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Introduction-
Insurance is a form of risk management primarily used to hedge against the risk of a
contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss,
from one entity to another, in exchange for payment. An insurer is a company selling the
insurance; an insured or policyholder is the person or entity buying the insurance policy.
The insurance rate is a factor used to determine the amount to be charged for a certain
amount of insurance coverage, called the premium. Risk management, the practice
of appraising and controlling risk, has evolved as a discret.

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Insurance involves pooling funds from many insured entities (known as exposures) in order
to pay for relatively uncommon but severely devastating losses which can occur to these
entities. The insured entities are therefore protected from risk for a fee, with the fee being
dependent upon the frequency and severity of the event occurring. In order to be insurable,
the risk insured against must meet certain characteristics in order to be an insurable risk.
Insurance is a commercial enterprise and a major part of the financial services industry, but
individual entities can also self-insure through saving money for possible future losses.

 



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Risk which can be insured by private companies typically share seven common
characteristics.[2]

1.? rarge number of similar exposure units. Since insurance operates through pooling
resources, the majority of insurance policies are provided for individual members of
large classes, allowing insurers to benefit from the law of large numbers in which
predicted losses are similar to the actual losses.
2.? Definite ross. The loss takes place at a known time, in a known place, and from a
known cause. The classic example is death of an insured person on a life insurance
policy. Fire, automobile accidents, and worker injuries may all easily meet this
criterion. Other types of losses may only be definite in theory
3.? Accidental ross. The event that constitutes the trigger of a claim should be fortuitous,
or at least outside the control of the beneficiary of the insurance. The loss should be
µpure,¶ in the sense that it results from an event for which there is only the
opportunity for cost.
4.? rarge ross. The size of the loss must be meaningful from the perspective of the
insured. Insurance premiums need to cover both the expected cost of losses, plus the
cost of issuing and administering the policy, adjusting losses, and supplying the
capital needed to reasonably assure that the insurer will be able to pay claims. For
small losses these latter costs may be several times the size of the expected cost of
losses.
 *.? Affordable Premium. If the likelihood of an insured event is so high, or the cost of the
event so large, that the resulting premium is large relative to the amount of protection
offered, it is not likely that anyone will buy insurance, even if on offer..
6.? Calculable ross. There are two elements that must be at least estimable, if not
formally calculable: the probability of loss, and the attendant cost.
7.? rimited risk of catastrophically large losses. Insurable losses are
ideally independent and non-catastrophic, meaning that the one losses do not happen
all at once and individual losses are not severe enough to bankrupt the insurer;


    

 

  
  
 portion of their capital base, on the order of * percent.





To "indemnify" means to make whole again, or to be put in the position that one was in, to
the extent possible, prior to the happening of a specified event or peril. Accordingly, life
insurance is generally not considered to be indemnity insurance, but rather "contingent"
insurance (i.e., a claim arises on the occurrence of a specified event). There are generally two
types of insurance contracts that seek to indemnify an insured:

1.? an "indemnity" policy and

2.? a "pay on behalf" or "on behalf of policy.




Claims and loss handling is the materialized utility of insurance; it is the actual "product"
paid for. Claims may be filed by insurers directly with the insurer or through brokers or
agents. The insurer may require that the claim be filed on its own proprietary forms, or may
accept claims on a standard industry form such as those produced by ACORD.
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Post Office Monthly Income
Scheme

Post Office Time Deposit

Scheme
Post Office Savings Account
National Savings Certificate
KisanVikasPatra
Post office schemes





A mutual fund is a professionally managed type of collective investment scheme that pools
money from many investors and invests typically in investment securities (stocks, bonds,
short-term money market instruments, other mutual funds, other securities,
and/or commodities such as precious metals).[1] The mutual fund will have a fund
manager that trades (buys and sells) the fund's investments in accordance with the fund's
investment objective. In the U.S., a fund registered with the Securities and Exchange
Commission (SEC) under both SEC and Internal Revenue Service (IRS) rules must distribute
nearly all of its net income and net realized gains from the sale of securities (if any) to its
investors at least annually.


