
• Any dispute on the legal construction of the policies as far as it relates to claims
• Delay in settlement of claims
• Non-issue of any insurance document to you after you pay your premium

The settlement process

Recommendation:

The Ombudsman will act as counsellor and mediator and

• Arrive at a fair recommendation based on the facts of the dispute
• If you accept this as a full and final settlement, the Ombudsman will
• Inform the company which should comply with the terms in 15 days

Award:

• If a settlement by recommendation does not work, the Ombudsman will:
• Pass an award within 3 months of receiving the complaint and which will be
• A speaking award with the detailed reasoning
• Binding on the insurance company but
• Not binding on the policyholder
• The Ombudsman can also award an ex-gratia payment

Once the Award is passed

• You have to accept the award in writing and the insurance company has to be informed of it within 30 days and
• The Insurance company has to comply with the award in 15 days after that.

Types of Insurance Companies

Getting insured is one great way to secure your future. While shopping for insurance you will came across many insurance companies. Getting a right knowledge about the types of insurance companies is very important.

Different kinds of insurance companies can be classified as:

Life insurance companies

These insurance companies sell life insurance, annuities and pension products. It mainly deals with long and short-term monetary investments, college plans, and plans that mature and benefit your surviving family at the time of your death.

Non-life insurance companies

These are one of the different kinds of insurance companies are which sell other types of insurance. These companies are mainly concerned with protecting property from many risks and natural acts like fire, lightning, typhoon, flood and earthquakes.

Composite insurance companies

These insurance companies types sells both life and non-life insurance.

Insurance companies are also classified as either mutual or stock companies. Mutual companies are owned by policy holders whereas stock companies are owned by stock holders.

Reinsurance companies

Another of different types of insurance companies is the Reinsurance companies, which sell policies to other companies. This helps them to reduce their risks and protects them from huge losses. The reinsurance market is dominated by a few large companies, with huge reserves.

Captive insurance companies

These are other kinds of insurance companies that can be defined as limited purpose companies. It is established with the main objective of financing risks originating from their parent groups or groups. It can be said as an in house self insurance vehicle. Captives also represents commercial, economic and tax advantages to their sponsors. They help in risks management.