Risk and Insurance: Biyani's Think Tank

Biyani's Think Tank
Concept based notes
Risk and Insurance

(B.B.A. Part-III)
Dr. Nandini Sharma Revised by Nikita Kanoongo

Dept. of Commerce & Management Biyani Girls College, Jaipur
Published by :
Think Tanks Biyani Group of Colleges
Concept & Copyright :
Biyani Shikshan Samiti

Sector-3, Vidhyadhar Nagar, Jaipur-302 023 (Rajasthan) Ph : 0141-2338371, 2338591-95 Fax : 0141-2338007 E-mail : acad@biyanicolleges.org Website :www.gurukpo.com; www.biyanicolleges.org
First Edition: 2011 Second Edition: 2012 Price: While every effort is taken to avoid errors or omissions in this Publication, any mistake or omission that may have crept in is not intentional. It may be taken note of that neither the publisher nor the author will be responsible for any damage or loss of any kind arising to anyone in any manner on account of such errors and omissions.
Leaser Type Setted by : Biyani College Printing Department
Risk & Insurance
Preface
am glad to present this book, especially designed to serve the needs of
the students. The book has been written keeping in mind the general weakness in understanding the fundamental concepts of the topics. The book is self-explanatory and adopts the Teach Yourself style. It is based on question-answer pattern. The language of book is quite easy and understandable based on scientific approach. Any further improvement in the contents of the book by making corrections, omission and inclusion is keen to be achieved based on suggestions from the readers for which the author shall be obliged. I acknowledge special thanks to Mr. Rajeev Biyani, Chairman & Dr. Sanjay Biyani, Director (Acad.) Biyani Group of Colleges, who are the backbones and main concept provider and also have been constant source of motivation throughout this Endeavour. They played an active role in coordinating the various stages of this Endeavour and spearheaded the publishing work. I look forward to receiving valuable suggestions from professors of various educational institutions, other faculty members and students for improvement of the quality of the book. The reader may feel free to send in their comments and suggestions to the under mentioned address. Author
Syllabus
Risk & Insurance
Contents
S.No Chapter Name Page No
6 -7 8 - 10 11 - 12 13 - 20 21 - 24 25 - 27 28 - 29 30- 31 32 - 33 34 - 35 36 - 39 40 - 41
1 2 3 4 5 6 7 8 9 10 11 12
Insurance- An Introduction Risk Management and Insurance Principles of Insurance Contract Types of Insurance Contracts Fire Insurance Marine Insurance Life Insurance Development of Life Insurance in India Life Insurance Corporation of India Life Insurance Agents Life Insurance Plans Life Insurance Selling and Underwriting
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13 14 15 16 17 18 19 20 21 21 Premium Calculation in Life Insurance Settlement of Claims in Life Insurance General Insurance The General Insurance Corporation of India Liberalization and Insurance The Insurance Act, 1938 The Insurance Regulatory and Development Authority Prospects and Challenges in Insurance Sector Differences between different Terms Unsolved Papers 42 - 44 45 - 46 47 - 49 50 - 51 52 - 53 54 55 - 56 57 58 - 70 71 - 78
Risk & Insurance
Chapter 1
Insurance- An Introduction
Q.1 What do you mean by Insurance? Ans. Insurance means a social device to reduce or eliminate risk of loss to life and property. It is a provision which a prudent man makes against inevitable contingencies, loss or misfortunes. Q.2 Define policy? Ans. The document which contains the terms and conditions of the insurance control and issued by the insurer is known as insurance policy. Q.3 What are the tax benefits available under insurance policies. Ans. According to section 88 of the Income tax act, tax rebate is available on the insurance premium amount given to life insurance Corporation for the life insurance cover. Q.4 Define Assurance? Ans. Assurance is an earlier term and was used till the end of the sixteenth century in connection with all for most insurances either marine, fire and other miscellaneous risk. But from the year 1826 the term assurance was properly applied to life insurance business only. Q.5 What are the characteristics of Insurance? Ans. These are the characteristics of Insurance : 1. There must be two parties in an Insurance. 2. Insurance is an arrangement of compensation. 3. It Provides security against uncertain losses.
8 4. Monetary measurement of risk . 5. Based on premium. 6. Insured person transfers his probable risk to the insurer. 7. Insurance is based on co-operation. 8. Insurance is based on mutual good faith. 9. Insurance is different from gambling. 10. Success of insurance depends upon the large number of assured person. Q.6 What are the social and economic advantages of insurance. Ans. 1. It provides stable standard of living. 2. It prevents disintegration of family units. 3. Optimum allocation of factors of production. 4. Creation of challenge seekers society. 5. Insurance is the basis of credit. 6. It is a method of saving. 7. Rationalization of expenditures. 8. Rebate in taxes. 9. Helpful in the creation of prosperous society. 10. Extension of social amenities. 11. More opportunities can be available. Q7 . Why insurance is not a gambling? Ans- Gambling is illegal which gives gain to one party and losses to other while insurance is a valid contract to indemnity against losses so insurance is not a gambling. Q8. Why in Assurance there exist element of investment? Ans- The element of investment is present in assurance since there is certainty of receiving payment either on death or on maturity of the policy.
Risk & Insurance Q9. Ans What is gambling? Gambling is an agreement under which both parties mutually agree to pay money or moneys worth to another on happening or non happening of some uncertain specified event.
Q10. Insurance is an co-operative device. Explain Ans- In insurance,there is a common fund which is created by the contributions of a large number of people. When the loss event happen with any one ,he is compensated from the fund.So Insurance is an co-operative devie. Q11 Ans Write the primary objectives of insurane? Primary objective of insurance are followingThe primary objective of insurance is to provide protection against future risk,accidents and uncertainity. Insurance is collective bearing of risk. Insurance determine the probable volume of risk by evaluating factors that gives rise to risk. Insurance distribute the risk. Insurance is an investment comment. In insurance specially in life insurance there is certainty of receiving payment either on death or on maturity of the policy and there is option for the investment of that money.
Q12 Ans
10
Multiple Choice Questions

Q1-The oldest form of insurance is a)Marine insurance b)Fire insurance c)Life insurance d)Unemployment insurance Q2-Fire insurance has its origin in a)India b)Japan c)Germany d)Australiya Q3-Life insurance act came in a)1987 c)1956
b)1967 d)1950
Q4-The first Marine insurance company in India a)ICICI b)LIC c)ING VYASA d)Sun insurance office LTD.
Case Study
Arun and Ashok, two universtiy friends, have just purchased a small pie manufacutring business. The business currently employs one full -time pastry chef, one kitchen hand, one part-time driver and two shop assistants. Arun will assist in the manufacuring side of the business while Ashok will act as manager. They are planning to employ an apprentice chef. They have each borrowd Rs2,00,000 to purchase the business. In addition, they have borrowed Rs 1,00,000 to help them with cash flow
Risk & Insurance until the business is able to generate enough income to cover all its expenses. They are leasing the premises, but eventually want to purchase some premises and their delivery vans. As the business grows they would like to increase this to four or more vans. Both Arun and Ashok have sufficient personal life insurance. However, they are concerned that they may not have adequate insurance to cover their exposure to the business in the event that either of them is no longer be able to participate in the business. They have come to you for advice a. Suggest the type of life insurance they should take out to cover the business in the event that either or both were unable to participate in the business. Give an explanation of each product you recommend and justifications for your recommendations where appropriate. b. Suggest the types of general insurance they should take out to cover their new business. Provide an explanation of each product you recommend and the reason for your recommendations.
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12
Chapter 2
Risk Management and Insurance

Q.1 What do you understand by risk management. Ans. Risk management is process that identifies loss exposures faced by an organization and select the most appropriate technique for treating such exposures. Q.2 Define peril? Ans. A peril is an event that causes a personal or property less, by fire, windstorm, explosion, collision sickness etc.
Q.3 What do you understand by Hazards in insurance? Ans. Hazard is condition that increases the chance of loss to the subject matter of insurance, or increase the uncertainty of loss. Q.4 What do you mean by risk control and risk financing? Ans. Risk control : it is a generic term to describe technique for reducing the frequency or severity of losses. Risk Financing: It refers to techniques that provides for the funding of losses after they occur. Q.5 What are the steps to be taken in personal risk management ? Ans. The steps in personal risk management are : 1. Identify loss exposures. 2. Analyze the loss exposures. 3. Select appropriate techniques for treating the loss exposures.
Risk & Insurance 4. Implement and revive the programme periodically.
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Q6
Ans
What is risk? Risk is the variation in the possible outcome that exist in nature in a given situation. What is speculative risk? The uncertainty of an event that could produce either a profit or a loss, such as a business venture or a gambling transaction. What is a pure risk? Pure risk is the uncertainty whether the loss will occure.For example,the possibility that a persons house will be destroyed due to a natural disaster is pure risk and here it is unlikely that there would be any potential benefit to the risk.
What is business risk?
Q7
Ans
Q8
Ans
Q.9 Ans.
Business risk may be defined as uncertainty regarding financial loss in business. Some example of common business risks are: 1. Damage or destruction of property by fire, storm, earthquake, drought or Vandalism. 2. Assets (cash merchandise, equipment) may be stolen by outsiders or embezzled by employees. 3. Law suits resulting from accidents in case of workers or others. 4. Obsolescence of merchandise goods or equipments. 5. Other causes arising from disabilities to key persons, customer, failure, competition and so on.
Q.10 What are the changing tool in risk management? Ans. The changing tools in risk management are: 1. Risk management information system. 2. Risk management intranets and web sites.
14 3. Risk maps. 4. Value at risk analysis. Q.11 What do you mean by financial risk management. Ans. Financial risk management refers to the identification, analysis and treatment of speculative financial risk. These risk include the following. 1. Commodity price risk. 2. Interest rate risk. 3. Currency exchange rate risk.
Q.12 Ans.
What are the methods of handling risk? Methods of handling risk may be classified under six headings:
1. 2. 3. 4. 5. 6.
Risk may be avoided Risk may be assumed The hazard may be reduced Losses may be reduced Risk may be shifted Insurance of risk
Q.13 Write short note on enterprise risk management. Ans. Enterprise risk management is comprehensive risk management program that addresses on organization risk, strategic risk and operational risk. Strategic risk refers to uncertainty regarding the organizational goal and objection and the organizations strength , weakness opportunities and threats . By packing all of these risk in a single program, the corporation offsets one risk against risk. As long as the risk combined in the programe do not exhibit perfect positive correlation, the combination of exposures reduces risk.
Risk & Insurance Q.14 What are morale Hazards? Ans. Moral hazards are the outcome of nature and behavior of a person. Carelessness, dishonesty, negligence or insanity, lack of proper education social and economic structure of the society etc. are the moral hazards. It becomes difficult to identify these factors in a person since these are of changing nature. Morality is the basis of moral hazards when a person behaves below the level of ethical standards, moral hazards take place.
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Multiple Choice Question

Q1 Moyto Tobacco Company is concerned that the company may be held liable in a court of law and forced to pay a large damage award. The characteristics of the judicial system that increase the frequency and severity of losses is known as (a) moral hazard. (b) particular risk (c) speculative risk (d) legal hazard. Q2 Priya was just named Risk Manager of XYZ Company. She has decided to create a risk management program which considers all of the risks faced by XYZpure, speculative, operational, and strategicin a single risk management program. Such a program is called a(n) (a) financial risk management program. (b) enterprise risk management program. ( c) fundamental risk management program. (e) consequential risk management program.
16 Q3 Which of the following statements about speculative risks is true? (a)They are almost always insurable by private insurers. (b)They are more easily predictable than pure risks. (c)Their occurrence may benefit society. (d)They involve only a chance of loss. Q4 Which of the following types of risks best meets the requirements for being insurable by private insurers? (a) market risks (b) property risks (c) financial risks (d) political risks Q5 All of the following are social costs associated with insurance EXCEPT (a) the expense of doing business. (b) fraudulent claims. (c) inflated claims. (d) increased cost of capital
Risk & Insurance
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Chapter 3
Principles of Insurance Contract

