INSURANCE

The meaning of insurance: Insurance is a policy from a large financial institution

that offers a person, company, or other entity reimbursement or financial protection
against possible future losses or damages.
A simple example will make the meaning of insurance easy to understand. A biker is
always subjected to the risk of head injury. But it is not certain that the accident
causing him the head injury would definitely occur. Still, people riding bikes cover
their heads with helmets. This helmet in such cases acts as insurance by protecting
him/her from any possible danger. The price paid was the possible inconvenience or
act of wearing the helmet; this i.e. equivalent to the insurance premiums paid.

Major types of insurances are as mentioned below:

Life insurance: Descendants family receives financial benefits. Life

insurances also offer paid proceeds to the beneficiary.

Automobile insurance: Usually automobile insurances cover damages and

legal financial expenditures of the automobile driver.

Health insurance: Health insurance covers the expenditures associated to

treatment and medical expenditures.

Credit insurance: Borrowers often fail to repay debts, loans and mortgages
due to certain unavoidable circumstances, credit insurances can be of great
help during such crisis.

Property insurance: Property protection insurance provides protection from

risks associated to theft, fire, floods etc.

Life insurance
Life insurance or life assurance is a contract between the policy owner and the
insurer, where the insurer agrees to pay a sum of money upon the occurrence of the
insured individual's or individuals' death or other event, such as terminal illness or
critical illness. In return, the policy owner agrees to pay a stipulated amount called a
premium at regular intervals or in lump sums.

How life insurance works

There are three parties in a life insurance transaction; the insurer, the insured, and the
owner of the policy (policyholder), although the owner and the insured are often the
same person. For example, if Mr. Rajan buys a policy on his own life, he is both the
owner and the insured. But if Mrs. Anita, his wife, buys a policy on Rajans life, she is
the owner and he is the insured. The owner of the policy is called the grantee (he or
she will be the person who will pay for the policy). Another important person
involved is the beneficiary. The beneficiary is the person or persons who will receive
the policy proceeds upon the death of the insured. The beneficiary is not a party to the
policy, but is designated by the owner, who may change the beneficiary unless the
policy has an irrevocable beneficiary designation. With an irrevocable beneficiary,
that beneficiary must agree to changes in beneficiary, policy assignment, or borrowing
of cash value.
The policy, like all insurance policies, is a legal contract specifying the terms and
conditions of the risk assumed. Special provisions apply, including a suicide clause
wherein the policy becomes null if the insured commits suicide within a specified
time for the policy date (usually two years). Any misrepresentation by the owner or
insured on the application is also grounds for nullification. Most contracts have a
contestability period, also usually a two-year period; if the insured dies within this
period, the insurer has a legal right to contest the claim and request additional
information before deciding to pay or deny the claim.
The face amount of the policy is normally the amount paid when the policy matures,
although policies can provide for greater or lesser amounts. The policy matures when
the insured dies or reaches a specified age. The most common reason to buy a life
insurance policy is to protect the financial interests of the owner of the policy in the
event of the insured's demise. The insurance proceeds would pay for funeral and other
death costs or be invested to provide income replacing the deceased's wages. Other
reasons include estate planning and retirement. The owner (if not the insured) must
have an insurable interest in the insured, i.e. a legitimate reason for insuring another
persons life. The insurer (the life insurance company) calculates the policy prices
with an intent to recover claims to be paid and administrative costs, and to make a
profit.

MAJOR PLAYERS OF INDIA IN INSURANCE

Reliance Life Insurance is a part of the Reliance group. It is one of the partners of
Reliance Capital Ltd which is a Anil Dhirubhai Ambani Group. Reliance Capital is
one India's most dominant private sector financial services companies. They offer
insurance products which help you with savings as well as give you protection.

Canara HSBC Life is a joint venture of Canara Bank, HSBC Insurance (Asia pacific)
& Oriental bank of Commerce. The Company got its approval from IRDA in June
2008 and from that commencing its business. They have more than 4100 branches all
over India.

DLF pramerica Life Insurance Company Ltd. is a joint venture between DLF
Limited & Prudential International Insurance Holdings Limited. DLF Pramerica
believes in delivering a secure & enrich life to there customers.

