Page |1

A
BRIEF INDEX
ON

INSURANCE

A TEAM WORK OF
B&I 1st BATCH
ROLL: (112-133)

University of Rajshahi
Dept. of Banking & Insurance
 Page |2

A
BRIEF INDEX
ON

INSURANCE

Inspired by
Mr. HEMANTA KUMAR BHADRA
Lecturer
Dept. of Banking & Insurance
University of Rajshahi

Customized by
MD. JONAYED HOSSAIN

Published on MAY 24, 2017

 Page |3

OUR TEAM
MD JONAYED HOSSAIN RAMJAN ALI
1511137112 1511037123

TAMANNA AKTAR SANJIDA RAHMAN

1512437113 1512037124

MD. NAYEM UDDIN AMIN ULLAH

1510237114 1510137125

SUSMITA SINGHA SUCHITRA SARKER

1512237115 1512037126

SUMON KUMAR MRIDANGA KUMAR MONDAL

1510637116 1511137128

MD SHARIFUL ISLAM NAIM SIDDIK

1511137117 1511137129

NAZMUN NAHAR SHOVA DULAL HOSSAIN

1512437118 1510337130

FIROZ KABIR MASUD RANA

1511037119 1511137131

SURAYA KHATUN HARUN UR ROSHID

1512437121 1510337132

MD. RAKIB HOSSAIN MD RAHABIR FARABIE

1510137122 1511037133
 Page |4

Actual Total It is material and physical loss of the subject matter insured.
Loss
Actuaries A person who compiles and analyses statistics and uses them to calculate
insurance risks and premiums.

Adjustable Policy This policy is nothing but an ordinary policy on the stock of the
business man with liberty to the insured to vary at this opinion, the
premium is adjustable predate according to the variation of the stock.

Aggregate A table constructed without distinguishing the select and ultimate lives
Mortality Table is called an aggregate mortality table.

Agriculture Agriculture Pumpset Insurance policy indemnifies the insured against

Pumpset unforeseen &sudden physical damage to the pumpsets caused by/or due
Insurance to mechanical/electrical breakdown, fire & lighting theft & burglary.

Aleatory contract An Aleatory contract is a contract in which the performance of one or

both parties is contingent upon the occurrence of a particular event. The
most common type of Aleatory contract is an insurance policy.
Annuity Due Under this annuity, the payment of installment starts from the time of
contract. The first payment is made as soon as the contract is finalized.

Assignment The Assignment clause determines whether rights, obligations and

Clauses duties under an agreement may be transferred in whole in or part to
another, and under what conditions.
Atomic Risk Atomic energy commission insurance industry as a leader to study
nuclear facilities and current state of the field.

Automobile More popularity known as motor insurance , this type of insurance

Insurance provides coverage for loss or damage to any vehicle like car, two wheeler
or other vehicle.

Average Policy Policy containing ‘Average clause’ is called an average policy. The
amount of identity is determined with reference to the value of the
property insured.
 Page |5

Aviation Aviation Insurance provides coverage for hull losses as well as liability
Insurance for passenger’s injuries, environmental & third party damage caused by
aircraft accidents.

B
Background Of The first credit insurance took place in 1820 principally offer fire and
Credit Insurance life insurance by British Commercial Insurance Company. The surety
And Surety. market started in 1894 in USA which required the purchase of surety
bonds on construction projects.

Baggage This policy provides indemnity to the insured to the extent of the
Insurance Policy insured value of the accompanied personal baggage.

Banc Assurance. Banc assurance is a strategy adopted by banks or insurance companies

arming to operate in the financial market in a more or less integrated
manner. It is inter-linkage of different financial services as well as the
distribution of these products.

Bank As Now banks can also enter in insurance business. In a bank where he has
Insurance his bank account, if he gets facilities of insurance; he would certainly
Institution. purchase insurance policies.

Bases For Bases For Formulation Of Investment Policy are:

Formulation Of
Investment A. The outlook of management
Policy
B. The composition of investment portfolio
C. Present position of the insurer
D. Availability of suitable securities
E. Adequacy of funds.

Beneficiary A beneficiary is the person named by the policy holder to receive the
proceeds of the policy after the death of the insured person.

Benefit Formula Retirees receive an income, including social security benefits, equal to
half of their earnings during their last five or ten years of employment.
The income that a particular retiree receives is determined by a benefit
formula.
 Page |6

Bill of lading It is correspondence of the insurance contract with the voyage and
vessel.

Bill of sale A document that details in writing a sale of goods or transfer of

property from one party to another. A bill of sale serves as legal
evidence that full consideration has been provided in a transaction and
that the seller has transferred the rights to the assets detailed in the bill
of sale to the buyer.

Blanket Policy. The policy is taken to cover losses within particular time and place.

Block Policy. This policy insures incidental inland risk along with the marine perils.

Breach of If there is any breach of warranty, the insurer is not bound to perform
warranty his part of the contract unless he chooses to ignore the breach.

Business Policy issued to business premises cover stock in trade, goods in trust or
Premises on commission, fixtures & fittings, tools of made such as type written,
Insurance Policy calculators & other similar property and cash & currency notes in locked
safe against the risk of burglary of house breaking.

Buy & Sell Life insurance can be used to fund buy and sell agreement. In this way a
Agreements person ownership share in a going business can systematically be
transferred after the owner’s death.

C
Calculating Of There are two approach for calculating surrender values:
Surrender A. Accumulation approach
Values B. Saving approach.

Cargo Clauses It is used in the marine of goods and are incorporated in cargo policies.

Cargo Insurance. It may be written a single risk policy or floating policies .The cargo may
be – water, property , merchandise ,goods and so on .
 Page |7

Cash For The death of a family member is always followed by bills that must be
Immediate paid. This includes funeral expenses, doctor and hospital bills, unpaid
Expenses taxes and personal debts.

Cash Value Cash values are sums payable to policy holder who wants to discontinue
Policy their insurance.

Cash-In-Safe The cover includes only if the safe is burglar proof and is of an
Insurance approved make and design.

Casualty It can include almost any line non life of insurance other than those
Insurance identified as part of the property insurance field.

Catastrophe Catastrophe insurance is the insurance to protect business and residence

Insurance against natural disaster such as earthquakes, floods, hurricanes.

