- Life assurance.
- General/property insurance.
LIFE ASSURANCE.
Inlife policy, the death of the insured person is bound to take place and only the time of occurrence is unknown.it can therefore be defined as a contract between the insurer and the insured that a certain sum of money(sum insured) will be paid upon the death of the assured/on the expiry of a specified period of time. There are two types of life policies;
- Whole life policy-The sum assured is paid only at the death of the assured to his/her legal beneficiaries as specified in the insurance contract.
- Endowment policy-the sum assured is payable at the death of the assured or at the expiry of a specified period of time, whichever occurs earlier/first. Where the financial position of the assured may become difficult, to pay premiums, the assured can terminate the policy before maturity date. If this happens the assured is paid surrender value (sum of money that the insurer is willing to pay if the insured surrenders the policy).life policies can be used as collateral to obtain loans. Loans depend on the surrender value of policy.
Other types of life policies.
- Annuities: In this case the insured pays a lumpsum amount or periodic payments to the insurance company. On receiving the total sum assured, the insurer undertake to pay a fixed regular amounts during the life time of the annuitant.
- Pension schemes: These are arranged by employers on behalf of the employees. The sum is paid to the employee by the insurance firm if he is retiring or leaving employment. If the employee dies before retiring the sum assured is paid to his beneficiaries.
- Suplimentary policies.
- Family income policy:- Meant to provide income to the family of the bread winner incase of death.
- Group life policy: – taken by employees to cover employees under him.
- Education policy: For child’s future education costs. If a child dies before benefiting from the funds then the sum is paid to the parents of the child.
- General insurance: – Under general department. Cover events that may or may not occur.
- Accident department: Includes motor vehicle insurance.
- Third party: Cover damages caused to other parties other than the vehicle itself.
- Comprehensive policy: provide comprehensive for both the vehicle and the third party.
- Properties insurance: Is a policy that is taken to cover household goods against vandalism.
- Fire insurance: – Covers damages caused by fire to property. In a case where fire has damaged or interacted trade activities, a consequential loss policy covers the loss of profits. Therefore consequential loss is based on anticipated profits.
- Personal accident policy: Covers death or injury resulting from an accident. If the injured is hospitalized he is paid an equivalent of his salary for the entire period he is in hospital.
- Employee liability – Workmans compensation: This offers security to workers in an organization. The term of contract depend on the wages of employees and the amount of risk in the work involved.
- Public liability: Covers risks/ injuries sustained by people at the premises of the insured.
- Products liability: This comes out of an arrangement between the producer and an insurance firm to cover injuries sustained as a result of consuming contaminated foods.
- Fidelity guarantee: This is a policy taken by employers to cover dishonest employees.
- Mortgage guarantee: This is a policy cover for financial institution against the purchasers who may fail to keep up his mortgage repayment.
- Burglary and theft: it’s a policy taken to cover the holder against breakages into his premises and theft of goods in transit including cash, glassware, crops and livestock
GENERAL/PROPERTY INSURANCE
This is also referred to as “non-life insurance. “it insures risks such as;
- Fire
- Theft and burglary.
- Flood
- Natural calamities.
- Schemes with special links-the schemes include educational policies, pension and group schemes and convertible schemes. Annuities are a form of pension scheme. The assured pays either a lump sum or a series of installments to an insurance company.
- Marine-this is the oldest and it covers ships and goods in ships.it deals with risks that may occur at sea,goods stolen and it covers areas such as;
- Marine hull-this policy covers the ship.
- Marine cargo-covers the cargo carried by the ship.the following are the policies under marine cargo.
- Voyage policy-the ship/goods in a ship are insured for a specific journey.
- Time policy-covers losses that may be incurred over a specified period of time,usually less than one year.
- Floating policy-covers all the cargo carried on a particular route which could be one or more ship(s).
- Mixed policy-this is a cover taken on cargo for a particular route for a specified period of time.it combines voyage and time policies.
- Accident –insures vehicles against accidents.
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