Q.1 What are the requirements of an insurable risk. Ans. The requirements of insurable risks are: 1. There must be a large no of exposure units. 2. The loss must be accidental and unintentional. 3. The loss must be determinable and measurable. 4. The change of loss must be calculable. 5. The premium must be economically feasible. Q.2 What are the basic principles of Insurance? Ans. The basic principles of insurance are: 1. Principle of cooperation 2. Principle of probability 3. Principle of utmost good faith 4. Principle of warranties 5. Principle of insurable interest 6. Principle of Indemnity 7. Principle of subrogation 8. Principle of contribution 9. Principle of mitigation of losses 10. Principle of proximate cause /causa proxima
Q.3 Write down the need of insurable interest. Ans. The need of insurable interest is: 1. Basis of legality of Insurance: Insurable interest is the basis of legality of Insurance contracts, in the absence of insurance interest
18 the insurance contract becomes void and such void contracts are considered as contract against public interest/policy. 2. Prevention of speculation: In the absence of insurable interest, and property or individual is insured, Insurance business becomes a speculative activity when the principle of Insurance Interest is made essential no one can be insured without presence of insurable interest. 3. Security to the property and life of other: If the principle of insurable interest is not made essential for any insurance contract, any one can insure the life or property of anyone this way the risk is increased against the property as well as life. Q.5 What are the types of principal of warranties? Ans. They can be classified in the following parts:1. Promissory warranties 2. Affirmative warranties 3. expressed warranties 4. Implied warranties Q.6 Ans Why insurance come in the category of contracts? Insurance come in the category of contract because it is an agreement between the two parties which has legal enforceability. Define the principle of utmost good faith. The principle of utmost good faith means to disclose all the important facts and information by the person getting insured and insurer to each other. Define the principle of the Doctrine of cause proxima. The principle of the Doctrine of cause proxima says that if there are many reasons to cause damage to the insured subject then,the closest cause is to
Q7 Ans
Q8 Ans
Risk & Insurance be considered rather than those cause which are remote, immaterial or secondary than primary. Q9 Ans What are the essential elements under the Indian Contract Act,1872? 1) 2) 3) 4) 5) Q10 Ans Proposal and acceptance Competence to make contract Free consent Lawful objectives Lawful consideration
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What is promissory warranty? A promissory warranty describes a condition, fact, or circumstances to which the insured agrees to be held during the life of the contract. What is affirmative warranty? Affirmative warranty is one that must exist only at the time the contract is first put into effect. What is the cooperative principle of insurance? One for all and all for one. What are the methods of ascertaing the probability of any future event? The two methods are following1. Analysis of past data- The data relating the past event are collected and analysed to find the probability of future event. 2. Statistical method-Data is converted in tabular form and formulas of statistics are applied to find the probability of future event. Explain the presence of Insurable interest in fire insurance.
Q11 Ans
Q12 Ans Q13 Ans
Q14
20 Ans In fire insurance the insurable interest must be present at both the times when the policy is taken and also at the time of happening of the event to claim the loss from the insurer.
Q15 Explain the principle of contribution. Ans- Principle of contribution ensures equitable distribution of losses between different insurers.A policyholder is not entitled to claim from each insurer more than rateable proportion of the loss to which one is liable.
Q16 Ans
Explain the principle of mitigation of loss. This principle says that the insured be more careful to protect the subject matter from any possible loss.If he fails to act in such a manner , the insurer can avoid claim of the insured, on the ground negligenence on the part of insured.

1 Warranties which have been expressed clearly by the assured regarding the insurance subject in the insurance proposal form a)Promissory Warranties b)Affirmative Warranties c)Expressed Warrant d)Implied Warranties Warranties which are not essential to be disclosed in the documents relating to insurance a)Promissory Warranties b)Affirmative Warranties c)Expressed Warranties d)Implied Warranties
Risk & Insurance 3 A truck hits As scooter, then insurance company will compensate the owner of the scooter, but afterwards, the company will have the right to get the amount of compensation from truck owner. This comes under the principle ofa)Principle of cooperation b) Principle of probability c) Principle of indemnity d) Principle of subrogation According to which principle the insured may not collect more than the actual loss in the event of damage caused by an insured perila)Principle of cooperation b) Principle of probability c) Principle of indemnity d) Principle of subrogation The insured may warrant that the ship will continue to sail convoy comes under a)Promissory Warranties b)Affirmative Warranties c)Expressed Warranties d)Implied Warranties
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Case study
In vijawari there are two factories named A and B.Factory A has purchased an insurance policy to protect its building from ABG ltd. Insurance company.Factory The factory A was polluted due to Chemicals of factory B. Being the manager of factory A,how will you claim for polluted building. Should you Case a file against companyA?
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Chapter 4
Types of Insurance Contracts

Q.1 What is underwriting in insurance? Ans. Underwriting includes, the total no. of insurance proposals issued by an insurance company but right from the origin of Insurance, Underwriting includes the working through adoption of total Burdon by underwritersafter analyzing the risk of insurance. Q.2. What are the various types of Insurance contracts on the basis of risk Ans. Insurance can be classified into four categories on the basis of risk. 1. Personal Insurance 2. Property Insurance 3. Liability Insurance 4. Fidelity guarantee insurance Q.3 What are the legal requirement of an insurance contract? Ans. The legal requirement of an insurance contract is same as the contract under contract act. 1. Offer and acceptance 2. Consideration 3. Competent parties 4. Legal purpose 5. Certainty of contract 6. Legel binding force
Risk & Insurance Q.4 What is unilateral contract? Ans. A unilateral contract means that only one party makes a legally enforceable promise in this case only the insurer makes a legally enforceable promise to pay a claim or provide other services to the insured.
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Q.5 What is reinsurance? Ans. Reinsurance is such an arrangement under which insurer transfers one part of incurred or probable risks mentioned in insurance contract to another insurance company. Q.6 What is over insurance? Ans. Over insurance means to insure excess amount for the insurance subject than its insurable interest or actual value or to get insurance of the subject more than its actual value is called over insurance .
Q.7 State the types of insurance contracts. Ans. Types of insurance contracts are: 1. Life Contracts (i) Life Insurance (ii) Personal Accident Insurance 2. Indemnity contracts (i) Marine insurance (ii) Fire Insurance (iii) Accident insurance (iv) Liability insurance (v) Property insurance (vi) Crop insurance
Q.8
What is under insurance?
24 Ans. It means to have insurance by the assured less than the actual value of the insured subject or under insurance is the adverse arrangement of over insurance.
Q. 9 What is double insurance? Ans. Double insurance means to get insurance of the prospective subject twice its actual value by the assured or when the assured takes more than one insurance policy for the same subject then , it is called double insurance.
Q.10 What are the methods of reinsurance? Ans. There are two kinds of reinsurance companies first type of companies are mixed companies which do insurance as well as reinsurance and the second type of companies do only reinsurance work. These reinsurance companies normally do the reinsurance business on the basis of the following methods: 1. Facultative methods: In this method the insurer sends a brief information of risk to the reinsurer against which he wants to get reinsured. 2. Treaty methods: In this method, reinsurance is automatically done on the basis of contract between the original insurer and reinsurer. Types of Treaties 1. Proportional Treaties (i) Quota share treaty (ii) Surplus treaties 2. Non Proportional Treaties (i) Excess of loss treaty
Risk & Insurance (ii) Excess of loss ration treaty 3. Pooling system 1. and of Proportional treaties: There is a contract between the original insurer various reinsurance companies that they will manage compulsory reinsurance of the total amount of insurance collectively on the basis predicated proportion. (i) Quota share treaty - In this method on the basis of contract it is decided between the insurer and reinsurer that up to the amount original insurer will do the insurance business. It will have to get reinsured at least one decided part of it with the reinsurer. Surplus treaty: The original insurer and reinsurer decide minimum limit of the reinsurer decide minimum limit of the insured sum for which reinsurance will not be effective.
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(ii)
Non proportional treaties: (i) Excess of loss treaty: There is a contract between insurer and reinsurer that excess amount of compensation borne by the insurer within a specific time period, reinsurer will bear the liability of excess amount of compensation. (ii) Excess of loss ration treaty: The reinsurer bears the responsibility regarding excess losses of the original insurer within a certain time period.
3.
Pooling system: There is an agreement among different insurers that they will surrender all their insurance business to a pool thus pooling
26 system is an ideal arrangement of pre-organised reinsurance among different insurers.
Q.12 What is reinsurance? Ans. Re-insurance in a contract between two or more insurance companies by which a portion of risk or loss is transferred to another insurance company thus insurance companies adopt reinsurance as their safety measure. Q.13 What do you understand by treaty methods. Ans. It is an informal agreement between two insurer under which the insurer agrees to reinsure risk written by the other insurance company subject to the terms and conditions of the treaty and within the prescribed time limit. Q.14 What do you mean by assignment? Ans. Assignment means to delegate the rights of the assured to any other person whose name is included in the insurance policy. Once the insurance policy has been assigned ,assignee gets all the rights of the assured. Q.15 What is nomination?? Ans. Nomination is made in the life contracts in making a nomination the assured nominates any person and the nominate person has the right to get the amount of life insurance policy after the death of the assured person. Itis important here that nominated person neither gets the insured sum during life time of assured person nor any other benefits from the insurance policy.
Q.16 What is group insurance?
Risk & Insurance Ans. Group insurance is an insurance which is meant for a group of persons without medical checkup through the master insurance policy.
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Q.17 What are the methods of indemnity? Ans. The methods of indemnities are as follows:(i) Cash payment - This is the most popular method of setting claims. (ii) Replacement: In case the insurance company prefers to replace the article itself rather than make cash payment of claims when the insured also so prefers. (iii) Repairing : Repairing of the articles to the satisfaction of the insured who constitutes an indemnity. (iv) Re-installment: This practice is following in fire insurance terms or insurance contract. The premise of the building lost fire is reconstructed.
Q.18 Write down the merits of facultative method? Ans. Merits of facultative methods: 1. There is no restriction on reinsurance. 2. This method is flexible the facility to make reinsurance is based on the circumstance of case. 3. This method can be adopted even in emergency situation. 4. This makes the original insured vigilant and makes an arrangement for reinsurance before the insurance is made. In case no insurance is available, he may refuse to accept any proposal involving heavy risks. Q.19 What is miscellaneous insurance business.
28 Ans. Miscellaneous insurance business is further divide into following parts: 1. Cattle insurance 2. Motor insurance 3. workmen's compensation insurance 4. Burglary insurance 5. Group/Personal accidents and sickness insurance 6. Motor cycle/scooter insurance 7. Machinery insurance 8. Fidelity guarantee insurance 9. Money in transit insurance 10. Satellite insurance Q.20 Write down the characteristics of Reinsurance? Ans. Characteristics of reinsurance are: 1. Reinsurance is possible in all types of insurance. 2. The original insurer can not do reinsurance more than the insurance sum. 3. Reinsurance is a contract of indemnity. 4. Reinsurance does not affect the right of insured. 5. It is insurance contract between two insurance companies. Q.21 What are the importance of life insurance corporation? Ans. The importance of life Insurance may be divided into four parts :1. Advantages to insured : A. Family protection B. Provision for education , marriage , housing etc. C. Provision for old age D. Encourage to thrift E. Combination of protection and investment element F. Increase in credit G. Tax relief H. Cash estate I. Protection against creditors
Risk & Insurance 2. Advantages to industry and trade : A. Provision for loan B. Facility to capital C. Insurance by partners D. Group insurance E. Security of loans F. Insurance of key personnel 3. Advantages to society and government : A. Industrial development B. Provision of providing resources to the govt. for economic development C. Self dependence D. Reduction in unemployment problems E. Social satisfaction 4. Other advantages : A. Peace of mind B. Efficiency C. Defeat of time
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Q.22 What is group life Insurance ? Ans. Group life insurance is an insurance which is meant for a group of persons without medical check up through the master insurance policy. The main characteristics of group life insurance are as follows:1. for group life insurance only one insurance policy is issued as a symbol of contract 2. Group insurance is similar to social security and provides many facilities and tax reduction 3. A minimum number is required for group life insurance 4. The rate of premium of group life insurance are changed from time to time 5. This type of insurance is done with the organization unit 6. No need of individual contribution
30 Q.23 What is Endowment life policy ? Ans. The payment of insurance amount in endowment life policy is made after a certain time period for which insurance has been made or to the dependents , if assured dies within this certain time duration. The decided period is known as endowment period and payment eligible for claim is known as maturity amount.
Q.24 What are the causes of nationalization of life insurance? Ans. At the time of nationalization Finance minister of the govt. of India Shri C.D.Deshmukh had presented following arguments in favors of nationalization of life insurance: 1. Means of collection of saving 2. Wind up of insurance companies due to mismanagement 3. Fraud in investment 4. Safety of interest of insurance policy holder Q.25 What is the annual report of insurance corporation ? Ans. Life Insurance corporation will communicate a report to the central govt. at the end of every financial year. This report will be in the prescribed format and this will also include the description of different activities to be done in the next year. Q.26 What do you understand by treaty method ? Ans. It is an informal agreement between two investment under which the reinsurer Agrees to reinsures risks written by the other insurance company subject to the terms and conditions of the treaty and within the prescribed time limit. Q27 What do you mean by contract of indemnity?
Risk & Insurance Ans A contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself or by any other person, is called a contract of indemnity. What are the essential conditions for Indemnification? The conditions are followingAll risks incurred in all insurance policies must be the same regarding the related subject. All insurance policies must be taken by a single assured person.If due to any reason,more than one persons have economic interest in the specific property,then double insurance wil not be considered up to their limits of interests. The time duration opted for all insurance policies must be the same for the same subject of insurance. Why there no legal relationship between the assured and reinsurer ? Reinsurance contract is made between the original insurer and reinsurer. That is why there is no legal relationship between the assured and reinsurer. What is auto-facultative method? In auto-facultative method reinsurer is bound to accept the proposalsenr by the original insurer. When does the insurance company cancels the insurance policy? The insurance company cancels the insurance policy if, in the contracts, assured surrenders his insurance policy or does not get his lapsed insurance policy renewed or commits suicide within a year of buying insurance or does not fulfil utmost good faith.
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Q28 Ans
Q29 Ans
Q30 Ans
Q31 Ans
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1 Insuring excess amount for the insurance subject than its insurable interest is: A)Under insurance B)Over insurance C)Insurance premium D)Insurance Risk Reinsurance contract is made between the_____and ________ a)Reinsurer and Insurer b)Insurer and insured c)Insured and Reinsured d)Reinsurer and reinsured The Indian Reinsurance Corporation Limited was establisheda)1956 b)1964 c)1973 d)1984 In 1974 The Indian Reinsurance Corporation Limited was merged with______ a)LIC b)GIC c)National insurance company d)ICICI
Case-1
In vijawari there are two factories named A and B.Factory A has purchased an insurance policy to protect its building from ABG ltd. Insurance company.Factory The factory A was polluted due to Chemicals of factory B. Being the manager of factory A,how will you claim for polluted building. Should you Case a file against companyA?
Risk & Insurance
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Case-2
You are a manger of the company ALDRA Ltd.You have purchased an injsurance policy from ABG LTd. An insurance company against the fire.On Sep 11,2011 there was an accident and your building was burnt. Now How will you claim .Define the steps
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Chapter 5
Fire Insurance
Q.1 Ans. What is cover note? Cover note gives an indication that the proposer has deposited the premium money and the company has accepted his proposal. What is fire insurance? A fire insurance contract may be defined as an agreement whereby one party one party in return for a consideration undertakes to indemnify the other party against any financial loss which the latter may sustain by reason of certain defined subject or object having been damaged or destroyed by fire or other defined perils up to an agreed amount. What are the types of fire insurance policies. Fire insurance policies are classified as:
Q.2 Ans.
Q.3 Ans.
On the basis of Indemnity
On the basis of stock
On the basis of risk covered
(i) (ii) (iii) (iv)
Average policy Specific policy Re-statement policy Valued policy
(i) (ii) (iii) (iv) (v)
Declaration Policy Floating policy Adjustment policy Excess policy Maximum value with discount policy
(i) (ii) (iii) (iv) (v) (vi)
Ordinary policy Special peril polices comprehensive Consequential loss Sprinkler leakage Public liability in insurance policy
Risk & Insurance
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(A) On the basis of Indemnity: 1. Average policy :- if assured has under insurance of the insured property, then insurance company will also indemnify on the basis of proportion of insured value and actual value. 2. Specific policy :- the assured has certain amount of fire insurance with the insurance company and insurance company indemnifies for the losses to insured subject with a lesser amount than actual losses or insured value. 3. Re-instatement policy :- insurance company promises to effect reinstatement of the subject prior to damages. It may be done either through repairing of damaged goods or its new construction. 4. Valued policy :- Evaluation is done of the insured property or goods by the expert evaluator at the time of insurance.
(B) On the basis of stock:
Declaration Policy: The assured insures with insurance company after paying the premium of 75% of the total value of stock held by the assured. After wards assured declares the value of actual stock every month. Floating Policy: In this policy insurance company is responsible for indemnification if insured goods or stocks get damaged by fire within the prescribed time period in a particular area Adjustment policy : These policies are appropriate for those businessman whose quality of stock as well as there market prices have beet fluctuating during the year. Maximum value with discount policy: In this policy assured takes the policy and pays the premium for the maximum probable quality of stock during the prescribed time period.
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(C) On the basis of Risk Covered:
Ordinary Policy: The policy is issued for the risks other than exceptional risk Special perils policy: In this policy the insurance company accepts only special risks of earthquake, riots, floods, etc by taking additional premium.
Comprehensive Policy: These policies are issued for household goods such as TV, Refrigerator etc. and also covers other risks as theft, decoit attempts, lightening , breakdown etc other than fire. Consequential loss policy :- Due to damages or destruction of the insured property business may get closed temporarily and has to bear the fixed costs like rent,salary, interest etc. These losses are covered under consequential loss policy. Sprinkler Leakage Policy: This policy provides the safety from the losses destroyed good which are destroyed due to the water used to set off the fire. Public liability insurance: These policies are useful for the owners of showrooms and retail outlets. Their liability will remain untill the goods are delivered to their owners.
Q.4. What are the risks which are not covered by fire insurance policy? Ans. The claims not covered under this policy are as :1. Theft during or after the occurrence of any insured risk. 2. War or nuclear perils 3. Electrical break downs 4. Some thing ordered to be set on fire by a public authority
Risk & Insurance 5. Subterranean fire 6. Loss or damages to bullion, precious stones, curious drawings, money, securities, cheque books etc. 7. Loss or damage to property moved to a different location for more than 60 days (except machinery and equipment for cleaning, repairs or renovation) Q.5. What is cancellation of fire insurance policy? Ans. The cancellation of fire insurance policy means to cancel it or to make insurance as null and void. The effect of cancellation of insurance policy is that the insurance company becomes free from its liabilities. Q6 Ans What is physical hazard? It refers to the inherent risk of fire breaking in property which may occur due to certain chemicals or liquids of inflammable nature, short circuit during construction, artificial lighting and heating , lack of fire extinguishing apparatus at the site, use of property in an improper manner etc. What is the procedure of issuing fire insurance policy? The procedure of issuing fire policy is followingStep-1: The assured proposes to the insurance company for insurance in the prescribed proposal form. Step-2:The assured fill the proposal form . Step3:The insurance company conducts a survey of the proposed subject after reviewing the proposal form. Step4: The information of payment is sent to the assured on the basis of survey report. Step5: The assured make the payment of premium. Step6: The insurance company issue the cover note. Step7:The insurance policy is issued on the basis of cover note.
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Q7 Ans
38 Q8 Ans What is Doubly hazardous risk? Doubly-hazardous risk shows the risks of insurance company at two levels.The building construction material is not fire-proof as well as the purpose for which the building is being used and the procedure of production or process which have more chances of getting fire then such risks are called doubly-hazardous risk.