Causa Proxima It means when there are more than one cause for the loss the proxima
cause and not the remote cause is regarded.

Cause of fire Two kind of cause:

1. Physical Hazard: inflammable nature, construction, artificial

lightning etc are responsible for it.
2. Moral Hazard: It depends upon man

Chance Of Loss Chance of loss can be defined as the probable number of losses out of a
given number of loss exposures.

Cheque A cheque is a document that orders a bank to pay a specific amount of

money of a person’s account to the person in whose name the cheque
has been issued.

Claims Provision The estimate of the most likely cost of sitting present and future claims
and associated claims adjustment expense plus a risk margin to cover
possible fluctuation of liability.

Claims Ratio Net claims incurred as a percentage of net earned premium.

Classes Of Life Classes Of Life Insurance are:

Insurance
(A) Individual insurance:
i. Ordinary life insurance
ii. Industrial life insurance
 Page |8

(B) Group life insurance

Co-Insurance Co-insurance is a type of insurance in which the insured pays a share of

the payment made against a claim.

Co-Insurer Co-insurer is a person or firm that contracts as an insurer jointly with

another or other.

Combined The sum of the claims ratio, commission ratio and expense ratio.
Operating Ratio

Commencement The risk does not commence immediately at the issue of policy but only
of Risk on the policy anniversary, following completion of 18 or 21 years.

Commission Net commission expense as a percentage of net earned premium.

Ratio
Committee Committee is a group of people appointed for a specific function,
typically consisting of members of a large group.

Components Insurance companies important components for corporate governance

Corporate are keeping an open mind, listening and learning from others, ready to
Governance. share ideas and thought recognizing rewarding cooperation and
franchise, development skill of employees.

Comprehensive This policy undertakes full protection not only to against the risk of fire
Policy but combining within the risk against burglary, riot, civil commotion,
theft, damage from pest, lightning.

Conditional Life insurance contract is conditional contract because the insurer shall
contract pay the assured sum only when the contract is continuing by payment of
premium.

Consequential This policy provides an identity to the insured for loss of net profit,
Loss Policy payment of standing charges and expenditure in respect of increased
cost of working.

Construction Where the subject-matter is not actually lost in the above manner.
Total Loss

Contract of Contract of adhesion means that the terms of the contract are not
Adhesion arrived by mutual negotiations between the parties as in the case of
ordinary contracts.
 Page |9

Contracts Of A contract whereby one party promises to save the other from loss
Indemnity caused to him by the conduct of the promisor himself or by the conduct
of any other person, is called a contract of indemnity.

Contribution This clause refers to that the vessel shall continue to be covered even
Clause after completion of voyage under the policy at a pro rate premium
to her port of destination provided previous notice was not given.

Contributory In contributory plan, the cost is shared by the employer and the
Plan In Group employees.
Insurance

Conversion Conversion clause gives workers who leave their jobs an option to
Clause In Group convert to an individual policy that provides the same amount of
Insurance coverage. The converted policy must be either endowment or whole life
insurance.

Convertible Term This policy gives the option to an insured to convert his/her term to a
whole life or endowment policy.

Co-Operative Co-operative insurance organizations are those concerns which are

Insurance incorporated and registered under co-operative society act in order to
Organizations provide insurance protection at lowest cost.

Corporate Corporate governance means doing everything, to improve relationship

Governance. between companies and their shareholders to improve the quality.

Cost Benefits Ralph W.Fastes proposal defines the two term-

Statement Model
A. Social benefits- any benefits to society whether economic or non-
economic, internal or external.
B. Social cost-any cost, sacrifice or detriment to society, whether
economic or non-economic, internal or external.

Cost of Service Cost of service means that the premium should be changed according to
cost to the issuer.

Coverage On All of the various health coverage are available on the group basis.
Group Health Hospital and surgical expense are the most common coverage, large
Insurance amounts of regular medical expense, major medical, and disability
income are also written.

Credit Insurance. Credit insurance is a risk management tool the compensate policyholder
when their clients fails to pay for goods and services.
 P a g e | 10

Credit Life Credit life insurance covers the lives of people who owe installment debt
Insurance and this insurance is very expensive.

Critical Illness It is usually structured in a way which pays a defined percentage of the
policy amount in the event a policy holder is diagnosed with one of
several design critical illness.

Crop Insurance Crop insurance refers to an insurance which insures farms and crop
producers against the loss of crop due to natural disasters such as flood,
drought etc.

Currency Policy Policies issued in foreign currency are called currency policy.

D
Declaration The declaration policy will give a better protection in such cases where
Policy the stock fluctuates from time to time under the declaration policy, the
insured takes out an insurance for the maximum amount that he
considers would be at risk during the period of the policy.

Decreasing In this category, the extra hazard decreases with increase in age.
Extra-Risk

Decreasing Term It is a common form of term insurance that decreases in amount each
month or year

Deferred Annuity In this annuity, the payment of annuity starts after a deferment period
or at the attainment by the annuitant of a specified age.

Deferred Profit- Some employers provide deferred profit-sharing plans instead of or in

Sharing Plans. addition to regular pension plans. The contributions to a profit sharing
plan are a percentage of the firm’s annual profits. Because profits
fluctuate from year to year, contributions to such a plan also fluctuate; if
there are no profits, nothing is added to the profit-sharing fund.

Degree Of Risk Degree of Risk is the extent of uncertainty about future losses.
Development Of Process of developing a new product or service for the market.
New Product
 P a g e | 11

Disability Workers who become totally disabled before they retire and who are
Benefits. expected to remain disable for at least 12 month receive disability
income payments. The disability benefits provide monthly income only;
they do not specifically pay for the costs of medical.

Discrimination The differentiation of the rates for individual risk in a particular class is
known as discrimination.

Divisible Profit After setting aside certain portion of surplus to various fund the profit
is distributed.

Docket Docket is a list of cases in court for trial, or the names of the parties
who have cases pending.

Doctors The doctor’s composite package insurance policy is devised to meet the
Composite insurance requirements of the doctors through a single composite
Package package policy.
Insurance

Doctrine Of Subrogation means the right of one person to stand in the place of
Subrogation another and to avail himself of the latter’s right and remedies.

Doctrine Of The doctrine of subrogation refers to the right of the insurer to stand in
Subrogation place of the insured after settlement of claim to recover the salvage
value.

