IC02 PRACTICE OF LIFE INSURANCE NOTES

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IC02 PRACTICE OF LIFE INSURANCE NOTES- BY IEXAMWORLD.COM


  1. Insurance cannot prevent the peril it can only reduce the financial loss to the owner or beneficiary of the asset.
  2. If there is any chance that the outcome will be different, from there is a risk. Risk means the uncertainty in the outcome.
  3. There are various kinds of risks, and it can be classified as follows:
  4. Catastrophic risks.
  5. Important risks.
  6. Financial risks.
  7. Non- financial risks.
  8. Dynamic risks.
  9. Static risks.
  10. Pure risks.
  11. Speculative risks.
  12. Fundamental risks.
  13. Particular risks.
 

  1. Catastrophic risks are where a single event can cause a number of claims on the insurer than the usual number.
  2. Financial risks are those risks in which loss is quantified through monetary terms.
  3. Non- financial risks are those which are not measured in monetary terms.
  4. Dynamic risks are those risks in which risk comes from changes in the economy of a country.
  5. Static risks are risks that occurred from perils of nature or dishonesty from others.
  6. Pure risks are risks that are not in control of any person.
  7. Speculative risks are risks in which chance of gain or loss involve such as the stock market.
  8. Fundamental risks are those in which a lot of people can be affected.
  9. Hazard can increase the chances of loss, it accelerates the peril, and it is classified into two:
  10. Physical hazards
  11. Moral Hazards
  12. Physical hazards means the characteristics and qualities of the subject matter, which is insured.
  13. Moral hazards mean the character of the person who wants to get the insurance.
  14. The actual loss arising includes the cost of:
  15. Repair, replacement, reinstatement
  16. Consequential losses, until repair, replacement, reinstatement.
  17. Consequential losses include the expenses that occurred for cleaning up of debris, loss of rent, or production.
  18. Ways of managing the risks are:
  19. Prevention of risk.
  20. Reduction of risk.
  21. Retaining of risk.
  22. Transferring of risk.
  23. An individual manages the risk by transferring it to the assurance company by buying the plan.
  24. Indemnity agreements are agreements in which one party takes liability to compensate the other party if a loss occurs.
  25. The concept of insurance is, an insurance company undertakes the liability to indemnify the party to the agreement for a loss that occurred of the subject matter. And the insured pays consideration to the insurance company which is known as Premium.
  26. The business of insurance is run for the protection of the economic value of the asset, which is insured by the insurer. Such asset is valuable to the owners for their economic value or in form of comfort or convenience.
  27. Insurance is important as it provides stability and steadiness to the trade and it also helps the trader to take the risk, as the insurance provides protection against various nature of risks.

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