What is insurance? Why do you do insurance? What are the popular life insurance policies?

Insurance is a contract. It is a legally binding contract between two parties. One party enters into a contract promising to indemnify the other party. The other party enters into a contract promising to pay a premium at a fixed rate to receive compensation. An agreement between the first party insurer and the second party insured guaranteeing payment of indemnity and premium respectively. If life insurance does not cover losses, no value can be measured in human life. Hence financial security is provided in life insurance.

What is insurance? Why do you do insurance? What are the popular life insurance policies?

Insurance industry plays a very important role in the economic development of any country. Insurance helps in capital formation by collecting small savings (premium) from the public. Ensures compensation for human life, debt and property. Having such reassurance makes people feel safe in their workplace and can concentrate on work. As a result, personal productivity increases. Thus, if individual production increases, national production increases. When production increases, the standard of living of people improves and overall economic prosperity of the country occurs. For example: life insurance contract, fire insurance contract etc.

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What are the benefits of insurance?

Money is very important for a person's life to run smoothly and so is financial security. And insurance helps in providing security to your life and property. The benefits of insurance are given below.

Benefits of Insurance:

(1) It provides security of life and property.

(2) It creates capital.

(3) It is old age and emergency assets

(4) It gives peace of mind.

(5) It provides finance to business.

(6) It reduces inflation.

(7) It provides security of social property.

What are the steps for insurance coverage?

You have to take insurance under any plan from the insurance company. Insurance companies usually provide insurance benefits in different categories. No matter which company you take insurance from, get details about it from the company representative or from their official website.

Below are the steps you need to take to get insurance.

The steps to get insurance are:

The customer is informed about the various plans from the insurance company's sales representative or website and reviews the various plans.

You have to select the plan of your choice.

To get the plan of the insurance customer's choice, the insurance company has to apply in the prescribed form.

Reviewing the application and supporting documents submitted by the insured: Insurer's underwriting decision

Payment of premium by the insurance customer after receiving the decision of the insurance company. That is, if you want to take insurance benefits, you have to pay the premium at a fixed rate.

The insurance contract is finalized by the insurance company through the FPR after the premium is paid by the insured.

Insurance documents are to be collected by the customer after execution of FPR by the insurance company.

What is the insurance premium?

An insurance premium is the reimbursement of the insurer's promise to indemnify or pay a claim to the insured in an insurance contract. In case of life insurance, the policyholder pays the premium to the insurer/insurance company where the insurance company pays the insurance claim on the death of the insured on or before the expiry of the specified term. So by analyzing different views of experts, the definition of premium is as follows:

"Contract of insurance means an undertaking by the insurer to mitigate or meet any pecuniary loss arising out of a future uncertainty or danger to the life or property of the insured, or in return for a promise to pay normal insurance claims from the insured at a specified rate or at specified intervals up to a specified time." or receiving a lump sum is called insurance installment or premium. 

In case of life insurance, the premium is usually collected in annual installments. However, for the convenience of the policyholder, there are also arrangements to pay the premium on six-monthly, quarterly and even monthly basis.

What is the total sum insured?

The subject of life insurance is human life. It is not possible to determine the value of life. Hence, in the case of life insurance, the amount of financial benefit that an insurance company provides to the policyholder in return for a fixed amount of premium is called sum insured.

How are premium rates determined?

In this case you have to remember which country you are a citizen of. Every country has insurance laws. How the insurance is to be determined or administered is stated in the law. Also insurance companies have certain policies.

The actuary will determine the insurance premium as per the Insurance Act, 2010. The premium is determined depending on factors such as: sum assured, term of insurance, age of the insured, office expenses, mortality table, commission expenses etc.

What is insurance or insurance plans?

The scheme prepared by the actuary states what risk the insurance company will take in return for a certain premium between the policyholder and the policyholder, i.e. what benefits will be given to the policyholder, what benefits will not be given, what will not be at risk, the scheme with various conditions is called insurance scheme.