Documents Documents required for claim are:

Required for
Claim 1. Bill of lading
2. Invoice
3. Copy of protest
4. Certificate of survey
5. Account sales
6. Letter of subrogation

Double When the double of the amount is paid if the life assured survives at the
Endowment end of the term of policy and only single amount will be paid if the
Policy death occurs within the term, is called the double endowment policy.

Double Double indemnity is a clause or provision in a life insurance or accident

Indemnity policy whereby the company agrees to pay the stated multiple of the
phase amount in the contract in causes of death caused by accidental
means.
 P a g e | 12

E
Educational Most parents hope that their children will be able to go to college and
Funds supplying fund for college expenses frequently a major reason for buying
life insurance.

Emerging Liability insurance is growing in emerging market. It has taken

Markets Liability diversified forms of development, personal liability , motor liability ,
Insurance social security system.

Employee Benefit Employee benefit plan are furnished through employment, in the form
Plan of group insurance and pension. They provide the second layer of
protection and what used to be called fringe benefit.

Employers A product for employers that protect them major financial loss if a
Liability worker experiences a job related injury of illness that workers
Insurance compensation doesn’t cover.

Endowment Life That pays a stated amount if the insured dying specified period of times
Insurance or pays the same amount if insured is living at the end of the period.

Engineering Engineering Insurance refers to the insurance that provides economic

Insurance safeguard to the risks faced by the ongoing construction project,
installation project and machines & equipment in project operation.

ERISA The Employee Retirement and Income Security Act, called ERISA, was
adopted by congress to establish federal regulation of private pension
plans. The law does not require employers to provide pension plans, but
it makes those who do provide them subject to federal supervision.

Estate Creation An estate is the property that a person owns by purchasing a life
insurance policy he immediate creates an estate in the amount of the
policy.

Estate Planning Estate planning provides arrangements to conserve property during the
owner’s life time and to distribute it at his/her death without
unnecessary taxation or other cost.

Estoppel Estoppel is the principal that precludes a person from asserting

something contrary to what is implied by a previous action or statement
of that person or by a previous pertinent judicial determination.
 P a g e | 13

Excess Policy The minimum level of stock can be found out from the past experience
and for the other portion of stock which exceeds the minimum limit, he
can purchase another policy called “excess policy”.

Ex-Gratia When the insurer pays certain portion of the claim before final
Payment settlement, it is called Ex-Gratia payment.

Expense Ratio Underwriting and administrative expenses as a percentage of net earned

premium.

Experience The combined judgment of a large number of individuals is taken into

Patting account.

Express Conditions which are set out in the policy are known as express
Condition conditions which may be either of general nature and therefore, printed
on the policy or conditions specially designed with reference to a
particular contract and are incorporated in the policy.

F
Family Income It is a combination of straight life policy with decreasing term insurance
Policy to furnish additional income protection during the first 20 years.

Features of Life Life insurance contract features are:

insurance
contract A. Nature of General Contract
B. Insurable Interest
C. Utmost good faith
D. Warranties
E. Proximate Cause
F. Assignment and Nomination
G. Return of premium
H. Other features

Fidelity Fidelity Guarantee is one of the main classes of insurance written in the
Guarantee accident department.
Insurance

Financial Impartial services to customers and financial service provides such as

Ombudsman insurers where they are unable to resolve their disputes.
 P a g e | 14

Service (FOS)

Fire Must have ignition, should be accidental.

Fire Insurance Fire insurance is a contract whereby insurer undertakes to pay a certain
some of money if any fire peril occurs.

First Loss Policy A “First Loss” policy insures the property up to a specified amount only
which is calculated to be the maximum likely loss on any one occasion.

Flat Extra- A method of rating a sub-standard life insurance risk when the extra risk
Premium is considered to be constant or temporary.

Floating Policy The floating policy is the policy taken to cover one or more kinds of
goods at one time under one sum assured for one premium and in
relation to the same owner.

Forms Of Forms Of Payments Of Surrender Values:

Payments Of
Surrender A. Cash surrender value
Values
B. Reduced paid up insurance
C. Extended term insurance
D. Automatic premium loans
E. Purchase of annuity.

Freight Clauses The clauses are framed in connection with the loss of freight due
to marine perils, Which may insured for a period or for a voyage.

Freight Freight insurance to be payable for the carriage of cargoes or if the

Insurance. vessel is chartered, the money is to be paid for the use for the vessel.

Functions Of Credit insurance protects a seller from the risk of buyer nonpayment,
Credit Insurance. which may occur due to commercial or political risks. The credit
insurance gets the right of collection directly from buyer who failed to
pay to seller. The credit insurer pays the amount of trade credit to seller
if buyer fails to pay to the seller.

Funding Pension funds can be administered by the trust company or by a life

Agencies. insurance company. When the trust company is the funding agency, the
plan is not insured. But when a life insurance is the funding agency, the
plan is insured.
 P a g e | 15

Furlough When risk is reduced, the proportionate share of premium is returned

Concessions or the period of coverage is extended by the excess premium. This is
called ‘Furlough Concessions’

G
General As a loss caused by or directly consequent on a general average act
Average Loss which includes a general average expenditure as well as general average
sacrifices.

General General insurance refers to insurance that covers your assets, not your
Insurance life or health.

General Liability General Liability policies cover a wide variety of business and
professional liability exposures.

Good Faith A requirement to act honestly and to keep one’s promises without
taking unfair advantage of others or holding others to an impossible
standard.

Government Government insurance is that which is written by Governmental

Insurance agencies
.
Gross Direct Gross direct insurance premiums, defined as a gross insurance premiums
Premium for direct insurance for a reporting country, divided by the population,
represent the average insurance spending per capita in the country.

Gross Premium Gross premium is a general term for an amount made up of the net
premium plus expenses and commissions.

Gross Written The total premium on insurance underwritten by an insurer or reinsurer

Premium (GWP) during a specified period, before deduction of reinsurance premium.

Group Visual The cost of eye care necessitated by accident or disease is commonly
Care Insurance. covered by major medical insurance. In contrast, group visual care
insurance covers the cost of regular eye examinations and glasses.

Guarantee Guarantee is a promise that something will be done or will happen,

 P a g e | 16

specially a written promise by a company to repair or change a product

that develops a fault within a particular period of time.