1 When the property has been destroyed with the willingness of the property owner, it is called a)Physical Hazard b)Occupational Hazard c)Moral hazard d)Legal hazard How many days of grace period ,a insured get after expiry of one year? a)20days b)25days c)15days d)10 days When fire take place the primary duty of assured isa)To inform to the insurer b)To make all efforts to stop the fire c)To run away from the place d)Both B and C In Fire insurance,the assured must have insurable interest in the insured subject ata)At the time of insurance b)When loss occure c)Both A and B d)None of these In Life insurance,the assured must have insurable interest in the insured subject ata)At the time of insurance b)When loss occure c)Both A and B d)None of these
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Chapter 6
Marine Insurance
Q.1 What is marine insurance contract? Ans. A contract of marine insurance is a contract whereby the insurer undertakes to indemnify the assured in the manner and to the extent thereby agreed against marine losses. Q.2 What are the conditions of Marine insurance policy ? Ans. The conditions of marine insurance policies are as follows:1. Institute cargo clause 2. Name clause 3. Assignment clause 4. At and from clause 5. Lost or not lost clause 6. Commencement and Termination of risk 7. Touch and stay clause 8. Warehouse to warehouse clause 9. Valuation clause 10. Perils clause 11. Miscellaneous clause Q.3 What is the procedure of settlement of claims in marine insurance. Ans. This procedure is as follows:5. Presentation of claims 6. Scrutiny of claims 7. Determination of losses 8. Payment of amount of loss
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Q.4 What is the scope of marine insurance? Ans. The scope of marine insurance means that for which subject of insurance and marine risks insurance is effected by the ensurer. The scope of marine insurance may be expressed by the following chart :A. Insurance subject (i) Hull Insurance (ii) Cargo insurance (iii)Freight Insurance (iv) Liability insurance B. Risks insured (i) Perils of the sea (ii) Land risks (iii) Fire (iv) Jettison (v) War risks (vi) Barratry (vii) Burglary
Q.5 How can we classified the Marine Insurance Policies ? Ans. Marine insurance Policies can be classified into as follows :1.On the basis of time period A. Fixed period policy B. Voyage policy C. Combined policy/Mixed policy 2. On the basis of valuation A. Valued policy B. Unvalued policy 3. On the basis of Hull/Vessel A. Single vessel policy B. Fleet policy C. Ship construction policy 4. On the basis of Cargo A. Named policy B. Floating policy
Risk & Insurance C. All risks policy 5. On the basis of Inland transportation A. Marine-cum-errection policy B. Inland transit policy C. Passenger baggage policy 6. Miscellaneous types A. Freight police B. With interest policy C. Wager policy D. Currency policy
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Q.6 What are the type of marine insurance policy? Ans. Marine insurance policies may be classified on the basis of hull, cargo, terms, valuation, inland transportation. It can be expressed with the help of the following chart : Types of Marine Insurance Policies
42 Q7 Ans What is Floating policy? A floating policy is a policy which describes the insurance in general terms and leaves the name of the ship and other particulars to be defined by the subsequent declaration. What is inland transit policy? It is a policy which covers the risk of inland transportation of consignment from one place to another through the rail,road,airways or by registered postal service.
Q8 Ans

1 Marine insurance act founded ina)1945 c)1963 b)1960 d)1970
In Life insurance,the assured must have insurable interest in the insured subject ata)At the time of insurance b)When loss occure c)Both A and B d)None of these Marine insurance is the policy fora) One year b)Two year c)three year d)No time limit In Marine insurancea)Only element of security is involved b)Only element of investment is involved c)Both A and B d)None of these In marine insurance if the company takes a decision to reject the proposal, it will issue
Risk & Insurance a)Formal letter c)Regert letter 6 b)cover note d)All of these
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On receipt of premium money company issuea)Formal letter b)cover note c)Regert letter d)All of these
Case study
A american client was using Andra ltd. Cos logistics services but was insured by a generic Way inbsurance companys liability policy that covered their whole company (not logistics specific). They had a relatively minor traffic accident near their destination port in Europe. They needed assistance to check the cargo, review documentation with local authorities and ensure the safe onward journey of the cargo. Whilst attempting to process the claim they came across the following problems: There were delays and increased costs whilst claim information was collated and actioned over different time zones. As the policy was held in Europe all authorisations had to come directly from our client. The claim was minor but the company had a minimum excess fee payable of 5,000 Euros Due to poor communication, further delays and costs were encountered in arranging local support in China. The European resources of our client were stretched. Being the manager of Way insurance company how will you solve the problem.
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Chapter-7
Life Insurance
Q.1 What do you understand by life insurance? Ans. Life insurance refers to the contract of insurance on human life under which if any individuals death other than accident or happening of any event concerning to human life, a certain amount is guaranteed to be paid to assured or his/her legal representative thus Life insurance is a corporate effort to provide security against economic hazards of man. Q.2 What are the essential elements of life insurance contract. Ans. The essential elements in life insurance contract are: General elements as proposal, acceptance, free consent etc. Special elements as insurable interest, utmost good faith etc. Q.3 What is net premium? Ans. Net premium refers to the premium which is sufficient to discharge the payment of insurance claim, but no provision of other expenses are included in interest.
Q.5 What is combined life insurance policy. Ans. The combination of more than one policy as whole life insurance, endowment insurance and term insurance etc. Q.6 What is bonus in life insurance policy.
Risk & Insurance Ans. Bonus is a means profit sharing in case of life insurance policies bonus may be given as a return of the investment made by the policy holders. Bonus may be given by the authority if they earned profit after investing the amount of insurance premium on the different types of securities. Q.7 Write the characteristics of life Insurance? Ans. The main characteristics of life insurance are as follows :1. The policy is signed by the insurer only. 2. It is a promise to pay the money insured in considered to a premium ' 3. Insurance of human hazards is covered by life insurance policy. 4. Life contract is a contract between the insurer and insured. 5. The proposal for affecting an insurance policy is executed in the prescribed form. 6. The insurance premium is sometimes paid at a lump sum together or periodically. Q.8 What are the Basic types of life insurance policy? Ans. Under broad classification of life insurance, various types of insurance policies are issued by the insurers. There are so many types of life insurance policies that it is impossible to discuss them all. Some important types of life insurance policies are shown below through the chart:
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1 Foundation day of LICa)Sep1,1956 c)Oct17,1990
b)Sep11,1956 d)oct30,1990
According to Section-4(1) of life insurance Corporation Act,Maximum how many members should be in Board of directors Corporationa)16 b)14 c)15 d)11 The right of appointment of members of LIC lies witha) Central government b)State Government c)Both of the above d)none of the above The post of chairman in LIC is for a)Full time c)Some time full and some time part The Chairman of LIC is alsoa)Chief executive officer c)Company head
b)Part time d)Not fixed
b)Director d)None of the above
The meeting of the board of LIC is conducteda)Once in a month b)Once in a year c)Once in a half year
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Chapter 8
Development of Life Insurance in India