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US mutual funds use SEC form N-1A to report the average annual compounded rates of
return for 1-year, *-year and 10-year periods as the "average annual total return" for each
fund. The following formula is used:[6]
P(1+T)n = ERV
Where:
P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment made
at the beginning of the 1-, *-, or 10-year periods at the end of the 1-, *-,
or 10-year periods (or fractional portion).

 


Mutual funds bear expenses similar to other companies. The fee structure of a mutual fund
can be divided into two or three main components: management fee, non-management
expense, and 12b-1/non-12b-1 fees. All expenses are expressed as a percentage of the
average daily net assets of the fund.
Brokerage commissions
An additional expense which does not pass through the fund's income statement (statement of
operations) and cannot be controlled by the investor is brokerage commissions. Brokerage
commissions are incorporated into the price of securities bought and sold.




O



U? Open-end fund, forms of organization, other funds
U? The term |
?  is the common name for what is classified as an open-end
investment company by the SEC. Being open-ended means that, at the end of every
day, the fund continually issues new shares to investors buying into the fund and must
stand ready to buy back shares from investors redeeming their shares at the then
current net asset value per share.

U? Equity funds
U? Equity funds, which consist mainly of stock investments, are the most common type
of mutual fund. Equity funds hold *0 percent of all amounts invested in mutual funds
in the United States.

U? ledge funds
U? Funds of funds
U? Money market funds
U? Bond funds
U? Exchange-traded funds


 

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A post office is a facility authorised by a postal system for the posting, receipt, sorting,
handling, transmission or delivery of mail.[1]
Post offices offer mail-related services such as post office boxes, postage and packaging
supplies. In addition, some post offices offer non-postal services such as passport applications
and other government forms, car tax purchase, money orders, and banking services.
Post offices had a main customer service and point of sale area and many offices were
directly assigned to Postal code, ZIP code.

Comparative analysis on the basis of Risk, Return, and Maturity:

Risk Return Maturity

ã? ã? ã?
Insurance ã? Returns given by ã? Returns given by ã? The date at
insurance company are insurance company which the
negative in some through premium. face amount
cases. ã? If any accident of a life
ã? In some case company occurs than claim can insurance
will not give full be taken. policy
amount because lack ã? It can be used as a tax becomes
of evidenced. savings. payable
either by
death or
other
contract
stipulation.

Mutual Funds ã? The amount invested ã? As Indian Economy ã? Maturity

has little risk is growing very period
involved. rapidly every day, the depends
ã? The risk factor can be funds can be upon the type
decided with the 3 expected to give good of scheme
available categories as return in the long taken by
"No Risk Fund" term investment up to investor for
"Balanced Fund" and 70%. e.g. there is
 "ligh Risk Fund" ã? Return on mutual no fixed
ã? The amount invested fund can be positive maturity
not has a guaranteed or negative. period in
small percentage of case of open
appreciation but there ended fund
may be quite high but in close
also. ended fund
maturity
period is *-7
years.

Strategies on the basis of income:

For those having income of 1 to3lakh.

ã? Planning for future safety.

ã? Reduces expenses
ã? Must open saving account
ã? Must take insurance policies by keeping the premium paying.
ã? Must invest in mutual funds and share market for getting the better return.

For those having income of 3 to 10lakh.

ã? Invest in share market for getting better return.

ã? Must invest in real estate to get profit.

For those having income above 10lakh.

ã? Must buy new house.

ã? Must take insurance for getting the tax rebate.
ã? Must buy property for better investment of money
ã? Can start new business.
Impact of the Budget 2010-
ã? The Finance Minister in his Union budget 2010 speech proposed banking licenses to
Indian banks to ensure the expansion of banking sector in size and turnover.
ã? With the increase in the share market it will definitely provide benefits to investor
weather they invested through mutual funds or equity.
ã? Due to competition in market post office may increase benefits for its customers.
ã? The parity in service tax was a substantial move for insurance sector.
ã? So attracting the customer¶s new banks may pay higher interest rate on mutual funds.
ã? The budget has given a huge thrust to health insurance, but at the same time, it has
brought the industry with in the ambit of service tax.
ã? It can increase the market by which more return can be expected.