Guarantee The guarantee insurance covers the losses arising due to dishonesty,
Insurance disappearance and disloyalty of employer .

Guaranteed A guaranteed insurability rider, also called a GI rider, is a life insurance

Insurability policy which allows to the owner of a life insurance policy to buy
additional life insurance with no underwriting. A rider is an additional
benefit to a life insurance policy beyond the death benefit.

Guaranteed Annuity payment up to a period is guaranteed by the insurer. If the

minimum annuitant dies before the specified period, annuity will continue up to
Annuity the unexpired period.

H-I
Hazard A hazard is a condition that increases the likelihood of loss due to a
particular peril.

Health Insurance Health insurance is insurance against loss through illness or injury of the
insured.

Health Insurance Health insurance benefits are-

Benefits
(a) accidental death benefit
(b) waiver of premium and
(c) disability of income.

Hogue Rules It is a set of regarding the rights and liabilities of cargo owners and ship
owners in connections with bills of lading . So that no complication
arises in settlement of claims.

Hull Insurance An Insurance policy that coverage for the physical integrity of a
ship .That is hull marine insurance covers the ships hull ,life ,boats
,railings and so for.

Immediate The immediate annuity commences immediately after the end of the
Annuity first income period.
 P a g e | 17

Implied The implied condition are not mentioned on the policies but are
Condition deemed to be present with reference to the policy.

Inchmaree The clauses protects the ship owner s against losses to be included in
Clause claims by the assured.

Income For Child For families with young children, the greatest need in the event of the
Raising Period death of a major income earner is income while the children are growing
up. Unfortunately, this need is greatest at the very time when a family is
in the poorest position to deal with it.

Incontestable The incontestable clause gives the insurers a period of time, two years or
Clause most policies, to check the information supplied by the applicant.
Incurring Extra- In this category, the extra mortality increases as the life assured grows
Risk older.

Industrial Life This insurance policy is generally in amounts of $1000 or less. This
Insurance premium is collected from insured’s home and thus it is called “home
service life insurance”.

Informative In the insurance the informative warranties are more important. The
warranties proposer is expected to disclose all the material facts to the best of his
knowledge and belief.

Initial Reserve This reserve is used for determining the interest earned by the insurer.

Inland Or Port It may be incorporated in the policy to determine the extent of loss. .
Risk Clauses
Insurable Insurable interest is the general principle of insurance without which an
Interest insurance cannot lawfully be enforced for an insurance unsupported by
an insurable interest would be a gambling transaction.

Insurance Insurance is a contract between insurer and insured whereby insurer

undertakes to pay a certain sum of money to the insured in exchange of
premium if the risk occurs.

Insurance As The life insurance and general insurance corporation are performing
Banking Institute. their respective functions with the help of banks. If the insurance
companies perform the business of banking institutions, they get benefit
of business in financial transactions. The claim amounts will be
deposited in insurance banks.
 P a g e | 18

Insurance Claim An insurance claim is a formal request to an insurance company asking

for a payment based on the term of the insurance policy.

Insurance For Fathers are the major income earners in most families, insuring their live
The Mother usually has the highest priority. In fact, until recent years, insuring the
mother’s life often was not even considered. One reason for the growth
of insurance for women is their increased activity in the business and
professional world.

Insurance Profit The sum of the underwriting profit (loss) and investment income on
assets backing policyholders funds.

Insurance Profit The ratio of insurance profit to net earned premium.

Margin
Insured The person, group, or organization whose life or property is covered by
an insurance policy.

Insurer Insurer is a insurance company that issues a particular insurance policy

to an insured.

Insuring It is for the insurance companies to come forward to insure wind losses
Hurricanes And exclusively over 26o c temperature of sea causes.
Windstorms

Interest Adjusted The interest adjusted method is much more accurate basis for
Method comparing policy costs it takes the time value of money into account.

International The life insurance premium in world market has increased rapidly up to
Insurance Scene. 1986 but decline thereafter. The percentage of premium to gross market
product of the country was maximum of 11.17% in Taiwan.

Investment Capital gains, dividends, interest and rent generated by investment, and
Income not by trading activities.

Invoice A survey report; it is prepared by some recognized surveyor.

Irrevocable If the right to change the beneficiary is not retained, is called irrevocable
Beneficiary beneficiary.
 P a g e | 19

J- K-L
Jettison Jettison means voluntary throwing away of the cargo or port of
vessels equipment for the lightering or reliving the ship for
common safety.

Jewellery & Policies under this form of insurance cover risks in respect of Jewellery,
Valuables plate, watches, personal ornaments and other valuables.
Insurance

Joint life This policy covers more than one life under a single policy
endowment
policy
Joint Life Policy In which policy, the payment of claim will be made at the first death of
assured lives who may be two or more is called the joint life policy.

Key Employee Business firms sometimes purchase key employee insurance. This covers
Insurance the firms losses resulting from death or disability of important
employees.

Lapse Policy A policy that’s premium has not been paid yet at the end of the grace
period.

Law Of Large It is a mathematical terms stating that as the number of exposures is

Numbers increased the actual results tend to come closer to the expected results.

Liability Liability is a claim against the assets, or legal obligations of a person or

organization, arising out of past or current transactions or actions.

Liability Liability insurance is any insurance policy that protects an individual or

Insurance business from the risk.

Lien Method In this method, the amount payable would be the sum assumed
less the outstanding lien at the particular time of policy.

Life annuity This annuity offers a regular income to the annuitant throughout his life
time.

Life Income The settlement options which are guarantee an income for remaining
lifetime of the recipient.
 P a g e | 20

Life Insurance Life Insurance may be defined as a contact whereby the insurer in
consideration of a premium undertakes to pay a certain sum of money
either on the death of the insured or on the expiry date of a insurance.

Life Insurance Income provided for the child raising period will end when the children
For The Widow are grown. Although the widow may then obtain full time employment,
she may not be in a position to earn a large income.

Life Insurance Life Insurance income options are the followings:

Income Options
(a) life only,
(b) life annuity with certain period,
(c) refund annuity.

Life Insurance Life insurance programming is a process of arranging a plan of life

Programming insurance to serve the needs of a particular family. In effect, it uses the
risk management concept to handle family’s risk of income loss.