Q.1 What is postal insurance? Ans. Postal insurance was started in the year 1883 to provide the facility of life insurance to the employee of the post office department afterwards in 1888 it was extended to the employees of telegraph department. Q.2 What are the provisions relating to plans and process of nationalization ? Ans. These provisions are being clarified here:1. Transfer of assets and liabilities of existing life insurance business 2. Provident ,super annuation and other life funds 3. General effect of vesting life insurance business 4. Transfer of service of existing employees of chief agents of insurer to the corporation in certain cases 5. Transfer of service of existing employees of insurer to the corporation 6. Power to modify contracts of life insurance in certain cases 7. Compensation for acquisition of business 8. Contracts of chief agents and special agents to terminate
Risk & Insurance Q.3 What are the causes of nationalization of life insurance? Ans. At the time of nationalization ,the then finance minister of the Government of India, Shri C.D. Deshmukh had presented following arguments in favor of nationalization of life insurance :1. Means of collection of saving 2. Wind up of insurance companies 3. Fraud in investment 4. Safety of interest of insurance policy holder
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Q.4 What are the objectives of Nationalization of life Insurance. Ans. The main objectives of Nationalization of life Insurance are as follows:(a) Effective collection of savings of public. (b) Ample expansion of the message of life insurance among masses (c) Economical operation of insurance services (d) Appropriate channelization of insurance funds so that the target of safety of maximum income and investment may be achieved. (e) Formulation of suitable insurance plans for different groups. (f) Development of effective and dynamic insurance. (g) Maximum safety of insurance policy holder (h) Determination of suitable rates of insurance premium (i) End of expensive competition in the field of life insurance. (j) The best and prompt service arrangements to insurance policy holder.

1 Which type of insurance policy will protect a business from theft and forgery by its employees? a. burglary insurance
50 b. robbery insurance c. indemnity insurance d. liability insurance e. a fidelity insurance 2 Property insurance protects the property holder against a. direct losses and indirect losses. b. nondirect losses and indirect losses. c. direct losses and nondirect losses. d. direct loss. In property insurance terminology, direct losses are all except a. replacing property destroyed. b. repairing property destroyed. c. replacing third party property damaged. d. repairing property damaged.
Case study
In 2005, Mrs. Ayushi sharma's had carcinoma of left breast and she got treated. In 2008 both husband and wife took a Mediclaim policy with ZENOY Ltd.. The policy excluded carcinoma of left breast because it was pre- existing. Later, she was diagnosed with carcinoma of right breast, which was not a recurrence, according to the doctor of Omega Hospital, Jhalavad, but a new case of carcinoma, so she had a full treatment at Omega Hospital. He has submitted his claim of Rs. 80,000 to the Third Party Administrator of ZENOY. Ltd., i.e.,SEVA TPA Private Ltd. but they rejected the claim on the grounds thats he had claimed for the left breast, which was an exclusion in the Policy. As a friend of Ayushi Suggest her what to do for receiving the amount of the claim.
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Chapter 9
Life Insurance Corporation of India

Q.1 What is the mission and vision of LICI? Ans. The mission of LIC is to explore and enhance the quality of life of people of India through financial security by providing products and services of aspired attributes with competition returns and by rendering resources for economic development As a sequel of this pledge of dedication to the service of the country and cause of humanity . LIC was established in 1956. The vision of LIC is a transnationally competitive financial conglomerate of significance to societies and pride of India. Q.2 What are existing committees of the life insurance corporation? Ans. 1. Executive Committee 2. Investment Committee 3. Personnel Advisory Committee 4. Building Advisory Committee 5. Development Advisory Committee 6. Budget Advisory Committee 7. Zonal Advisory Board 8. Employees and agents relationship committee Q.3. What is the organizational structure of life insurance corporation? Ans. Organizational structure of life insurance corporation is devided in to four tier system :(i) Central office (1)
52 (ii) (iii) (iv) Zonal offices (7) Divisional offices (100) Branches and sub offices (2048 +satellite branches)
Q.4. What is life insurance funds. Ans. The quantity of investment of any institution depends on the available funds with it. The life insurance business, by nature is a business that it had sufficient amount for investment. This amount collectively is known as insurance funds. Q.5. What is the growth and development of LIC. Ans. The growth and development of LIC as a whole may be summarized in the following headings :1. Contribution to economic development. 2. Facilitates capital market 3. Creates a brand for trust and security 4. Ease in settlement of claims 5. Provides customer satisfaction 6. Productive growth 7. Enhance rural insurance 8. Expansion of overseas business Q.6 What do you mean by non-building agency system. Ans. A non building agency system is a marketing system by which an insurer sells its products through established agent who are already engaged in selling life insurance.

1 Life insurance plans area)Money back policy b)Jeevan asha policy
Risk & Insurance c)Bima plus policy 2 d)All of these
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What is not the advantage of Life Insurance? a)Saving plan b)Encourages and forces thrift c)Easy settlement d)No tax benefit`
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Chapter 10
Life Insurance Agents

Q.1 What do you mean by insurance agent? Ans. An agent in the sales person of the insurer by way of commission in consideration of his soliciting insurance business thus insurance agent means a person having licence under the provision of the act , who works to get insurance business from the insured . Q.2 What are disqualification for appointment of insurance agent. Ans. The following persons can not be appointed of insurance agent. 1. A person who is not a license holder under the provision of section 42 of insurance act. 2. A person who is already employed in any govt. or public enterprise. 3. A person who has not passed high school education or any other examination approved by the corporation. 4. A person disqualified on the ground of fraud misrepresentation or deceived others while dealing with insurance policies.
Q.3. When can an agency be terminated? Ans. Following are the situations when an agency can be terminated :1. Failure in securing minimum business 2. Termination of agency on cancellation of or failure to renew license 3. Termination of agency on account of certain disqualification as if agent is found to be an unsound mind, if he is found guilty of criminal offence etc.
Risk & Insurance 4. Termination of agency for certain lapses as if he acts adversely against the interest of the corp. or policy holder, if he fails to perform his work according to the satisfaction of competent authorities. 5. Termination of agency by notice.
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Q.4. Ans
What is minimum amount of business for a agent. It is essential for the agent of life insurance corporation ,according to section(9) of the agents regulation1972, thus he must secure minimum business every year as laid down by the corporation from time to time, otherwise his agency can be terminated. What are the qualities of An Ideal insurance Agent? The qualities of an Ideal Insurance agent are following1) To motivate the policyholders ton pay the premiums in time. 2) To assist in the process of nomination or assignment. 3) To prevent the policy lapsing 4) Not to interfere in the matters of other agents 5) To assist in getting the payment of claims by the assureds. 6) Rendering prompt and efficient services. 7) To follow all the rules and regulations. 8) To be loyal to the LIC. 9) To follow the directions of the Corporation. 10) To Update themselves in the basic technique of profession. 11) To strive for self development.
Q5 Ans
Q.6 Ans
Describe the qualification for issuing Insurance Agents Licence to an individual. The qualifications necessary before a license can be given are that the person be at least 18 years old.
56 have passed at least the 12th standard or equivalent examination, if he is to be appointed in a place with a population of 5000 or more, or 10th standard otherwise have undergone practical training for at least 100 hours in life or general insurance business, as the case may be, from an institution, approved and notified by the IRDA. In the case of a person wanting to become composite insurance agent, the applicant should have completed at least 150 hours practical training in life and general insurance business, which may be spread over six to eight weeks. have passed the pre-recruitment examination conducted by the Insurance Institute of India or any other examination body recognized by the IRDA.

1 What is the minimum age for an agent? a)18 yr b)16 yr c)15yr d)25yr What is the age for Rural career agent? a)Between 21 to 35 b)Between 18 to 24 c)Between 24 to 30 d)Between 20 to 25 Insurance proposal form is accepted or rejected bya)LIC b)Insurance agent c)Both of the above d)None of the above A person who represents the other person with the third party in commercial transaction isa)Insured b)Commercial agent c)Insurer d)None of the above
Risk & Insurance 5 A person who takes up agency from the insurance company to sell its policies on a commercial basisa)Insured b)Commercial agent c)Insurer d)Insurance agant
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Case study
Mr. Ram Prakash Verma had purchased a bus by taking a loan from Mittal Financers. The bus was being used as a private service vehicle, and not as a public transport one. It was insured under a comprehensive insurance policy issued by Swami Insurance Co. Ltd.. The bus met with an accident. Mr. Ram Prakash Verma Claim for the losses. Being the manager of Mittal Financer to whom eill you pay either Financer or Mr. Prakash and why?
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Chapter 11
Life Insurance Plans