An insurance company has different schemes in different categories. These are basically insurance plans. Example: Term Plan, Temporary Plan etc.

What is profitable/unprofitable/term plan?

Profitable Plan: A life insurance policy where a dividend or bonus is paid to the policyholder along with the sum assured at the end of the term is called a profitable insurance policy or a profitable plan.

Non-profit plan: A life insurance policy where the policyholder receives only the sum assured at the end of the term is called a non-profit insurance policy or non-profit plan or non-bonus plan. The premium rate of this type of insurance plan is very low.

Term Plan: In this type of insurance plan, the sum assured is paid if the insured dies within the policy term, if the insured survives till the end of the term, no monetary benefit is due. The premium rate of this type of insurance plan is very low.

What are the plans of the life insurance corporation?

The insurance plans launched by Life Insurance Corporation are:

01. Life Insurance (with benefits)

02. Term Insurance (with benefits)

03. Progressive Term Insurance (with benefits)

04. Expected Term Insurance (with Profit)

05. Multi Installment Insurance (with benefits)

06. Marriage policy

07. Joint Term Insurance

08. Child Safety Insurance

09. Dual Security Term

10. Pension insurance

11. Health Insurance

12. Single Premium Policy (with Benefits)

13. Triple Protection Principle


15. Life Insurance (Without Profit)

16. Term Insurance (Without Profit)

17. Anticipated Term Insurance (Without Profit)

18. Overseas Mediclaim Policy

19. Self-Dependent Insurance (Without Profit)

20. Property Tax Insurance (Non-Profit)

21. Education and Marriage Insurance (with benefits) for boys and girls

22. Guaranteed Bonus Term Insurance

23. Money Back Term Policy (Without Profit)

24. Term Insurance (Without Profit)

25. Self-Dependent Insurance (Single Premium Policy)

26. Life Insurance Scheme for Poverty Alleviation

27. Expatriate Insurance

28. JBC Monthly Savings Scheme

29. JBC Expected Monthly Savings Scheme

30. Social Security Insurance (with benefits)

31. Promila DPS (with profit)

32. Hajj Insurance (with benefits)

33. Rural Life Insurance (with benefits)

34. Mortgage Protection Policy

What is insurance or insurance contracts?

An agreement entered into between the insured and the insurer to transfer the potential risk of human life or property is called an insurance contract. In the case of insurance contract, the insured transfers the risk in return for payment of installments or premium for a specified period and the insurer accepts the premium for a specified period.

That is, if any potential accident results in damage to the insured's property, or death of life or life insurance expires, the insurance contract is a contract to pay a fixed amount. Insurer or his nominee the insurer.

What is insurance or insurance offers?

An insurance proposal is a written request made by the insured to the insured to accept insurance. Generally:

Insurance is issued on printed paper prescribed by the insurance company. Where policyholder's name, father's name, mother's name, occupation details, date of birth, permanent address, present address, list and tenure of insurance, insurance number, premium amount, method of premium payment, income and source of income Nominator's name, age, relationship, subscriber's signature , date of application, witness statement etc. are recorded.

What information and documents must the insured provide to make the insurance contract?

All the information and documents to be provided by the insurance customer for concluding the insurance contract are as follows:-

  1. Details of the name and address of the insured must be submitted.
  2. Occupation Details of the insured customer Proof of occupation of the specified customer must be submitted.
  3. Insured must submit proof of income detailing area specific income.
  4. The professional address of the insured must be submitted.
  5. Insurance customer has to submit proof of age.
  6. Passport size photograph of policy holder and nominee should be submitted.
  7. Medical/Non-Medical report to be submitted as proof of good health.
  8. For larger sum insurance / age wise urine test report, ECG report, X-ray report and various blood test reports are to be submitted.
  9. Persons working abroad should submit attested photocopy of passport and passport page with latest Bangladesh arrival stamp.

What insurance customers should be tested?

The policyholder or insured generally needs to verify the following:-

  • Whether all information in the proposal is correctly and accurately recorded.
  • Whether the financial capacity or capacity of the insurance company is sufficient.
  • Whether all information is correctly recorded in the insurance document.
  • Whether the sales representative of the insurance company has proper appointment letter.