MetLife One of the fastest growing insurance company in India is MetLife. The
company started its operations in between 2000-2001. They have a range of various
products to offer.

ICICI Prudential

ICICI Bank with Prudential plc, both well known & strong

financial institutions came together in December 2000 to form an insurance company

- ICICI Prudential Life Insurance.

Max New York Life Max Indias leading multi business corporation & New York
Life joined there hands in 2000.The company started there operations in 2001. The
company is involved in Life & health products.

Bajaj Allianz Bajaj who are into iron & steel, finance, insurance & etc and Allianz
who provides financial services when came together they formed Bajaj Allianz Life
Insurance Company.

Bharti AXA Bharti AXA Life Insurance is a joint venture between Bharti & AXA.
The company started its functionality in December 2006 and they always believe to
be a strong financial institute.

HDFC Standard Life HDFC Standard Life Insurance is a joint venture between
Housing Development Finance Corporation Limited & a Group of Standard Life
Plc.The Company started commencing its business in December 2000.

AEGON Religare AEGON Religare Life Insurance Company Ltd is a joint venture
with AEGON, Religare and Bennett, Coleman & Company a part of Times Group.
AEGON Religare Life Insurance company was launched in July 2008.

Kotak Mahindra A joint venture of Kotak Mahindra group & Old Mutual plc is
known as Kotak Mahindra Old Mutual Funds. The Company started commencing its
business in 2001. The company aim is to help customers in making there financial
decisions.

Future Generali Life Future Generali is a joint venture between Future Group of
India & Italy based Generali Group.Future Generali in India is into both Life & Non
Life businesses in India. The company wants to provide a financial security to all.

SBI Life

SBI Life Insurance Company Limited is a joint venture between State

Bank of India and BNP Paribas Assurance. It is present in more than 41 countries
across the world. SBI Life offers a variety of plans in life insurance and pension.

Shriram Life Shriram Life Insurance Company is a joint venture between Shriram
Group and Sanlam Group.Shriram Group is one of Indias most esteemed financial
services & Sanlam Group is one of the largest life insurance providers of South
Africa.
TATA AIG The TATA Group and American International Group Inc together formed
Tata AIG Life Insurance Co. Ltd.Tata Group holds 74% stake in the insurance venture
with AIG holding the balance 26%. They started their operations in April 2001

Aviva Aviva, one of UK's largest insurance company and world's 5th largest insurance
group. It was one of the first international insurance company to set up its office in
India in the year 1995. They introduced the concept of banc assurance in India.

IDBI Fortis IDBI Fortis Life Insurance Co. Ltd is a joint venture between three
financial institutes; they are IDBI Bank, Federal Bank and Fortis. They introduced
there plans in March 2008. IDBI owns 48% equity while Federal Bank and Fortis own
26% equity each.

Sahara The Sahara Pariwar stepped into the insurance business by launching Sahara
India Life Insurance Co. Ltd. They received the IRDA license in February 2004 and

started their operations in October 2004. They are the first solely owned private sector
insurance company in India.

ING VYSYA ING Life was established in 2001 as a joint venture between ING
Insurance International B.V. (INGI), ING Vysya Bank Limited and GMR Industries
Limited. At present, INGI, Exide Industries Limited, Ambuja Cement Ltd, Enam
Group are the joint venture partners.

Star Union Star Union Dai-ichi Life Insurance Co.Ltd. is formed by three various
financial institutions. Bank of India, Union Bank of India and Dai-ichi Mutual Life
Insurance Company This firm was incorporated in the year 2007 and got their IRDA
license on the 26th Dec 2008.

Some of the important milestones in the life insurance business in

India are:
1818: Oriental Life Insurance Company, the first life insurance company on Indian
soil started functioning.
1870: Bombay Mutual Life Assurance Society, the first Indian life insurance company
started its business.
1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate
the life insurance business.
1928: The Indian Insurance Companies Act enacted to enable the government to
collect statistical information about both life and non-life insurance businesses.
1938: Earlier legislation consolidated and amended to by the Insurance Act with the
objective of protecting the interests of the insuring public.
1956: 245 Indian and foreign insurers and provident societies are taken over by the
central government and nationalised. LIC formed by an Act of Parliament, viz. LIC
Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India.