Q.1 What are the advantages of whole life policies? Ans. The advantages of whole life policies are : 1. It provides economic security to the dependents of assured. 2. It helps to discharge the liabilities after the death. 3. The premium rates are lower in comparison to other policies. 4. It provides security to the insured throughout life. Q.2 What is endowment insurance plans. Ans. Endowment insurance plan is a plan in which sum assured is paid to policy holder on the maturity of insurance policy or during the period if the assured is dead. In the case of death of assured the amount of policy would be paid to nominee. Q.3 What is annuity insurance plan. Ans. Annuity insurance plans are beneficial for those persons who are willing to arrange a source of regular income for themselves or their dependents. Under these plans, companies contract to pay a certain amount regularly to the assured at fixed age or for whole life. Q.4 What is term insurance plan? Ans. Life insurance plans which provides only risk cover during a specified period without any survival benefit are called term insurance plans. The payment of insurance amount is made only on the death of assured in the prescribed duration.
Risk & Insurance Q.5 What are the Specific Life Insurance Plans? Ans. These are as follows:(a) Multi purpose insurance plan: The purpose of this insurance plan is to fulfill insurance requirements plan is to fulfill many insurance requirements with one insurance plan: (b) Guaranteed triple benefit plan: This plan includes three types of benefits: 1. Payment of excess amount than insured sum in case of death of assured in the between the insurance duration. 2. Payment of fixed amount on completion of insurance duration. 3. Payment of amount equal to insurance sum in case of death. (c) Mortgage redemption insurance plan: In this plan there is a provision of automatic payment of unpaid loans in case of death of debtor. (d) Jeevan Sathi or Double cover Joint life plan: Jeevan sathi insurance may be taken for the joint life of husband and wife and may be done for minimum amount of Rs.5000 and maximum 10,000. (e) Jeevan mitra or double cover endowment plan: In this plan, persons of the age of 18 to 50 yrs may be included. But those persons who have more than 35 percent extra mortality rate are not eligible for this plan. (f) Jan Raksha insurance plan: This plan was specifically started for the farmers and the provisions was made that even in the event of lapse of premium payment, the benefit of family safety in not ended. (g) Money back insurance plan: This plan explains to receive the payment in cash during the insurance period from time to time and also assures the security at the end of insurance period. Q.6 What are unit linked plan? Ans. There are some unit linked plans:
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60 1. Market plus: In the plan the assured can take this plan with or without risk cover. He can also choose the level of cover within the prescribed limits. 2. Money plus: This is a unit linked endowment plan which offers investment cum insurance during the term of the policy. 3. Fortune Plus: The level of cover will depend on the level of premium the assured agrees to pay. Q.7 Write down the characteristics of single premium limited payment whole life policy? Ans. The minimum sum insurable is Rs.10,000 the sum assured is payable on the death of assured. The premium for the assured sum is paid once or at of age to jointhe time of purchasing the policy. The age limit is minimum 15 yrs. and maximum 60 yrs. The premium money will be in large amount because the whole amount is remitted in one installment. Q.8 Write down the features of valued policies? Ans. The main features of a valued policy are :1. It becomes easier to evaluate the loss at the time of fire. 2. The amount of claim has nothing do to with actual loss. 3. Valuation of the risk is made at the time of affecting policy. 4. Such policy is issued on very rare cases where the valuation become difficult at the time of fire.
Q.9 What is Bima Plus policy? Write down it's benefits. Ans. Bima plus policy is designed to benefit the individual dealing/investing in capital market are earning higher income from stock market transaction benefit are: 1. On maturity: Bonus with market value of the fund.
Risk & Insurance 2. On Death : Basic sum assured together with value of the funds in units and bonus on certain terms and conditions. 3. In the event of death by accident: Additional sum on the sum assured and bonus on certain terms and conditions. Q. 10 What are group insurance scheme? Ans Group insurance schemes persuade the employees towards more production and hence more productivity in business by boosting their morals. These schemes are issued comparatively at a lower premium due to being economic in the administrative expenditure of a company , and being of a collective nature. Q.11 What is salary saving scheme. Ans salary saving scheme is not a specific scheme of life insurance but a facility which is available to employees working in an institution .Under this scheme an employee can opt for deduction of the insurance premium directly from the salary. The total amount of such deduction of all the employees is sent by the employer to the LIC with details of each employee. Q.12 Write the name of main insurance plans for physically handicapped. Ans. The main insurance plans for physically handicapped are as follows :a. Jeevan Adhar :- Under this plan any person can take insurance on his own life for securing future payment of funds to his dependents or nominee in lump sum or as on annuity. b. Jeevan Vishwas :- This is an endowment assurance plan with benefits payable either on date of maturity or on death , which ever is earlier. Q13 Ans What is salary saving scheme? Salary saving scheme is a scheme in which an employee can opt for deduction of the insurance premium directly from his salary. The total
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62 amount of such deduction of all the employees is sent by the employer to the LIC with details of each employee.
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1 Life insurance plans area)Whole life insurance plan c)Annuity insurance plan b)Endowment Insurance plan d)All of the above
The policy money and the bonus are payable toa) Nominee b)Any relative of insured c) Either A or B d)None of the above Under Whole life insurance plan ,payment of insurance sum is made Available aftera)5yr b)10yr c)After death d)5 To 10yr The objective of Endowment Insurance Plansa)Investment b)Security c)Both of the above d)None of the above
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Case study
The District Consumer Forum of Yamunanagar on July 11 ordered Oriental Insurance Company to pay Rs. 75574.62 and Rs 2513.05 with 12 per cent interest and Rs 5000 as compensation for harassment and litigation charges to Mr. G.D. Gupta of Mangat Pura, Jagadhri. Mr.Verma had purchased a Mediclaim policy from the ALPHA Insurance company on November 2000. He fell ill in January 2001 and was admitted in Sabu Hospital, Ajmer for Angiography on January 29th 2001, while purchasing the policy, Mr. Verma had submitted his E.C.G report and blood test report. The Insurance Company repudiated his claim by alleging that Mr. Gupta was a heart patient before the insurance of the policy as is apparent from the E.C.G report submitted by him while purchasing the policy. Being a friend of Mr. Verma what will you suggest him to get insurance claim.
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Chapter 12
Life Insurance Selling and Underwriting

Q.1. What is the process of insurance selling? Ans. Insurance selling is the personal selling of a concept turned product. An insurance agent may adopt the following process while dealing with prospective customer . These steps are as under :1. Prospecting 2. Pre approach 3. Presentation 4. Handling objections 5. closing sales 6. follow up Q.2. What is the procedure of underwriting the life insurance policy by the life insurance companies. Ans. Different steps regarding procedure of under taking the life insurance policy are as: 1. An interested person has to fill the prescribed proposal form. 2. A medical examination is done by recognized doctors of the corporations. 3. Agent, through whom the proceeding is carried on, dispatch separate report to the company. 4. Consideration of proposal form by the corporation . 5. Acceptance of proposal 6. Proof of age must be submitted along with the proposal form. 7. Payment of premium by the proposer
66 8. Issue of insurance policy
Q.3. What is bonus Notice? Ans. Bonus Notice is the intimation about Bonus earned by the policy. Q.4 What do you understand by pre loss objective? Ans. Important objective before a loss occurs include economy reduction of anxiety and meeting legal obligations: 1. The first objective means that the firm should prepare for potential losses in the most economical way this preparation involved an analysis of the cost of safety programmes insurance premium paid. 2. The second objective is the reduction of anxiety. Certain loss exposures can cause greater worry and fear for the risk management and key executive. 3. The final objective is to meet any legal obligations for example, govt regulations may require a firm to install safety devices to protect workers from harm and to label consumer products appropriately the risk manager must see that these legal obligations are met. Q.5 What are the advantages of retention? Ans. The major advantages of retention are: 1. Save money : The firm can save money in the long run it actual loses are less than the loss component in the insurers premium. 2. Lower expenses: The services provided by the insurer may be provided by the firm at a lower cost. 3. Encourage loss prevention: Because the exposure is greater incentive for loss pretenses. 4. Increase case flow: Case flow may be increased, because the firm can use the fends the normally be paid to the insurer at the beginning of the policy period.
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Q.6
What is citizen's charters is adopted by the General Insurance Industry? Ans. The citizens charter formulated and adopted by the general insurance industry embodies the industry's commitment in meeting the customer requirements for insurance cover and for rendering, efficient service, prompt insurance of documents and settlement of claims. Q7 Ans Name the factors affecting the Premium Rate. The factors affecting the premium rate are followingMortality rate Interest rate The rate of expenses Reserve fund Bonus or guaranteed additions Age and health conditions Types of policies Rates of tax rebate Competitors rate
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1 The sources from where prospective buyers of insurance can be prepareda)Friends and relative b)Telephone directories c)Existing customers d)All of the above A prospect may be converted into a customer bya)Effective closing of sale deal b)Giving information to customers c)Both of the above d)None of the above
Case
Mr.Naveen Shah a resident of Vidhyadhar Nagar, had taken a Mediclaim policy from the company Narayani Insurance Ltd. for his 10-year-old son Guddu. He was insured for Rs 20,000 for the period from October 11, 1999 to October 10, 2000. The complainant stated before the forum that in the first week of November, 1999, his son, felt severe pain in his abdomen. After the medical examination, a stone was found in his kidney. Thereafter, Raja was taken to the Garg Hospital for the treatment and there he underwent treatment in November 1999. The complainant stated that he had spent huge amount on his treatment but could not preserve the bills and submitted the bills for Rs 16,000. The company Narayan Insurance Ltd. pleaded that the said policy was obtained after concealment of the precious disease as the disease was pre-existing at the time of taking the policy . Being the manager of NarayaniLtd. Whay will you do?
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Chapter 13
Premium Calculation in Life Insurance

Q.1 What is premium? Ans. Premium is the monetary consideration for promise bought from insurer in the form of on insurance policy. Q.2 What is gross premium? Ans. This is the total premium that on assured has to remit with the insurer. Gross premium = Net premium + Insurance exp. Q.3 What are the types of premium? Ans. The premium is of four types: 1. Net premium- Means the premium for which the totals present value is equal to the present value of insurance policy. There are two types of net premium are there: (a) Net single premium- net single premium is that premium which is received by the insurer in a lump sum and is exactly adequate. (b) Net level premium: The net level premium is collected periodically while the net single premium is charged only once in the beginning of the contract. 2. Gross Premium: The gross premium is that premium which is charged by the insurer to meet the amount of claims and
70 expenses gross premium is make up with the composition of the following elements: Mortality, Estimated interest , Operating expenditure, Contingencies, etc. 2. Extra Premium: An extra premium is additional top of the normal premium that insured pays. This reflects the increased risk that the insurer is taking by insuring the life. Extra premium may be charged in any of the following manner:
(a) Rating up of age: In this methods the life assured is assumed to be a number of years older than his real age. (b) Flat extra premium: Under this method, a flat annual extra premium of so many rupees per thousand sum assured per year is charged. 4. Under Premium: Is charged on the group life insurance policies under this plan a large number of person are insured by a single policy without medical examination at a low cost or premium.
Q.4 Write short note on Net premium Ans. Net premium is a part of total premium which is essential for discharging the death or maturity claims. It is calculated on the basis of mortality rate on certain age is calculated with the help of mortality table. The mortality rate is multiplied by total sum insured. Then the interest to be occurred on this amount deducted from the total amount. It itself has 2 types: 1. Net single premium: This is the money deposited with the insurer for insuring the life and it is deposited on a lump sum. 2. Net installment premium: The money to be deposited by the assured as premium by installment after certain time interval. The
Risk & Insurance net installment premium shall always be more than the net single premium. Q.5 Write down the process of loading? Ans. Loading process includes the following steps: 1. Identify the expenses in detail such as preliminary expenses, advertisement repeating expenses, final expenses etc. 2. Provide for any expected emergency. 3. Divide or distribute total expenses among all the assureds of uniform term and aged groups. Q.6 Write short notes on value at Risk Analysis? Ans. VAL is the worst probable loss likely to occur in a given time period under regular market conditions at some level of confidence of assets such as mutual funds or a pension fund & is similar to the concepts of maximum probable loss in traditional property and liability risk management. For example: A mutual fund may have the following VAR characteristics : There is a 5% probability that the value of the portfolio may decline by Rs. 50,000 in a single trailing day. In this case the most probable loss in Rs. 50,000 the time period is one trading day, and the level of confidence is 95% based on a VAR estimate the risk level could be increased or decreased, depending on risk tolerance. Q7 Ans What is Loading? Loading refers to the process of including the expenses of operative costs and other kinds of expenses to net premium.
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1 The price charged by a life insurance company for an insurance contract is called a)Premium b)Interest c)Amount d)None of the above Net premium is calculated on the basis of a)Mortality rate b)Interest Rate c)Both of the above d)None of the above NSP isa)Non single premium c)Net service premium NIP isa)Net instalment premium c)Net income premium Gross premium isa)Net premium+gross premium c)Gross premium-Net premium
b)Net single premium d)Non service premium
b)New instalment premium d)New income premium
b)Net premium-Gross premium d)None of the above
Case study
Kunal Sharma had met the accident in Jaipur in 20011. The mishap had resulted in injuries to him, besides damages to the car. Kunal had the vehicle insurance plan of Icici Lombard.already purcha. He Gave a application for the claim of Rs.3 lakh.The company workshop had estimated a loss of over Rs 4 lakh as damages.The company mentioned that he was drunk so the company will not pay for the claim while this
Risk & Insurance was not the fact.infact company could not show any proof that hw was drunk while driving. A)Suggest kunal how to claim.
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Chapter 14
Settlement of Claims in Life Insurance