Life Insurance Factors affecting life insurance risk are:

risk factor
01. Age,
02. Build,
03. Physical condition,
04. Personal history,
05. Family history,
06. Occupation,
07. Residence,
08. Present habits,
09. Morals,
10. Race and Nationality,
11. Sex,
12. Economic Status,
13. Defense Services,
14. Plan of insurance.

Life Insurance Life insurance settlement option is a life annuity, a form of insurance
Settlement that guarantees an income for the lifetime of an annuitant.
Option

Limited Payment where premiums to be paid either for a stated number of years or until
Whole Life Policy the insured reaches a stated age.

Livestock Livestock Insurance refers mainly to the insurance of horses & cattle.
Insurance
 P a g e | 21

Lloyd’s Lloyd’s association is one of the greatest insurance institution in world.

Association

Loss Reduction in the value of an insured property due to an insured peril.

Loss Exposure Loss exposures refers to the objects that are subject to loss.

Lost And Not Under this clause , the insurer insures the subject -matter irrespective
Lost Clause of the fact that it has already been lost or not lost before of the issue of
the policy.

M
Managing A wholesale insurance agent with the authority to accept placement
General Agent from retail agents on behalf of insurer.
(MGA)
Marine Insurance Marine insurance refers to coverage against loss of or damage to a ship,
cargo los, damage over waterways.

Marine Insurance Marine insurance business means the business of effecting contract of
Business. insurance upon vessels of any description.

Marine Perils Marine peril means the perils consequent on or incidental to the
navigation of the sea, that is to say perils of the fire, war, pirates,
rovers, thieves, capture, restraint s and jettisons, battery and any other
perils, Which may be designed by the policy.

Maximum Event An estimate of the largest loss to which an insurer will be exposed. The
Retention (MER) probability of that loss at a return period of 1 in 25 years.

Maximum Value The policy is taken for a maximum amount and full premium is paid
With Discount thereon.
Policy

Mean Reserve Mean reserve is used for valuation purposes. It is connected with the
annual statements.
 P a g e | 22

Medicare. Medicare is a health insurance program for people over 65. It also
covers certain disabled persons below that age. The program has two
parts: The first is a basic hospital insurance program; the second is a
voluntary program of medical insurance.

Memorandum Its provides a minimum limit to be underwriters liability regarding

Clause claims for particular average by exempting him from such claims.

Methods for Risk Methods for risk classifications are:

Classification
1. The Judgment method
2. Numerical Rating System

Methods Of The reserve can be calculated by applying retrospective method or by

Calculating prospective method.
Reserve

Micro Insurance Micro Insurance is the protection of low-income people (below $4)
against specific perils in exchange for regular premium payment
proportionate to the likelihood and cost of the risks involved.

Moral Hazard A moral hazard exists when the insured person may dishonestly cause or
exaggerate a loss.

Mortality Risk The financial uncertainty associated with dying.

Mortality Table Mortality table is such data which records the past mortality and put in
such a form that can be used in estimating the course of future data.

Mortgage The family’s insurance program can conclude provision for paying off
Payment the balance of the home mortgage. Paying off the mortgage will reduce
family expenses and thereby reduce the need for income replacement.

Mortgage This policy meets the requirements of institutions and individual

Redemption borrowers to ensure that the outstanding loan is automatically
Assurance Policy extinguished in the event of the borrowers death.

Mortgagee A mortgagee is an entity that lends money to a borrower for the purpose
of purchasing a piece of real property.

Multi Peril Crop US federally regulated crop insurance protecting against crop yield
Scheme losses by allowing participating insurers to insure a certain percentage of
historical crop production.
 P a g e | 23

Multi-Peril Multi-peril insurance means policies that cover a variety of perils.

Insurance

Multiple Life In this annuity more than one life is contracted.

Annuity

Multi-Policy More than one policy with the same insurer, one may receive a discount.
Discount

Mutual Co-operative association formed for the purpose of effecting insurance

Companies on the property of its members.

N-O
Named Policy. The name of the ship and the amount of insured cargo are mentioned.
These policies are specific policy.

Nature of Natures of general contract are given:

General contract
A. Offer and acceptance
B. Competencies of parties
C. Free consent of the parties
D. Legal consideration
E. Legal objective

Need For There are three needs for reserves:

Reserves A. To meet the amount of claims
B. To build up funds
C. Policyholders are benefited.

Needs Of There are three needs for investments:

Investments
A. Payment of claims
B. To avoid financial deficit
C. Natural interest

Net Claims The amount of claims incurred during an accounting period after
 P a g e | 24

Incurred deducting reinsurance recoveries.

Net Earned Net written premium adjusted by the change in net unearned premium
Premium (NEP) for a year.

Net Investment Gross investment income net of foreign exchange gains and losses and
Income investment expense.

Net Loss Net loss, also referred to as a net operating loss (NOL), is the result
that occurs when expenses exceed the income or total revenue produced
for a given period of time.

Net Premium Net premiums written is the sum of premiums written by an insurance
company over the course of a period of time, less premiums ceded to
reinsurance companies, plus any reinsurance assumed.

Net Premium It refers to the portion of the premium needed to pay for future loss.

Net Single Net single premium is that premium which is received by insurer in
Premium lump sum and is exactly adequate, along with the return to pay the
amount of claim wherever it arises.

Net Written The total premium on insurance underwritten by an insurer during a

Premium (NWP) specified period after the production of premium applicable to
reinsurance.

Nomination The holder of a policy of life insurance on his own life may either at the
time of affecting policy or at any subsequent time before the policy
matures, nominate the person or persons to whom the money secured by
the policy shall be paid in the event of his death.

Non Forfeiture A policy holder who stops paying the premium does not thereby forfeit
Provisions the policies cash value and it is called non forfeiture value.

Noncontributory In noncontributory plan, the entire cost is paid by the employer.

Plan In Group
Insurance

Non-Life Banc Non-life insurance started early in 1990, when banks began to
Assurance. distributes mainly property insurance products .Motor insurance being
the biggest nonlife business line in banc assurance is becoming popular.

Non- Non proportional reinsurance protects against exceptionally large losses.

Proportional
 P a g e | 25

Reinsurance

Notice of In case of total loss, the notice of abandonment is required.

abandonment

Notice of Claim A prompt notice of claim by the insurer is required.

