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Life Insurance Practices And Procedures

Life Insurance Practices And Procedures

• Risk pooling Life insurance is based on a concept called risk pooling, or a group sharing of losses.

• People exposed to a risk agree to share losses fairly or on an equitable basis.

• The law of large numbers states that as the size of the sample (insured population) increases, the actual loss experience will more and more closely approximate the true underlying probability.

• The object of Insurance should be lawful; the person proposing for Insurance must have interest in the continued life of the insured and would suffer pecuniary loss if the insured dies.

[Post Image Courtesy of Vichaya Kaitying-Angsulee at FreeDigitalPhotos.net]

• Where the proposal is on the life of another, unless the proposer has insurable interest in the life to be assured, the contract shall be void.

• Assignment is the transfer of the rights to receive the benefits under a contract accruing to the party to that contract.

• In life insurance parlance, assignment is the transfer of rights to receive benefits stated in the life insurance policy from the Policyholder to the Assignee.

• Nomination is a facility that enables a Policyholder to nominate an individual, who can claim the proceeds of the Policy, upon the demise of the Policyholder.

• While usually the title to the insurance contract is held by the Policyholder, where the policy has been assigned, the title to the contract passes on to the Assignee and therefore the Assignee assumes the right to receive all survival and death benefits under the contract.

• A claim under a life insurance contract is triggered by the happening of one or more of the events covered under the insurance contract.

• Claims under Section 80C of the Act, premiums paid by the assessee on policies held by himself, spouse or children is eligible for deduction from gross total income.

• The concept of Trusts in a Life policy is necessitated by the applicability of estate duty on transfer/inheritance of benefits under a life insurance policy, including annuities.

Insurance Law And Practice - ICSI

About Author Mohamed Abu 'l-Gharaniq

when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries.

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