Q.1 Write down the essential conditions of assignment Ans. 1. Assignment should not be opposed to any law for the time being in force. 2. The assignor must be a person competent to contract. 3. The assignment should not be subject to any legal disqualification. 4. Assignment must be in writing and it must be very clear in the operative part of the endorsement that interest in the policy has been transferred and has become vested in the assignee. 5. It should be supported by consideration, either valuable or normal/meritorious. 6. The assigner must affix his signature to the assignment.
Q.2. What are the conditions when life insurance claim can be arised? Ans. The life insurance claim can arrive either 1. On the death of the policy holder. [death claim] 2. On the maturity of the policy. [maturity claim] 3. Survival up to a specified period during the term [survival benefit] Q.3. What are the conditions of settlement of insurance claims? Ans. There are two conditions of settlement of insurance claimsI. Death claims :- The process of settlement of claims in case of death is as under :
Risk & Insurance 1. 2. 3. 4. 5. 6. II. Intimation of death to office of the insurance company. Proof of death Proof of age Proof of title Death claim investigation Payment and discharge
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Survival/maturity claims- Normally assured himself receives the insurance amount in to claims by maturity and there is no need of specific formalities in the settlement of such claims.
Q.4. What happens if the nominee is minor? Ans. If Nominee or assignee of life insurance policy is a minor then a guardian can be appointed by the father of the minor for the assets including the insurance amount. Q.5. Who is insolvent assured? Ans. If assured has been declared insolvent by any court before the maturity of insurance, and this information is sent to the assured by the official receiver appointed by the court with a certified copy of the court regarding the appointment of an official receiver on his estate, then company will have to give the information to the official receiver regarding the maturity date of insurance policy and amount of insurance. Q6 Ans What is an insurance claim? An insurance claim is the demand for performance of the promise made by the insurer at the time of making the contract. Write the procedure of of claim settlement on the death of the assured The procedure to be followed in the settlement of death claim ia1.Notice of the death to the insurer
Q7 life. Ans
76 2.Submissin of claim 3.Submission of essential document 4.Proving the right of claim 5.Making Enquiries by the insurance company 6.Calculation of claim money 7.Payment of claim 8.Attestation of signature
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1 The sources from where prospective buyers of insurance can be prepareda)Friends and relative b)Telephone directories c)Existing customers d)All of the above
A prospect may be converted into a customer bya)Effective closing of sale deal b)Giving information customers c)Both of the above d)None of the above
to
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Chapter 15
General Insurance
Q.1 What are important milestones in general insurance. Ans. The general insurance business in India can trace its roots to the Triton Insurance Company Ltd. the first general insurance company established in the year 1850 in Culcutta by the British. Some important milestones in general insurance are: 1. Establishment of the Indian mercantile Insurance limited was set up in 1907, it was the first company to transact all classes of general insurance business. 2. Formation of general insurance council was formed in 1957, it is a wing of the insurance association of India to frame a code of conduct for ensuring fair conduct and sound business practices. 3. Establishment of the Tariff Advisory Committee The insurance Act was amended in 1968 to regulate investment and to set minimum solvency margins. 4. Nationalization of general insurance business in India: The general insurance business was nationalized by passing the act named the general insurance business act 1973 and effected from Ist Jan. Q.2 What is general Insurance? Ans. General insurance business means fire, marine or miscellaneous insurance business, whether carried on singly or in combination with one or more of them.
Risk & Insurance Q.3. State the arguments given against the nationalization of general insurance ? Ans. The main arguments against of general insurance are: 1. Establishment of govt. monopoly 2. Reduction in Efficiency 3. Nationalisation is not a Panacea 4. Limited economic utility
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Q.4. Give some reasons in favour of nationalization of general insurance? Ans. The main reasons in favour of nationalization of general insurance are: 1. Use of funds in planned economic development 2. To eradicate undesirable competition 3. To provide comprehensiveness to general insurance 4. To prevent departure of profits to foreign countries 5. Favourable in the interest of policy holders 6. Success story of Life Insurance Corporation. Q.5. Ans. 1. 2. 3. 4. What are the main milestones in the general insurance business in India? Some of the important milestones in the general insurance business in India are as under: Establishment of The Indian Mercantile Insurance Ltd. Formation of general Insurance council. Establishment of the tariff advisory committee. Nationalization of General Insurance business in India.
Q.6 What is liability insurance? Explain? Ans. Liability insurance is the major field of general insurance whereby insurer promises to pay the damage of property or to compensate the losses to the third party. The amount of compensation is paid directly to third party. The field of liability insurance includes workman
80 compensation insurance, third party motor insurance professional indemnity insurance and third party liability insurance etc in liability insurance, there may be various reasons for the arising of liabilities as accident to a worker at the workplace, defective goods, due to the uses of chemicals and other such substances in the manufacturing process. Q.7 What can be treated as proofs of death? Ans. Following may be treated as proofs of death :1.A statement by the claimant 2. A certificate from the doctor 3. A certificate of hospitals treatment 4. A certificate of employer 5. A certificate of burial or cremation Q.8 What is the procedure of payment of claims by maturity? Ans. The procedure of payment of claims by maturity is :a. Intimation by the company b. Forwarding the Insurance policy c. Discharge form d. Return of discharge form by the claimant e. Claim payment

1 inThe government nationalized the Life Insurance business in the country a)1950 c)1976 b)1956 d)1990
Risk & Insurance 2 The General Insurance Act1972, contains0 a)7 chapters and 39 sections b) 8 chapters and 39 sections c) 7 chapters and 35 sections d) 76chapters and 39 sections Registered office of GIC is ina)Mumbai c)Kolkata
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b)Delhi d)ahamdabad
Subsidariesof GICa)The national Insurance Company Ltd.,Kolkata b)THE New India Insurance Company Ltd.,Mumbai c)Both of the above d)None of these General insurance is a)Personal accident insurance c)Aviation insurance
b)Crop insurance d)All of the above
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Chapter 16
The General Insurance Corporation of India

Q.1 What are the objectives of General Insurance corporation of India. Ans. The general insurance corporation of India bears the responsibility of fulfilling the following objective: 1. Making provision for grants to its subsidiaries. 2. Advising the subsidiaries in respect of management cost and commission. 3. Advising the subsidiaries in the investment of funds. 4. Advising the subsidiaries in conducting the insurance business with a view to excel comptetition. 5. Starting the business of general insurance as and when it is felt essential. Q.2 What are the main functions of GICI? Ans. The functions of GICI as laid down in the act were :1. Carrying on of any part of general insurance business. 2. Aiding assisting and advising the acquiring companies in the matter of setting up of standards of conduct and sound practice. 3. Advising the general insurance companies in the matter of controlling their expenses. 4. Advising the acquiring companies in the matter of investment of their funds.
Risk & Insurance 5. Issuing directions to acquiring companies in relation to the conduct of the general insurance business.
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Q.3
What are the General main objectives of the insurance conducted by the GICI and its subsidiary companies? Ans. It may be expressed with the help of a chart given as under: A. General insurance business conducted by the GICI : 1. Hull insurance 2. Aviation insurance 3. Crop insurance B. General Insurance Business conducted by the subsidiary companies :1. Marine insurance excluding Hull insurance 2. Fire insurance 3. Miscellaneous insurance excluding crops and Aviation insurance C. Miscellaneous insurance Business :1. Cattle Insurance 2. Motor Insurance 3. Workmens compensation Insurance 4. Burglary Insurance 5. Group/personal accidents and sickness Insurance. 6. Motor cycle /scooter Insurance 7. Machinery Insurance 8. Fidelity Guarantee Insurance 9. Money Insurance 10. Hospitalization and Domiciliary insurance Q.4 What are the main roles of GICI ? Ans. The main role of GICI are as under :-
84 1. To conduct General Insurance business 2. Development role the corporation tries to introduce insurance plans in new areas 3. Advising role the corporation fulfills the advising role for the subsidiary companies 4. Controlling role 5. Superintending role
Risk & Insurance
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Chapter 17
Liberalisation and Insurance

Q.1. What are the weakness in the growth of Insurance. Ans. There are some weakness in the growth of Insurance are : 1. Low level of Insurance penetration 2. Low level of Insurance density 3. Poor quality of insurance services 4. Lack of qualitative and quantitative insurance products. 5. Low productivity 6. Inadequate application of I.T. 7. Rigid control over performances 8. Political interference 9. Lack of sense of belongingness 10. Defective appointment policy 11. Monopolistic protection Q.2. What is Economic liberalization? Ans. The Economic liberalization is an encouraging factor of globalization. The de-licensing of industries remove of restriction on growth, opening up of industries earlier reserved for the public sector, import liberalizations, liberalization of policy towards foreign capital and technology, etc. could encourage globalization of Indian business. Q.3 What are the characteristics of economic liberalization. Ans The main characteristics of economic liberalization:1. Rapid economic development 2. Competitive approach 3. Wide scope and activities 4. Vast process 5. Reformative economic programme 6. International economic collaboration
86 7. Consumer oriented culture 8. Structural adjustment
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Chapter 18
The Insurance Act, 1938

Q.1. What are the main objectives of the insurance Act. 1938 ? Ans. The main objectives of the insurance Act. 1938 are as follows :1. To provide strict state control over insurance business. 2. To prevent the growth of mushroom companies 3. To enforce working on sound principles 4. To prevent misappropriation of funds and to protect the assets. Q.2. What are the main provisions of the Act.? Ans. The main provisions of the Act 1938 have been discussed under the following headings :1. Wide scope 2. Requirements as to capital 3. Deposits 4. Registrations 5. Submission of returns 6. Prohibition of rebates, restriction of commission 7. Licensing of Insurance agents 8. Investment 9. Prohibition of loan 10. Investigation 11. Duties and powers of the controller of Insurance 12. Penalties Q3 Ans Explain the scope of insurance act. The Insurance act applies to all types of insurance-life,fire,marineetc. Done by companies incorporated anywhere.It governs the provident companies,mutual offices and cooperative societies.
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Q4 Ans 1)
2)
What are the duties and Power of the controller of Insurance? The duties and Power of the controller of Insurance are followingGeneral duties and Power-The controller is authorosed to granr the certificate of registration, to inquire about deposit, and to receive reports and accounts from the insurers.He is empowered to issue licenses to agent and to accept the amalgamation and reorganization. Special duties and Power
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Chapter 19
The Insurance Regulatory and Development Authority

Q.1. What is IRDA? What are the objectives of IRDA ? Ans. The IRDA is the insurance regulatory and development authority. The IRDA was set up :1. To provide for establishment of an authority 2. For protecting the interest of holders of Ins. Policies 3. To regulate , promote and insure orderly growth of the insurance industry 4. For matters connected there with or incidental thereto. Q. 2. What is the mission statement of IRDA. Ans. The mission statement of IRDA is given as under : 1. To protect the interest of and secure fair treatment for policy holders; 2. To bring about speedy and orderly growth of the insurance industry (including annuity and superannuation payments), for the benefit of the common man, and to provide long term funds for accelerating growth of economy; 3. To set promote, monitor and enforce high standards of integrity, financial soundness, fair dealing and competence of those, it regulates; 4. To ensure that insurance customers receive precise, clear and correct information about products and services and make them aware of their responsibilities and duties in this regard; 5. To ensure speedy settlement of genuine claims, to prevent insurance frauds and other malpractices and put in place effective grievance redressal machinery;
90 6. To promote fairness transparency and orderly conduct in financial markets dealing with insurance and build a reliable management information system to enforce high standards of financial soundness amongst market players; 7. To take action where such standards are inadequate or ineffectively enforced; 8. To bring about optimum amount of self regulation in day to day working of the industry consistent with the requirements of prudential regulations. Q.3 What are the causes of nationalization of life ins. Ans. At the time of nationalization Finance Minister of the Govt. of India Shri C.D. Deshmukh had presented following arguments in favors of nationalization of life insurance. 1. Means of collection of savings. 2. Wind up of insurance companies. 3. Fraud in investment 4. Safety of interest of insurance policy holder. Q.4 What is the annual Report of insurance policy. Ans. Life insurance corp. will communicate a report to the central govt. at the end of every in financial year. This report will be in the prescribed format and this will also include the description of differ activities to be done in the next year. Q.5 What are the liberalization efforts made in India in the insurance factor? Ans. The following steps have been taken to liberalise the insurance sector in India1. Setting up of Malhotra Committee 2. Passing of insurance regulation and development act 3. Amendments in the related acts 4. Constitution of insurance regulatory and development 5. Declaration of rules
Risk & Insurance 6. Setting up of insurance consultation committee 7. Application for license and issue of license 8. Appointment of evaluators 9. Fixations of village and social insurance business limits 10. Fixation of limits for investment funds 11. Fixation of capital funds 12. Fixation of capital ratio for domestic companies 13. Exemption to banks/institutions to enter into insurance fields
14. Fixation of code of conduct
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15. Approval to new products developed
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Chapter 20
Prospects and Challenges in Insurance Sector

Q.1. What is the prospectus of insurance sector? Ans. The prospectus of insurance sector may be understood with the help of following: 1. Potential Growth in Insurance business 2. Emerging Role of Public and private Insurance Companies 3. Potential Contribution of Insurance Premium to GDP 4. Significant Opportunity for life and non life Insurance 5. Contribution in Urban and Rural Insurance 6. Enormous Job/ Professional opportunities 7. Vast untapped Market 8. Mandatory Insurance 9. Variety of New products for the Customers 10. Contribution in the growth of Indian Economy 11. Strategic Tie-up with banks 12. Prospects regarding Better Customer services 13. Huge Inflow of funds 14. Premium Rate Reduction 15. Revolution in service sector 16. Mega projects 17. Commodity products 18. Potential market to grow 19. Other future Prospects
Risk & Insurance
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94

