Important Concept and Terms of Insurance

Bancassurance :

Bancassurance means selling of insurance products through banks. The insurance companies and the banks come up in a partnership wherein the bank sells the tied insurance company’s insurance products to its clients. Bank Insurance Model is also termed as Bancassurance.


Actuary :

A person with expertise in the fields of economics, statistics and mathematics, who helps in risk assessment and estimation of premiums etc. for an insurance business, is called an actuary.

Actuaries are experts in:

1. Evaluating the likelihood of future events—using numbers, not crystal balls.

2. Designing creative ways to reduce the likelihood of undesirable event.

3. Decreasing the impact of undesirable events that do occur
.

Actuaries may also be involved with the acceptance of proposals for new policies, with legal and taxation matters affecting life assurance, or with the investment of funds.

Actuarial Science:

Actuarial science is the discipline that applies mathematical and statistical methods to assess risk in insurance, finance and other industries and professions. Actuarial science includes a number of interrelated subjects,
including probability, mathematics, statistics, finance, economics, financial economics, and computer programming.


Third Party Administrators:

Third Party Administrators or TPAs are a vital link between health insurance companies, policy holders and health care providers.

The TPAs maintain databases of policy holders and issue them identity cards with unique identification numbers and handle all the post policy issues including claim settlements.


Mortality Charge:

Mortality Charge is the amount charged every year by the insurer to provide the life cover to the policyholder on the life of the Life Insured. It is also called as Cost of Insurance.

It is the actual cost of insurance by the life insurance company. It is usually deducted with other charges in the policy, before investing your money. Mortality is dependent on the sum at risk (sum assured minus fund value) and should reduce as the fund value increases in the policy term.


What is Maturity Date :

 The maturity date is the date when the amount paid towards the life insurance policy is given to the  policy holder once the term of the policy ends. The maturity date tells you when you will get your principal back and for how long you will receive interest payments.


Who is an Agent :

 An Agent is a person who is licensed by state to sell Insurance. The Agents serve as an intermediary between the insurance company and the insured. The insurance company is responsible for the acts of its agents, and it can 
be assumed by the insurance applicant that any information or payment of money to the agent will be received by the insurance company. Agents are only responsible for the timely and accurate processing of forms, premiums, and paperwork.

(i) Captive Agent – Agent sell Insurance of a specific Company.
(ii) Independent Agent – Agent who works independently and sells Insurance of many companies.
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