To why you should have Life Insurance let us take a close look at advantages of life insurance:
Life Insurance has no competition from any other business.Many people think that life insurance is an investment or a means of saving.This is not a correct view.When a person saves,the amount of funds available at any time is equal to the amount of funds available at any time is equal to the amount of money set aside in the past,plus interest.This is so in a fixed deposit in the bank,in national savings certificates,in mutual funds and all other savings instruments.If the money is invested in buying shares and stocks,there is the risk of the money being lost in the fluctuations of the stock market.Even if there is no loss,the available money at any time is the amount invested plus appreciation.In life insurance,however,the fund available is not the total of the savings already made(premiums paid),but the amount one wished to have at the end of the savings period(which is the next 20 to 30 years).The final fund is secured from the very beginning.One is paying for it over the years,out period,if so chosen.The assured fund is not affected.There is no other scheme which provides this kind of benefit.Therefore life insurance has no substitute.
There is no similar to a hire purchase scheme.In a hire purchase scheme,the intended purchase is effected immediately,but the price is paid in instalments later.However, in the event of death,the balance instalments are not exused.They have to paid by the surviving family.In the case of life insurance,the premiums cease on death.There are no outstanding instalments.There is no financial arrangement that can be equal the benefits of life insurance.
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Saturday, November 28, 2009
ReInsurance
You came across this phrase ReInsurance but don't know what it is?Let us have a close look what is ReInsurance?
Insurance companies are taking risks.They have to pay claims as and when they occur.They cannot be sure when the claim will occur and how big the claim may be. This is so because of the very nature of perils.Insurers normally are financially sound enough to be able to pay claims.But there are limits.An event like the tsunami or a hurricane may generate claims amounting the crores of rupees,which may put a very heavy strain on the reserves of the insurer.Insurers protect themselves from such situations,which may be beyond their capacity,by reinsuring the risk with other insurers.If there is a claim,the burden is shared by the primary insurer and the reinsurers.
There are some companies which are exclusively in the business of reinsurance.In India the General Insurance Corporation of India is the national insurer.Reinsurance business is placed globally.When there is a major calamity,the claims affect several insurers all over the world,through the system of reinsurance.
Please post your valuable comments on this post.
Insurance companies are taking risks.They have to pay claims as and when they occur.They cannot be sure when the claim will occur and how big the claim may be. This is so because of the very nature of perils.Insurers normally are financially sound enough to be able to pay claims.But there are limits.An event like the tsunami or a hurricane may generate claims amounting the crores of rupees,which may put a very heavy strain on the reserves of the insurer.Insurers protect themselves from such situations,which may be beyond their capacity,by reinsuring the risk with other insurers.If there is a claim,the burden is shared by the primary insurer and the reinsurers.
There are some companies which are exclusively in the business of reinsurance.In India the General Insurance Corporation of India is the national insurer.Reinsurance business is placed globally.When there is a major calamity,the claims affect several insurers all over the world,through the system of reinsurance.
Please post your valuable comments on this post.
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