1 All of the following are financial risks which may be faced by business organizations EXCEPT (a) interest rate risk. (b) commodity price risk. (c) product liability risk. (d) currency exchange rate risk. All of the following can be classified as casualty insurance EXCEPT (a) marine insurance. (b) general liability insurance. (c) workers compensation insurance. (d) burglary and theft insurance. What is the methods of handling risk (a) avoidance (b) loss control (c) retention (d) noninsurance transfers (e) insurance
2.
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Differences Between Various Terms
1.
Distinctions between Insurance and Gambling: There is a basic and original difference between insurance and gambling, which can be understood with the help of the following table: S.No. Basis of Difference 1. Objective Insurance Gambling Gambling may be effected from many objectives, for example, to earn profits, to become millionaire quickly for the purpose of entertainment, etc Gambling is related with probable risks in which there may be possibility of both profit and loss. Whereas in gambling, gambler intentionally takes the risks. Risk starts when person starts to gamble, not before that.
2.
3. 4.
5.
Insurance is done to have security from the probable risks relating to any subject or person and object. Types of risks Insurance can be done only for pure risks under which there may be any loss to any insurable subject or object. Security from The objective of insurance is risks get safety from the losses. Time element Insured person takes the in the existence decision to be insured due of risks to existence of risks. Hence, risk exists even before the insurance. Principles Insurance is operated by based certain basic principles, arrangements such as, principle of utmost good faith, principle of cooperation, principle of
Gambling is based on non-ethical foundation. It is operated with an intention of deceit without any principles.
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probability, principle of the law of large numbers, etc. Role of luck In insurance, luck has no significant role. Insurable Insurance is impossible if interest insured person has no insurable interest in the subject of object. Legal enforce Insurance contracts have ability legal recognition. Related parties may enforce contracts with the help of law. Legality Insurance has full legality due to its recognition under the provisions of the Act. To receive Insured person gets payment compensation if insurable subject or object gets damaged during the contract. Receiving Insurance contract is double amount basically in indemnification arrangement, hence, there will be no chance to get amount more than the insured sum or actual losses. Social status Insured person has the social status of being a reliable person in the society. Promotion of Insurance companies national basically invest the amount interests received from the insured
6. 7.
In gambling, a person gives more importance to luck. In gambling, there is no insurable interest.
8.
Gambling agreements are declared as void under section 30 of the Indian Contract Act.
9.
10.
To gamble and to render any help for it is legal crime. That is why gambling is a crime with the view of legality. In gambling one party may receive the payment if it wins or has to pay if loses.
11.
But in gambling, winning party not only gets the winning amount be also receives the amount it used for the gambling purpose.
12.
Whereas gambler is seen as neglected person in the society.
13.
Through gambling there is no promotion of the national interests.
Risk & Insurance

persons as premiums in the areas on priority basis. Hence, national interests get promoted. 2. Difference between General Contacts and Insurance Contracts: The difference between general contract and insurance contract may be explained as under: S.No. Basis of General Contract Insurance Contract Difference 1. Enforcement General contracts are governed In insurance contracts it is of the Act through the provisions of the essential to include the Indian Contract Act, 1872 provisions of the related insurance acts in addition to the provisions of contract act. 2. The Doctrine The doctrine of caveat emptor Insurance contracts are the of Caveat applies in which one party of a contracts based on utmost Emptor contract is not bound to explain good faith. In which, insured the other party each and every person and insurance aspect relating to the subject company both are bound to matter of the contract, explain all important facts relating to the subject matter of the contract and conditions contained in the insurance proposals. 3. Breach of In general contracts, if one party In insurance contracts, Warranty breaches the warranty, then other warranties are like party has the right to get conditions. If insured compensation, but he cannot void breaches the warranty then the contract insurer can claim for voiding the contract. 4. Objectives General contracts are made There is no question of generally for mutual profits. It is a profits in the insurance separate issue that afterwards, contracts. The objective is to
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profits are generated or not. get security for the probable risks in the future. Insurance contracts are based on the principle of compensation that is why there will be no question to get excess amount as compensation than for actual losses or insured value.
3.
Difference between an Indemnity Contract and a Life Contract: The difference may be expressed in an effective manner with the help of the table shown below: S.No. Basis of Indemnity Contract Life Contract Difference 1. Insurable In indemnity contracts, In life insurance contracts, Interest insurable interest is essential at insurable interest is the time of insurance as well as essential at the time of at the time of damages as in the insurance and not essential fire insurance. In marine afterwards. insurance, insurance interest is not there at the time of insurance, but its existence is compulsory at the time of losses to subject of interest. But, once, the losses occur, insurable interest becomes a necessity even before the losses actually occur. 2. Duration of These contracts are normally In life contract if it is an Insurance effective for one-year duration. endowment or duration, Contract then it may be effective for 10, 15 or 20 years. In lifetime insurance contract,
Risk & Insurance

its duration may be up to the death of assured person. Thus, the duration of life contracts is much more than the indemnity contacts. In life contract if it is certain for the probabilities to happen. If life is insured for 15 years, it may be possible that either the assured may be alive or may be dead during this period. There are no such diversities in life insurance as in the insured units in indemnity contacts. Although, there are so many diversities found among human beings in the world, but all are same with a view of their structure. The classification of risks is easier in the life contracts due to the common factor effecting the existing human beings i.e. death. In life contacts, risks may be calculated on the basis of classification of groups as the age group, health, diseases, etc.
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3.
Nature of Risk
4.
Classification
In indemnity contracts, the probability of losses due to risk relating to insurance subject is uncertain. It means that losses may or may not happen to the insured subject during the insurance period. In indemnity contracts, there are different elements influencing the risks to the insurance subjects of different nature on different scales. There are wide diversities in the nature of insured subjects that is why the classification of risks is very difficult for the insurance company.
5.
Calculation of Risks
Separate calculations of risks are done in indemnity contacts due to different risks affecting different units.
6.
Premium
As risks are calculated in the Rates of premium are not
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Determination indemnity contracts for different units, thus, rates of premium are also different for different subjects of insurance. different on the personal basis in the life contracts. They are determined separately on the basis of different age groups and insurance duration. The principle of indemnity does not apply in life contracts. Hence, every person can determine the insured sum on the basis of economic condition or needs. In life contracts, double insurance is practical because every person has the right to determine his insured sum and hence he can take more than one insurance policy. There is a reverse situation in life contracts. The insurance company is responsible, either after death expiry of certain time period, whatever is mentioned in the insurance proposal form. Thus, the origin of liability is certain in life contract.
7.
Insured Sum
8.
Double Insurance
The contracts are based on the principle of indemnity. According to this, actual losses or the value of insured subject is indemnified in case of any losses or damages. That is why neither under-insurance nor over-insurance is rational. Double insurance is impractical because in case of any damages or losses to the insurance subject, only actual losses are indemnified in indemnity contracts.
9.
Origin Liability
10.
Surrender Value
of In indemnity contracts, insurance company is bound only when there is any loss or damages to the subjects of the insurance within the duration of the contract due to certain reasons. If there have been no losses to the insured subject during this period, then, insurance company is not responsible. Surrender means to surrender Normally, these contracts the insurance policies by the are of long-term period. It assured insurer. As these might be possible that the
Risk & Insurance

contracts are of very short term economic condition was period, thus, there is no good at the time of taking question about their surrender. insurance then; insurance might be of a higher premium. But, if it is not possible now to continue it, then policy may be surrendered to life insurance corporation and the value according to the rules may be received. The doctrine of subrogation is Life contracts are not based applied in indemnity contracts on the principle of if insurance company indemnity. Thus, the indemnities for the losses doctrine of subrogation has occurred to the insured subject no significance in life due to some reasons in certain insurance. time duration. Hence, insurance company has the right to get the amount of damages by the third party. There is only the safety element In life contracts, insurance in indemnity contracts. The company pays the amount project is to get indemnification case of death of assured in case of losses due to certain person or expiry of the causes to the insured subject in term of insurance policy. a particular time period Thus, it provides safety to the assured. The assured also gets bonus declared by the company every year. Hence, it also encourages the investment elements in the assured. Nomination is not possible in In life insurance, insurable the indemnity contracts interest is essential at the
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11.
The Doctrine of Subrogation
12.
Safety and Investment
13.
Nomination and
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Endorsement because nomination is done only in life contracts where it decides that after the death of the assured person, nominated person can avail the insured sum. Endorsement may be done in indemnity contracts but prior permission is essential from the assured person. The reason is that in indemnity contacts, existence of insurable interest is essential at the time of insurance. time of insurance and not afterwards. Hence, assured has both, nomination and endorsement facilities in life contracts. In nomination, nominated person may get the insured amount in case of death of assured person. The life assured can change the nomination during his life time. In endorsement, endorsee may get the benefits of insurance policy even if the assured person is alive. In endorsement, ownership of insurance policy is transferred immediately and the assured cannot change it.
DIFFERENCE BETWEEN LIFE INSURANCE AND FIRE INSURANCE
There are various differences between life insurance and fire insurance which are shown as under: S.No. 1. 2. Basis of Difference Subject Difference Object Life Insurance The subject matter of insurance is human life. The object of life Fire Insurance The subject matter is any physical property or assets. The object of fire insurance
Risk & Insurance

insurance is to secure human life against future uncertainties. Life insurance has the elements of protection or security and both investment. Insurable interest must be present at the time of effecting the policy but not necessary when the claim falls due. The duration of life insurance policy usually exceeds a year. Life insurance is not indemnity insurance. The sum assured is paid either on the happening penning of certain event or on maturity of the policy. Classification of risk in life insurance is much easier. Life insurance policy has a surrender value is to secure the assets or property against fire. Fire insurance has only the element of protection or security and not the element of investment. Insurance interest for the related subject must be present both at the time of effecting policy as well as when the claim falls due. The duration of the fire insurance policy usually does not exceed a year. Fire insurance is indemnity insurance. The loss due to fire is an indemnified subject to the maximum limit of the policy amount.
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3.
Element
4.
Insurable Interest
5.
Duration
6.
Indemnity
7.
Classification of risk
Classification of risk in fire insurance is very lllll.
8.
Surrender Value
9.
Policy Amount
10. 11.
Payment of Premium Moral Hazard
Fire insurance policy does not have any surrender value. One can insure for any In fire insurance, the amount in life insurance. amount of the policy cannot be more than the value of the subject of insurance. Payment of premium is Lump sum payment of made in installments. premium is made. Life insurance lacks In fire insurance, moral
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moral hazard. hazard is more influential.
5.
Group Insurance Versus Social Insurance: S.No. 1. Basis of Difference Base Group Insurance Social Insurance Group insurance is Social insurance related based on the contract. system is according to the Act. Premium is determined Under this, the rate of through risk and contribution is not insurance characteristics. determined, but is predetermined by the government. Subject matter of group There is no question as to insurance is managed by determination of subject the contract. matter. What facilities will be available to the contributor, this is managed by the Act. of There is a direct There is no direct and relationship of insurance relationship of contribution premium with facilities. with facilities availed. Group insurance is There are social interest and operated with business welfare objects in social point of view. insurance.
2.
Contribution
3.
Facilities
4.
5.
Relation Contribution Facilities Operation
6. Distinction between Whole Life Policy and Endowment Life Policy:
S.No.
Basis of Difference
Whole Life Policy
Endowment Life Policy
Risk & Insurance

1. Object Its object is to manage the money for dependents after death. Insurance is done for whole life. Payment is made only after the death of assured. Right to get payment is available only after death. It has an object to make arrangement of a fixed amount after certain duration. Insurance is done for certain time duration. It is made after completion of certain time duration. There is an arrangement that dependents of assured can have the insured sum if assured is dead during the insurance period. Rate of premium is comparatively higher. The system of endowment policy is adopted to encourage savings.
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2. 3.
Duration of Insurance Payment of Insurance Amount Double Benefits
4.
5.
Rate of Premium
6.
System
Rate of premium remains comparatively low. It is a compulsory social need and this system is adopted keeping in view the direct and remote consequences of untimely demise.
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B.B.A (Part III) EXAMINATION, 2011

(Faculty of Commerce) (10+2+3 Pattern) Second Paper
RISK AND INSURANCE MANAGEMENT

Time: Three Hours Maximum Marks: 100 Question Nos. 1 and 2 are compulsory. Attempt three questions from Part III
Note: (i)
No supplementary answer-book will be given to any candidate. Hence the candidates should write the answer precisely in the main answer-book only. All the parts of one question should be answered at one place in the answerbook. One complete question should not be answered at different places in the answer-book.
(ii)
Part-I
1.
Answer the following questions in 50 words each: (i) Insurance is co-operative device. Comment. (ii) What is a Pure risk? (iii) What do you mean by Fidelity Guarantee Insurance?
Risk & Insurance What are Under-Insurance and Over-Insurance? Describe Endowment Life Policy. Distinguish between Nomination and Assignment of Policy. Write the definition of an Insurance Agent mentioned in Insurance Act, 1938. (viii) What is Net Premium in Life Insurance? (ix) What ARE Marine Losses? (x) What is IRDA? (iv) (v) (vi) (vii)
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Part-II
2.
Answer the following questions in 100 words each: (i) Write down the primary objectives of Insurance. (ii) Write a note on cancellation of insurance agents license. (iii) What is the difference between Fire Insurance and Marine Insurance? (iv) What are the qualities of an ideal Insurance Agent? (v) Write a note on Settlement of Claim in General Insurance.
Part-III
Answer any three questions:
3. 4. 5.
Write in detail the social and economic significance of Insurance. Discuss in brief the main principles of Insurance. What is meant by Individual Insurance Agent? Describe the procedure for issuing Insurance Agents Licence to an individual. What do you mean by Fire Insurance Contract?
6.
108 7. Write an essay on Economic Liberatlisation and Insurance.
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109
Risk and Insurance Management
Unsolved Paper 2010

Time Allowed : 3 Hours Attempt the five question in all. Question Nos. I and 2 are compulsory. Part-I M.M. 100
Q.1
Answer all ten question. All question carry equal marks. (Answer limit upto 50 words each) 2 x 10 =
20
(i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix)
Insurance provides 'Mental Peace' Comment. What is speculative risk? Explain mortality Table. Write four objective of IRDA. Describe the meaning of 'Hazards' What is 'Jettison'. Name the principles applicable in the fire insurance contract. Name of subsidiary companies of GIC. Differentiate Insurance and Assurance.
110 (x)
Q.2
What is "Tariff Rates".