Ordinary When the payment of claim amount is made at the survival of the term
Endowment or at the death of the assured whichever is earlier, is called the ordinary
Policy endowment policy.

Ordinary Life It’s the oldest and largest insurance of life insurance, the policies
Insurance generally cover multiples of fund.

Outstanding The amount of provision established for claims and related claims
Claims Provision expense that have occurred but have not been paid.

Over Insurance Over insurance is when someone insure something for an amount of
money that is more than its fair or reasonable value.

P
Pay Out Sometimes the insurance company will give money as part or full
settlement for ones insurance claim.

Payment Of A claim and its payment are the end result of the insurance process.
Claim
Pension Plans Pensions, providing income payments to retired workers, are the major
part of our system of employee benefit plan. As with group life and
group health insurance, pension plans are voluntary; they are not
required by law.

Peril Something that causes or may cause injury, loss, or destruction.

Personal Personal insurance refers to a insurance of human life which may suffer
Insurance loss due to death, accident and disease.
 P a g e | 26

Personal The rates so made indicate the opinion or judgment of the rate makers.
Judgment Rating

Personal Liability Personal accident Insurance is one of the popular classes of accident
Insurance insurance and as a supplement to life insurance; it provides an ideal
protection against death of disability.

Physical Hazard It is tangible characteristics exposed to loss.

Plate Glass The policy providers cover against the breakage of the plate glasses fixed
Insurance to display windows or show cases of commercial establishments by any
reason whatever, except those that are specially exclude by the policy.

Policy It is a statutory and formal document of insurance contract.

Policy Provisions The knowledge of the more important policy provisions gives one of
future understanding, how life insurance operates.

Policyholders Those financial assets held to fund the insurance provisions of the
Funds Group.

Postponement Postponement means the consideration of proposal is postponed for a

period when the initial risk is so heavy that there is little hope of
offering insurance immediately and the proposal is postponed.

Potential Loss Any loss other than a total loss is called potential loss.

PPI Policies. The policy is issued to avoid the complication of the principle of
insurable interest. This is called “policy proof of interest”.

Premium Premium financing is the lending of funds to a person or company to

Financing cover the cost of an insurance premium. Premium finance loans are
often provided by third party finance entity known as a premium
financing company.

Premium Income Premium income is denoted by first year premium and renewal premium
as well as single premium.

Prescribed The sum of the capital charges for asset risk, concentration risk,
Capital Amount insurance concentration risk and operational risk.
(PCA)
Present To find out what resources are available to meet the family’s objectives.
Resources In
 P a g e | 27

Programming This frequently turn out to be much more than it had realized for a
young family usually the most important existing resource is social
security.

Primary 1. Insurance provides certainty

Functions of 2. Insurance provides protection
Insurance 3. Risk-sharing

Primary These include road clean water , food and fortification.

Preventive

Principle Of The doctrine of indemnity aims to compensate the insured for a loss
Indemnity sustained and the compensation should be such as to place him as nearly
as possible in the same pecuniary position after the loss as he occupied
immediately before the occurrence.

Principles Of A. Safety
Investment B. Profitability
C. Liquidity
D. Diversification
E. Increasing of life business.

Private Insurance Private insurance is that which is furnished by private insuring

organizations.

Privatization Sale or return of publicly owned enterprises to private ownership and

control. Opposite of nationalization.

Product It is a document that insurance company give someone by law and

Disclosure condition of ones policy.
Statement (PDS)
Product Of The a) Cost effective health insurance
Health Insurance b) Investment cash health service product.
c) Product of casual and non-casual risk.
d) Trust and confidence

Productivity A measure of the efficiency of a person, machine, factory, system,. in

converting inputs into useful outputs.

Productivity Of Productivity of agents is calculated dividing total new business

Agents (individuals) by number of active agents.

Profit After Tax After tax profit margin is a financial performance ratio, calculated by
 P a g e | 28

dividing net profit after taxes by revenue.

Promissory Warranties relating to the future may only be statements about his
Warranties expectation or intention, for instance, the proposer promises that he will
not take up any hazardous occupation and will inform the insurer if he
will take the hazardous occupation.

Property It is made up of property insurance and casualty insurance

Casualty
Insurance

Property Property insurance insures the society against the loss of fire and marine
Insurance perils.

Proportional the insurer and the reinsurance share premiums and losses at a
Reinsurance contractual defined ratio under proportional reinsurance

Prospect Of Corporate management has become an essential feature of any

Corporate organization. It involves corporation strategies particularly corporate
Governance LIC. strategy, marketing strategy, product strategy, pricing strategy,
promotion strategy, place strategy, financial strategy and human resource
development.

Prospective The excess of present value of future claim over of the future premium
Value is called net liability. The net liability is calculated after some time of
the commencement of policies.

Prospects A potential new customer who can be approached for buying an

insurance policy.

Proximate Cause Proximate cause is a key principle of insurance and is concerned with
how the loss or damage actually occurred and whether it is indeed as a
result of an insured peril.

Public Assistance. Public assistance payments are given to those who show that they need
them. Public assistance programs are financed by the general revenues of
the government.

Pure Premium It is the premium , necessary to pay for losses and loss related expenses.

Pure Endowment In this policy insurer promises to pay the insured value in case the
Policy holder survives a certain fixed period.

Pure Risk Pure risk can result only in loss or in no loss.

 P a g e | 29

R
Rank Of Life The per capita life premium has been more than 10 ranks in UK,
Insurance. Switzerland, Belgium, Japan, Ireland, Finland, Denmark, France, Hong
Kong, and Sweden. It reveals that almost all the developed nations have
maximum life insurance cover.

Rate Of Interest The percentage charge for borrowing money.

Rating up of Age Under this method, the life assured is assumed to be a number of years
older than his real age. The premium rate is calculated according to the
assured higher age.

Recoveries The amount of claims recovered from reinsurance, third parties or

salvage.

Reinstatement Reinstatement means that a lapsed policy may be put back enforce
within stated period, usually three or five years.

Reinstatement This policy is issued to avoid the conflict of indemnity. This policy
Policy undertakes to reinstate the insured property lost by fire to new
condition irrespective of its value at the time of loss.

Reinsurance Reinsurance is the transfer of insurance business from one insurer to

another.

