19-06-2014, 11:31 AM
A STUDY OF CONSUMER PERCEPTION TOWARDS SBI LIFE PRODUCT AT JAGATSINGHPUR
A STUDY OF CONSUMER PERCEPTION.docx (Size: 339.17 KB / Downloads: 23)
What is Life Insurance
Life Insurance is a tool for financial protection for your family in case of an unfortunate incident.
Life Insurance creates a fund for future financial needs
INSURANCE
Insurance basically involves two elements
Transfer or shifting of risk from one individual to a group.
Sharing of losses on an equitable basis by all members of the group
DEFINATION OF INSURANCE
Insurance is a contractual agreement whereby one party aggress for a consideration called to compensate another party for losses. Such transaction involves the following terms
There can be two approaches for defining insurance. One is functional approach other is contractual approach
FUNCTIONAL DEFINATION
The functional approach says insurance may be defined as a social device, whereby a large group of individual, through a system of equitable contribution may reduce or eliminate measurable risk of economic loss common to all members of a group. In similar sense disnadle has defined that insurance is an instrument of distributing loss of few to many. Allen C.Mayerson states insurance is a device for the transfer to an insured of certain risk of economic loss that would otherwise be borne by the insured.
From the above definitions, it emerges clearly that the functional definition has following features.
• It is co-operative device
• It spreads the risk over a large number of persons who are insured against the risk.
• It provides security to be measured.
CONTRACTUAL DEFINATION
In contractual since the following definition are noteworthy. To justice Tindal, insurance is contract in which a sum of money is paid to the insured in consideration of insurers incurring the risk of incurring the risk of paying a large sum upon a given contingency. In the words of E.W.Patterson, insurance is a contract by which one party for a consideration called premium, assumes a particular risk of the party and promises to pay to him or his nominee a certain a ascertainable sum of amount on a specified contingency. The contractual approach definitions highlight the following features
LIFE INSURANCE
The subject matter of life insurance is human life. Most of the insurance policies are combination of saving and security. The insured is promised by insurance that during the tenure of insurance in case of his death. His nominee will be paid the insurance amount. According to insurance act 1938 life insurance is the business effecting contracts of insurance upon human life including any contract whereby the payment of money is assuredon death, expect death by accident on the happening of any contingency dependent on human life and any contract, which is subject the payment of premium for a term of the policy, he/she will be paid and amount as per terms of the policy
HISTORY
Life assurance was born in England when the first policy providing temporary cover for a period of 12 months issued in early 1583 AD. The Amicable society started granting fluctuating sum on death since 1705 and fix sum since 1757. With the development of mortality table, life assurance acquired a scientific character. The equitable society founded in 1762, was the first society established on scientific basis.
In India, after failure of two British companiesEuropean and the Albert in 1870, which attempted writing business on Indian lives, First Indian Life Assurance Society was formed in the same year called Bombay Mutual Assurance Society Ltd. It was followed by the Oriental Life Assurance Company Limited 1874, Bharat in 1896 and Empire Indian in 1897.
The Swedes Movement of 1905 provided impetus to the formation of several companies such as the “Hindustan Co-Operative“, the “UnitedIndia”, The “BombayLife” and “The National”.
Further in the wake of freedom movement number of companies such as the “New India”, the “Jupiter”, and the “Lakshmi” emerged.
FIRST LIFE POLICY
The earliest recordlife insurance policy was issued on 18thJune, 1583 on the life William Gybbons, a citizen of London. The policy was procured by Richard Martin, it was under written for 12 months by 16 individuals for an amount of E383=6S-8D with premium @ 8% i.e. E30-13-4. The nest of the policy ended with an interesting prayer. “God send the said William Gybbons died on May 29, 1584, that is within a year. The underwriters disputed the claim pleading that the insured had survived 12 lunar months of 28 days each. The claimwas finally paid through the court.
PRINCIPLES OF UTMOST GOOD FAITH
Commercial contract are normally subject to the principle of caveat emptor i.e. let the buyer be aware, it is assumed that each party to the contract can examine in item or service, which is the subject matter of the contract. Each party can verify the correctness of the statement of the other party. There is no need to take the statements on trust. Proof can be asked for.
In the case of insurance contracts, this principle does not apply. Most of the facts relating to health, habits, personal history, family history etc. Which form the basis of life insurance contract, are known only to the proposer. The insurer cannot know them. The underwriter can ask for a medical report. Ye-there may be certain aspects, which may not be brought out even by the best medical examination.
For example, a person suffering from blood pressure or diabetes can, through appropriate medication, hide these facts from the examining doctor. History of past sicknesses, operations, injuries can be suppressed. Some of these may affect the life expectancy of the proposer. Hence, these constitute material information from the underwriter’s point of view. Similarly, in general insurance, an inspection of the premises may not disclose that the contents of the go-down have been temporarily relocated. Non-disclosure of such would put the insurers as well as the community of policyholders at a disadvantage. When a proposer puts an insurer and the community of policyholders at a disadvantage, there is what is called adverse selection. The contract is unfair because one of the parties to the contract is in a more advantageous position
PURPOSE AND NEED OF INSURANCE
Life is full of uncertainties and insurance is based on uncertainties and if there are no uncertainties about the occurrence of a disaster, the concept of insurance will cease to exist. For insurance if one is able predict the forthcoming dangers then one will take a proper safeguard action and then face the crisis in a very normal manner but then this is an utopian concept because death, disaster an danger cannot be predicted. All individuals have assets both tangible, thehouse, car, factory or intangible like voice of singer, leg of an often seen in the western countries. Now all such assets are insured, because they run the risk of becoming non-functional through a disaster are known as perils. And the damage caused by such perils are the risk that the assets are exposed to. Risk is a contingency and the insurance is done against such possible contingencies.
INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY
The insurance act, 1938 provided comprehensive regulation of the insurance business in India. It creates a powerful supervisory authority in the controller of insurance. The controller of insurance had the power to direct, advice, caution, investigate, inspect, search, seize, amalgamate authorise, register and liquidate insurance companies. In 1999 as per the recommendation of Malhotra committee, IRDA has been formed to regulate the sector