Why invest in premium?

Insurance companies invest the surplus (if any) from their premium income after payment of insurance claims, commission, salary-bonuses of development officers and management expenses in safe and profitable sectors for the following reasons:

A: Payment of insurance claims: 

Interest, bonus etc. are added to the premium collected and naturally the amount of insurance claim is much higher than the premium received. Hence there is no alternative to invest the premium received to equalize potential claims by investing in safe and profitable sectors.

B. Covering the financial shortfall: 

The premiums received from insurance customers are much lower than the insurance claims payable.
Premium investment is essential to avoid any financial difficulties in paying insurance claims on time.

C. Support to national economic activity:

The huge premiums collected by the insurance industry must be invested in government development activities, increase national production by developing domestic industries and strengthen national economic strength by exporting surplus production.

Premium investment is very important in insurance business. The success of an insurance company largely depends on the sound and efficient management of investment activities.

What are insurance agents and agents' jobs?

Agent: The person who sells the insurance scheme/insurance policy to the customer on behalf of the insurance company is called agent or insurance representative. Bima Pratidhi acts as a bridge between the insured and the insurance company. Section 124 of the Insurance Act-2010 contains provisions relating to insurance agents. Insurance agents get commission from insurance companies as per the governing law.

Job of Agent: The role of agent is very important in life insurance business. An insurance agent does the following on behalf of an insurance company:

(1) Sale of insurance policies by appointed insurance companies.
(2) Encourage the insured to pay renewal premiums on time.
(3) Insurance binds the insured with the insurance company to pay the claim.

In order to perform the above functions, the insurance company takes measures to establish relationships between the insured. This is why agent activity is very important in expanding life insurance business. If the agent's activities are done faithfully, the insurance product is highly successful in marketing.

What is a surveyor? Why is this important to insurance companies?

One of the most difficult and important aspects of property insurance is the correct policy and correct application of indemnity. This principle states that compensation in case of loss of assets or property should be equal to the amount of loss. Neither more nor less. Giving a broad interpretation of this policy, it states that if there is any loss of assets or property and the risk is assumed in the insurance policy, the insurance company will compensate the affected person or organization to the extent that the person or organization was in the same financial condition as before the loss. go back
The problem is who will determine the true value of the damage? Insurance company or policyholder. Both are interested parties. It is not unusual for insurance companies to seek to minimize losses and maximize the claims of the insured. The only way to resolve this issue is through a third party or organization. The duty of determining the actual loss in the question of claim is entrusted to a person who is honest, impartial and experienced in determining the actual loss subject to general insurance and knows all its technical aspects. This is what is done in general insurance business. Those who are entrusted with this responsibility are called surveyors.

Surveyors are experienced and skilled in all technical aspects of determining the actual loss of a general insurance matter. Government gives certificates to such persons or organizations and only government certified surveyors submit their survey report or survey report to the insurance company in case of any damage to assets or property. The value of this survey report is very important in claim settlement. The role of surveyors in general insurance business is therefore important.

How does the insurer pay insurance claims?

As per the terms of the insurance contract, the insurance company pays compensation in return for premium in case of any uncertain possibility or contingency. Claim availability is the insured's legal right. Life insurance claims are paid only to the legal owner. As per the terms of the insurance contract, the insurance company pays the sum assured in 02 (two) types of cases.
a) Death or accidental disability of the insured within the stipulated period of the insurance contract.
b) After the expiry of the stipulated period, depending on the type of insurance scheme, the sum insured is paid partially or fully to the policyholder or nominee or to the assignee of the property.

Payment/Settlement of Death Insurance Claim: 

In case of death insurance claim the valid claimant of the policyholder has to submit the following documents to the insurer:
1) Death certificate, funeral/cremation certificate, original insurance document, age certificate issued by the attending physician at the time of death of the insured.
2) Claim form, identity card, employer's statement and doctor's statement form provided by the insurance company.