Renewable Term These policies are renewable at the expiry of term for an additional
policy period without medical examination; but the premium rate will be
altered according to the age attained at the time of renewal.

Reserve In insurance, reserve is a liability which is to be met by the insurer at

and when it arises.

Resilience The ability or capacity of a person an object (such as a building) or a

community to withstand stress and catastrophe.

Restrictive Clause Under this clause, the extra hazard is accepted with a restrictive clause
which limits death benefit under certain circumstances.
 P a g e | 30

Retirement When we are young we don’t think much about retirement. When we
Income are in our twenties and thirties our parents worries are to generation
away and we are safely insulated from them by our parents generation.

Reversionary The bonus is allotted as a uniform percentage addition to the sum

Bonus assured or sum assured plus existing bonus addition.

Revocable If the right of changing beneficiary is retained, it is called revocable

Beneficiary beneficiary.

Risk It means uncertainty about future loss.

Risk Pricing Premiums that insurers calculate to reflect the relative risk of each
policyholder and provide an incentive to the policyholder to manage
risk.

Running Down It provides that the underwriter agrees to take upon the liabilities of
Or Collision owners of the ship for damage done by hiss vessel to another vessel on
Clause collision to extent ¾ of such liability.

Rural Insurance Rural insurance offers products with an extensive range of cover options
to meet all your clients farming requirements.

S
Salvage The salvage is the remuneration or reward payable according to
Maritimes laws to salvors who voluntarily and independently of contract
render services to maritime property at sea.

Salvage Value The value of goods recovered from a ship or its cargo from perils of the
seas.

Schedule Rating It is a plan by which hazards with respect to any particular risk are
measured and an empirical standard for the measurement of relative
quantity of fire hazard.

Secondary 1. Prevention of loss

 P a g e | 31

Functions of 2. It provides capital

Insurance 3. It improves efficiency
4. It helps economic progress

Secondary In this level, screening program for cancer and diabetes which could be
Prevention provided by private sector.

Setting Goal In the goal setting step of life insurance programming both short rang
and long rang goals are considered. Because of the cost of building a
complete program, long rang goals some time must be given lower
priority until short rang goals achieved.

Single life Under this annuity one single person following is contractor. This
Annuity annuity is most beneficial to those who have no dependent and want to
use all this saving during his life time.

Single premium The annuity in this case is purchased by payment of a single premium.
annuity Generally, the life insurance amount is utilized for purchasing this
annuity.

Single Premium The premiums for whole life policy that payable all at once.
Whole Life Policy

Single Vessel A ship or a fleet of ships is insured in a single policy. When one policy
And Fleet is assured, it is called single vessel policy and when a fleet of ship is
Policies. insured in single policy, it is called single insurance policy.

Social Insurance The social insurance is to provide protection to the weaker section of
the society who are unable to pay the premium for adequate insurance,
pension plan, disability benefits, unemployment benefits, sickness
insurance and industrial insurance are the various form of social
insurance.

Socio-Economic Statement model presents the positive and negative aspects of its social
Operating Model activities. The positive aspects are broadly termed as, ‘Social Benefits’
and negative aspects as ‘Social Cost’. The firm presents, focuses the
negative and positive aspects of social activities.

Solvency Ratio Ratio of net tangible assets to earned premium for assessing the ability
of general insurer to settle their existing liabilities.

Sources Of Funds A. Premiums

B. Interest
 P a g e | 32

C. Capital gain
D. Savings in expenses
E. Non-payment of claims.

Sources Of The foremost reserve is accumulated in level premium plan. And the
Reserve second one is interest.

Specific Policy Where a specific sum is insured upon a specified property in case of a
specified period the whole of the actual loss is payable provided it does
not exceed the insured amount.

Speculative Risk Speculative Risk can result in either loss or gain.

Sprinkler This policy insures destruction of or damage to by water accidentally

Leakage Polices discharged or leaking from automatic sprinkler installation in the
insured premises.

State Insurance The insurance which is under public sector put, specifically when
government have taken over the insurance business particularly life
insurance.

Steps Of Life (a) Analyzing the family needs,

Insurance (b) setting goal,
Programming (c) reviewing present resources,
(d)adopting a plan of action

Straight Life It is one kind of whole life policy where premiums are payable for the
Policy lifetime of the insured also known as ordinary life policy

Straight term The corporation issues term insurance for two years, which is also called
insurance as two years temporary assurance policy. The sum assured will be
payable only in the event of the life assureds death occurring within two
years.

Strikes In Strikes are unforeseen and causing damage to properly and life and also
Insurance loss of revenue. It is insured under fire policy with payment of extra
premium.

Structural This is provided by the govt. Good guide for health care and developing
Facilities Of structural facility of health insurance are:
Health Insurance
a) International classification of diseases.
b) Product classification system.
 P a g e | 33

Sub-Committee Sub-committee is a number of people chosen from a committee to study

and report on a particular subject.

Sub-Standard Sub-standard risk refers to an individual who is considered riskier to

Risk insure than the average individual on account of their age, habit, family
history of diseases, health condition, occupation, hobbies, morals and
residential location or surroundings.

Successive Losses The underwrites are generally not liable for more than the insured value;
but they may be liable for successive losses which may in the aggregate
exceed the insured value, by payment of extra premium and stamp duty.

Superannuation Superannuation scheme an Australian retirement plan in which a

Scheme monthly payment is made to an employee who has retired from
working.

Surety Ship. Surety ship is a bond and contract in which the insurer provides a
guarantee to the policyholder or beneficiary that a third party will meet
its contractual.

Surety Surety compensates the beneficiary if a contractual, legal or regularly

obligation is not met.

Surrender
Charges A. Initial expense
B. Adverse financial selection
C. Adverse morality selection
D. Contribution to contingency reserve
E. Contribution to profits
F. Cost of surrender

Surrender Value Surrender value can be as that amount of premiums paid which is
returned to the policy holder at the time of surrendering the policy.

Survivor Benefits Survivor benefits are payable to the families of deceased workers. These
benefits, which are comparable to life insurance, include: A small lump
sum payment, Income for widows, Income for dependent children.

Sustainability Of The insurance should be sustained for developing the trust and
The Product confidence.
 P a g e | 34

T
Temporary life Under this plan, annuity payments cease at the end of a specified period
annuity or at the death whichever is earlier. The corporation does not issue such
annuity.