Answer all five question. All question carry equal marks (Answer limit upto 100 words each) 5 X
4=20
(i)
Write down the difference between General Contract and Contract of Insurance.
(ii)
'Insurance is an investment' Comment.
(iii) Classify the 'Insurance Risk' (iv) Write down four prominent challenges and four opportunities in Indian Insurance Industry. (v) Discuss the qualities of an Insurance agent.
Part-II Attempt any three question. Each question carries 20 marks.
Q.3
Define Insurance. Describe the social and economic significance of Insurance in Indian context.
Q.4
What is Reinsurance? Explain the methods of Reinsurance.
Q.5
What factors are considered in calculating premium rate in Life Insurance? How premium is determined ? Explain ?
Q.6
Explain the different policies taken under the insurance in details.
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Q.7 Q.8 Q.9
Write an essay on IRDA. How many types of marine loses are there? Explain with suitable examples. Write down the impact of opening up of Insurance Sector for private and foreign companies in India.
112
Unsolved Paper 2009

Time Allowed : 3 Hours Attempt the five question in all. Question Nos. I and 2 are compulsory. M.M. 100
Part-I
Q.1
Answer all ten question. All question carry equal marks. (Answer limit upto 50 words each) 2 x
10 = 20
(i) (ii) (iii) (iv) (v) (vi)
Define 'Pure Risk'. Define 'Assurance.' Explain 'ex-gratia calims' . Explain 'Nomination'. Name 5 marine losses. Foundation day of LIC.
(vii) Corporate Motto of LIC. (viii) Full form of IRDA. (ix) (x)
Q.2
Define 'Fire Insurance' Who is an insurance agent ?
Answer all five question. All question carry equal marks (Answer limit upto 100 words 5 x 4 = 20 each)
Risk & Insurance (i) (ii) (iii) (iv) (v) Distinguish between surrender value and paid up value. Distinguish between 'Reinsurance and Double insurance'. Explain death claims. Write a note on "Loss prevention Association of India. Write the names of "Public Sector General Insurance Companies".
113
Part-II
Attempt any three question. All question carries 20 marks.
Q.3 Q.4 Q.5 Q.6 Q.7 Q.8
Explain the various types of risks. Also explain the management of risks. Critically examine the main principles of Life Insurance. Discuss the essentials of Insurance Contract. Explain the qualities of an Ideal Insurances Agent. Discuss the meaning and scope of fire insurance. Discuss the organization and working of general insurance companies in India with special references to Public Sector Companies.
Q.9
Write an essay on emerging challenging prospects of insurance in India after of Insurance Industries.
privatization
114
UnSolved Paper 2008

Time Allowed : 3 Hours Attempt the five question in all. Question Nos. I and 2 are compulsory. M.M. 100
Part-I
Q.1
Answer all ten question. All question carry equal marks. (Answer limit upto 50 words each) 2 x
10 = 20
(i) (ii)
What is social insurance. Write a short note on significance of insurance from a family's point of view.
(iii)
Explain the four main distinctions between contract of life insurance and contract of indemnity.
(iv)
Explain the procedure or getting duplicate policy when the original life insurance policy is lost.
(v)
Enumerate the main characteristics of group insurance scheme.
Risk & Insurance (vi) (vii) Briefly explain the Ex-gratia claims. What do you understand by unit link insurance plan?
115
(viii) State and disqualification of the agent of Life Insurance corporation of India. (ix) (x) What do you mean by Fire Insurance? Describe the functions of Insurance Regulatory Authority. and Development
Answer all five question. Each question carries 4 marks. (word limit upto 100 words each) 5 x
4 = 20
(i) (ii) (iii)
Distinguish between 'Insurance' and Assurance' Life insurance is insurance as well as investment comment. What do you mean by re-insurance? How does it differ from double insurance?
(iv) (v)
Enumerate the functions of the life insurance agent. Explain in brief the factors affecting the rate of premium.
Part-II
Attempt any three question. All question carry equal marks.
Q.3
What do you mean by risk? Clearly state the characteristics of insurable risk and discuss and risk management process.
116
Q.4
Discuss the main principles of insurance.
Q.5
What is Life Insurance? Describe the procedure of affecting life insurance policy.
Q.6 the
What is an insurance claim? State the procedure of claim settlement on the death of assured life.
Q.7
Discuss clearly the main conditions of fire insurance policy.
Key words
Insured: The party or the individual who seeks protection against a specific risk and entitled to receive payment from the insurer in the event of happening of stated event,is known as insured. Insurere: The party which promises to pay indemnity the insured on the happening of any contingency is known as insurer. Premium: The amount which is paid to the insurer by the insured in consideration to insurance contract is known as premium. It may be paid on monthly, quarterly, half-yearly, yearly or as agreed upon. Insured sum: The sum for which the risk is insured is called the insured sum.
Risk & Insurance Chances of loss: It is the probable number of times in any given number of exposures that loss will occur. Policies- Policies are those in which insurer promises to reimburse the insured for losses suffered during the term of the agreement. Beneficiary- The one who receives the insurance proceeds when death occurs. Objective risk- Objective risk is the relative variation of actual loss from expected loss. Subjective risk-Subjective risk is uncertainty based on a persons mental condition or state of mind. Hazard-Hazard is a condition that increases the chance of loss to the subject of insurance, or increases the uncertainty of losses. Agreement - When two parties are mutually agreed on a particular subject it is called an agreement. Insurance Insurance is a tool to spread the loss caused by a particular risk over a number of person who are exposed to and who agree to ensure themselves against the risk. Risk Risk is uncertainty of financial loss. Warranty - The insured's guarantee that the facts are as stated in reference to an insurance risk or that specified conditions will be fulfilled to keep the contract effective. Proximate cause-The direct cause of loss; exist if there is an unbroken chain of events leading from one act to a resulting injury or loss.
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118
Remote cause-The cause that put no effect on the happening of losses, known as remote cause. Subrogation Subrogation means to take place of another. Propsal- The act of offering or suggesting something for acceptance, adoption, or performance. Cover Note-Document evidencing issuance of an insurance policy and gives a summary of the given in a certificate of insurance. Original insurer-The insurer who insures the assured is called original insurer. Reinsurer-The insurer who accepts the part of any risk is called reinsurer. Nominated person-The person who has the right to get the amount of life insurance policy after the death of the assured person. Assignment-Assignment means to delegate the rights of the assured to any other person whose name is included in the insurance policy. Renewal-The continuation of in-force status that is caused by the payment of a premium Grace period-Extra time allowed for the payment of premium. Lessor-The owner of real property who rents it to a lessee pursuant to a written lease. Lessee - The person renting property under a written lease from the owner . Bailees-One to whom personal property is entrusted for a particular purpose by the bailor according to the terms of an express or implied agreement.
Risk & Insurance
119
Surrender value- The amount available in cash upon cancellation of an insurance policy, usually a whole life policy, before it becomes payable upon death or maturity. also called cash surrender value or cash value. Regret letter- A letter sent to a subscriber for new securities intimating that none of the amount applied for has been allotted to him. Fleet-Fleet means a number of ships, aircraft, buses etc moving or working under one command or ownership. Memorandum of insurance- A Memorandum of Insurance (MOI) is a document evidencing insurance coverage. Bonus- A payment or gift added to what is usual or expected, in particular. Authority- The power or right to give orders, make decisions, and enforce obedience. Convertible- Able to be changed in form, function, or character. Provisiona clause in a legal instrument, a law, etc., providing for aparticular matter. Nationalisation- Takeover of privately owned corporations, industries, and resources by a government with or without compensation. Wind up-. The act of bringing something to an end. Fraud-Making a material misrepresentation or failing to disclose a material fact in order to induce another to give up something of value. Agency- A business or service authorized to act for others, Expansion- expansions enlargement; increase; spread; development.
120
Overseas business-Business which is connected with another country. Zonal office-Office which is divided according to zone. ExecutivePerson or group appointed and given the responsibility to manage the affairs of an organization and the authority to make decisions within specified boundaries. Personnel- An administrative division of an organization concerned with the body of persons employed by or active in it and often acting as a liaison between different department NASSCOM-The National Association of Software and Services Companies (NASSCOM) is a trade association trade association of Indian Information Technology and Business Process Outsourcing industry. Reinstatement-The act of an insurer putting an insurance policy back into effect after it has lapsed because of missed premium payments. IRDA-Insurance regulatory and development authority.
Nominee- Nominee is the person whose name is registered by insured for the recovery of claim in the particular situation. AIDAS-(Attention,Interest,Desire,Action,Satisfaction) An approach used by insurance agents. Praposal form-It is a form which is given by an insurance company to the person during issuing the procedure of issuing insurance policy.
Risk & Insurance Prospectus-It is a document ,which gives details regarding set up of the life insurance company,plans or features of the life insurance productsand other terms and conditions. Prospect-A person who wants to buy insurance. NAIC-NATIONAL Association of Insurance Commissioners Mortality- Mortality is the condition of being mortal, or susceptible to death. Estimated interest- To calculate approximately (the amount, extent, magnitude, position, or value of something. Operating expenditure- A company's expenses related to the production of its goods and services. Contingencies- A negative situation that may occur and for which one ought to prepare. Attestation- To certify by signature certified copy A certified copy is a copy (often a photocopy) of a primary document, that has on it an endorsement or certificate that it is a true copy of the primary document Intimation-To announce Aviation- The operation of aircraft Subsidaries- Serving to assist or supplement Mandatory-Required by law or rules. Prospects- The continued possession, use, or control of something.
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Bibliography
Websiteswww.invested.com www.sapers_wallack.com www.dictionary.com www.wikipedia.org
BooksRisk Management and Insurance by M.J. Methew Risk and Insurance Management by Dr. R.K. Kotharij Risk Management And Insurance by Trieschmann, Hoyt,Sommer.

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Risk and Insurance

Dr. Nandini Sharma Revised by Nikita Kanoongo

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Risk & Insurance

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Risk & Insurance

Risk & Insurance

Multiple Choice Questions

Risk Management and Insurance

Risk & Insurance 4. Implement and revive the programme periodically.

Multiple Choice Question

Risk & Insurance

Principles of Insurance Contract

Q12 Ans Q13 Ans

Multiple Choice Questions

Types of Insurance Contracts

What is under insurance?

26 system is an ideal arrangement of pre-organised reinsurance among different insurers.

Q.16 What is group insurance?

Multiple Choice Questions

Risk & Insurance

On the basis of Indemnity

On the basis of stock

On the basis of risk covered

(i) (ii) (iii) (iv)

Average policy Specific policy Re-statement policy Valued policy

(i) (ii) (iii) (iv) (v)

(i) (ii) (iii) (iv) (v) (vi)

Risk & Insurance

Multiple Choice Questions

Risk & Insurance

Multiple Choice Questions

Risk & Insurance

Multiple Choice Questions

b)Part time d)Not fixed

b)Director d)None of the above

Development of Life Insurance in India

Multiple Choice Questions

Risk & Insurance

Life Insurance Corporation of India

Multiple Choice Questions

Risk & Insurance c)Bima plus policy 2 d)All of these

Life Insurance Agents

Multiple Choice Questions

Life Insurance Plans

Risk & Insurance

Multiple Choice Questions

Risk & Insurance

Life Insurance Selling and Underwriting

66 8. Issue of insurance policy

Risk & Insurance

Multiple Choice Questions

Risk & Insurance

Premium Calculation in Life Insurance

Multiple Choice Question

b)Net single premium d)Non service premium

b)New instalment premium d)New income premium