After receiving the documents stated by the valid claimant/nominee of the policyholder, the insurer follows its statutory postmortem claim settlement process and conducts an inquiry as necessary and if the inquiry report is positive, an executive receipt is sent to the nominee with the approval of the appropriate authority. The nominee duly fills out the executive receipt. On return to the insurer, a payable check is sent to the bank account of the insured nominee.

Post term insurance claim payment/settlement: 

Post term claim is when the insured claim is payable after the expiry of the specified period/term of insurance as per the insurance plan during the life of the policyholder. In case of term insurance claim the policyholder has to submit the following documents to the insurer:

1) Age proof (if age not proved earlier).
2) Proof of ownership (if ownership is imposed)
3) Original insurance document.

In case of maturity insurance claim, if the policyholder submits certain documents to the insurer, the insurer sends the executive receipt to the insured. After the insured properly fills out the executive receipt and returns it to the insurer, the insurer sends an account payable check to the insured's bank account.

When does the insurer pay the bonus to the customer with the insurance claim?

If the funds of the insurance company are more than the actual liabilities of the insurance company, then the excess is called surplus. The surplus obtained after the valuation process conducted by the actuary is distributed by the insurance company in the form of bonus along with the insurance claims of the insured customers. 

However, the bonus is offered only on profitable insurance plans. Also the declared bonus is paid along with the paid price.

What is Tamadi policy and why is Tamadi? (Policy cancel)

Generally, the policy earns surrender value only after two or three years of service. For those policies which have not earned the surrender value except the first premium, if the subsequent premiums are not deposited within the grace period, the policy will be canceled or lapsed.

All these Tamadi policies can be started at any time (not exceeding 5 years) subject to payment of outstanding premium with interest charged by the Corporation, supporting documents (eg: declaration of good health, short medical report, full medical report).

Policies expire or cancel for various reasons. For example:-
  • If insurance documents are not issued on time.
  • If the Premium Demand Notice is not sent on time.
  • Failure to provide after sales service i.e. failure to maintain contact with insurance customers after the sale of the policy.
  • If the policy is not sold by untrained sales representatives according to the needs and capabilities of the insured.
  • If the insurance seller/agent makes unrealistic promises (which cannot be fulfilled) to the insurance customer.
  • If you are not getting good service from the insurer's office.
  • If the insured suddenly faces financial problems.
  • If the insurance customer needs to change the policy.
  • If the policy-bonus rate declared by the insurer is not satisfactory.
  • If the reputation of the insurer is tarnished.

What is the customer's loss if the policy is cancelled?

1. In case of cancellation of the policy the insurance customer faces financial loss. Because tamadi policies do not earn surrender value, the policyholder does not get his deposit back.

2. If the policy lapses, the life of the insured is not covered. Consequently, in case of premature death of the policyholder, his nominee does not get any benefit of the policy. As a result, the insured's nominee and family face an uncertain future.

What is Survival Benefit and Paid-up Policy?

Survival Benefit (Expected Benefit): 

In that life insurance policy, a monetary benefit is paid to the policyholder at a percentage rate of the principal sum assured after a specified period of time if the insurance is in force before the expiry of the policy. The portion payable at the said percentage rate is called survivorship benefit or expected benefit. Eg: In three installment insurance plans and multi installment insurance plans, survival benefit or expected benefit is paid to the insured at fixed intervals.

Paid-up policy (Paid-up Insurance): 

After two or three years of policy validity, the policyholder can convert the original policy into a policy by paying a relatively low one-time premium at the cash surrender value. This type of convertible insurance is called a paid up policy. Surrender value earned on paid up insurance is treated as one time premium for that insurance and no further premium is payable thereafter. The insurance provided under the original insurance contract becomes a claim. 

The bonus profit earned during this period is distributed along with the sum assured in the insurance plan. Paid up insurance is the future value of the insurance. This premium is either paid to the policyholder at maturity or to the policyholder's nominee on premature death during the term.

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