Term Insurance The term insurance means in which the payment is made only when life
assured dies within the term specified.

Term Life The policy that provides death protection for a stated length of
Insurance time, within which face amount is paid to the insured.

Terminal Reserve The reserve is used for calculating the amount of surrender value or paid
up values.

Terrorism Risk This is the loss of life , property and revenue become unthinkable
Insurance events.

Tertiary These include family oriented disease management therapist.

Prevention

The Black-Out The payments to the widow stop from the time when her child becomes
Period 18, until the widow reaches 60. This time is called the black-out period.

The Earning Test. Both survivor benefits and retirement benefits are subject to an earnings
test. Survivors and retirees who earn no more than a certain limit per
year from current wages receive full benefits. The earnings test applies
only to current wages. Income from savings, investments, nor other
pensions is not counted.

The Need Of There are three needs,

Health Insurance a) Need of broader set of services
b) Need of outpatient costs.
c)Third need is prevention measures by providing health education
and quality life.

The Select Mortality table giving rate depending on both age and duration elapsed
Mortality Table since entry are called the select mortality table.
 P a g e | 35

The Three a) Primary preventive

Preventive b) Secondary prevention
Levels c) Tertiary prevention

The Variable The variable annuity is designed to reduce the impact of inflation. The
Annuity annuitant income depends on the value of the insurer common stock
investments.

Theft Insurance Theft insurance covers all act of stealing .

Theory of The theory of profitability reveals the possibility of occurring a certain

Profitability event or not occurring a certain event out of the given events.

Third Party Third party is a person other than the principals.

Time Policy Under this policy the subject matter is insured for a definite a period of
time.

Total Income Total income includes premium income, income from investments and
miscellaneous.

Total Outgo Total outgo includes commission to agents, salary other benefits to
employees and other expense. The transfer to reserve and surplus share
paid to government are also included under outgo.

Traditional Net The traditional method of showing the cost of cash value life insurance
Cost Method the net cost method is misleading because it ignores the interest that
buyer could earn by investing their money elsewhere.

Transparency. Transparency means crystal glass where seen information without

ambiguity. The authority or board of directors is accountable to
policyholder and shareholders.

Treaty Treaty is a formal agreement between two or more states in reference to

peace, alliance, commerce, or other international relations.

Triple benefit This policy is a combination of a whole life limited payment and a pure
policy endowment with a guaranteed annual bonus payable during the
endowment term.

Types Of Credit Credit insurance covers all the commercial trade receivable under
Insurance. ‘Comprehensive Policy. When the insurer finds that the individual
buyer is not creditworthy, it does select the risk. Credit insurance
 P a g e | 36

policies are annually renewable.

Types Of There are two types of reinsurance

Reinsurance.
(i) Proportional Reinsurance
(ii) non-proportional Reinsurance

U-Z
Underwriting The process of reviewing applications submitted for insurance or
reinsurance coverage, deciding whether to provide all or part of the
coverage requested and determining the applicable premium.

Underwriting The aggregate of policy acquisition costs excluding commissions. and

Expenses portion of administrative, general and other expenses attributable to
underwriting operations.

Underwriting It depends on the number of years of experience you have and how
Experience much risk you are able to take now. It is a broad subject involving many
different duties.

Underwriting The amount of profit or loss from insurance activities exclusive of net
Result investment income and capital gains or losses.

Underwriting The year in which the contract of insurance commenced or was

Year underwritten.

Unearned The portion of premium representing the unexpired portion of the

Premium contract term as of a certain date.

Unilateral Life insurance contract is unilateral contract because, here, only the
contract insurer makes an enforceable promise.

Unvalued Policy. When the value of policy is not determined at the time of
commencement of risk but is left to be valued when the loss takes place.

Utmost Good Utmost good faith refers to full and true disclosure of all information of
Faith the insured object.
 P a g e | 37

Valuable Policy: Valuable policy is that policy where claim amount is to be determined
at the market price of the damaged property.

Valuation Determination of the worth of the asset to be insured or that which has
been damaged or lost.

Valuation It is a process to value the net liabilities of a life insurer as on a

particular date and determine the total amount of reserve.

Value of Service The value of service determines the rate of premium according to the
utility of insurance to each proponent.

Valued Policy. Under this policy, the value of loss to be compensate is fixed and
remains constant throughout the risk except where there is fraud and
excessive over valuation.

Vehicle Vehicle Insurance (also known as car insurance, motor insurance or auto
Insurance insurance) is insurance for cars, trucks, motorcycles and other road
vehicles.

Vesting When an employee receives a permanent, irrevocable right to receive

pension benefits, that right is said to be vested.

Voucher A small printed piece of paper that entitles the holder to a discount or
that may be exchanged for goods or services.

Voyage And The elements of voyage and time policy are combined in under this
Time policy. The reference is made certain period after completion of voyage.
Policy/Mixed
Policy

Voyage Policy. The policy is issued to cover a particular voyage from one port to
another and from one place to another. This policy is not suitable for
hull insurance as a ship usually does not operate over a particular route
only.

Waiver A Waiver is the voluntary relinquishment of a known right.

Waiver Of A waiver of premium rider is a clause in an insurance policy that waives

Premium the policy holder‘s obligation to pay any further premium should he
become seriously ill or disable so the waiver of premium allows people
to benefit from insurance policy even when they cannot work.

Warehouse To The island risk from the original place of departure to the part of
 P a g e | 38

Warehouse sailing and from the port to discharge the place of the final
Clause destination are insured under this clause.

Warranties A written guarantee, issued to the purchaser of an article by its

manufacturer, promising to repair or replace it if necessary within a
specified period of time.

Warranties Warranty is that by which the assured undertakes that some particular
thing shall or shall not be done or that some conditions shall be fulfilled
or whereby he affirms or negatives the existence of a particular state of
facts.

Whole Life Whole life insurance is a cash value policy that provide lifetime
Insurance protection, consists of several forms of level premium.

Whole Life A whole life insurance policy continues for the whole life and promises
Insurance Policy to pay the sun assured upon the death of the insured to his beneficiary.

Working Result Working result is calculated by finding the life insurance fund which is
equal to total income minus total outgo.

Written Premium Premiums written, whether or not earned, during a given period.

------------------------O------------------------