It is an agreement between an insurer and a policyholder. The insurer promises to reimburse or compensate for the loss in this contract. In exchange, the insured must pay a premium for a set length of time. Insurance correspondence is any written information about it.
What are the types of insurance correspondence?
They are as follows:
- The Principle of Indemnity. The insurance, according to this theory, is unrelated to any profit.
- Faith. Both the insurer and the insured must trust each other completely.
What is insurance in business communication?
Insurance is a company that protects people and property from hazards such as fire, theft, burglary, and natural disasters. The insurance industry began in the private sector. Later, as a result of government policy, two massive firms emerged: LIC and GIC. Many new private enterprises, including foreign companies, have entered the area as a result of privatization. The insurance industry appears to have a bright future ahead of it. Faith and indemnification are the two basic principles that govern insurance. It is a business where both the customers and the company should have a high level of ethical value. Companies must strike a balance between competitiveness and ethical ideals. The content of insurance correspondence requires sensitivity, faith, courtesy, and transparency.
Policyholder:
The policyholder is the person who offers and pays the premium for the life insurance policy (see #7 Premium). The policyholder is the policy’s owner, and the life assured (see # 2 Life assured) may or may not be the policyholder.
Life assured:
The insured person is the life assured. The person for whom a life insurance policy is acquired to cover the risk of an untimely death is known as the life assured. The family’s breadwinner is, first and foremost, the family’s lifeline.
The policyholder may or may not be the life assured. For example, a spouse might purchase a life insurance policy for his wife. Because the woman is a stay-at-home mom, the husband pays the premium, making him the policyholder and the wife the life assured.
Sum assured (coverage):
When purchasing a life insurance policy, the financial loss that may occur due to the death of the life assured is typically chosen as a life cover. ‘Sum Assured,’ in technical words, is an amount that the insurer promises to pay in the case of the insured person’s death or the occurrence of any other covered event.
When comparing policies online, purchasing a life insurance plan, and reading the policy papers, you may come across the term’sum assured.’ If the insured individual dies during the policy term (see #5 Policy tenure), the life insurance company will pay the sum assured to the nominee (see #4 Nominee).
Nominee:
The ‘nominee’ is the person (legal heir) named by the policyholder to whom the life insurance company will pay the sum assured and additional benefits in the event of an unfortunate occurrence. The nominee could be the policyholder’s wife, child, parents, or other family members. If the life assured dies during the policy term (see #5 Policy tenure), the nominee must file a claim for life insurance.
Policy tenure:
The ‘policy tenure’ refers to how long the policy will offer life insurance coverage for. Depending on the type of life insurance plan and its terms and circumstances, the policy duration might range from one year to 100 years or whole life. It’s also known as policy term or policy length in some cases.
The policy duration determines how long the firm will cover the risk. Whole life insurance plans, on the other hand, provide life coverage for as long as the life assured is alive.
Maturity age:
The age at which the insurance finishes or terminates is referred to as the maturity age of the life assured. This is a different way of expressing how long the plan will be in effect than policy tenure. In essence, the life insurance firm specifies the maximum age at which the life insurance coverage will be granted to the person insured up front. For example, if you’re 30 years old, you might choose a term plan with a 65-year maturity age. That implies the policy will cover you until you are 65 years old, which means a 30-year-old can have a policy for up to 35 years.
Premium:
The premium is the amount you pay each month to keep your life insurance policy current and covered. The insurance will terminate if you are unable to pay the premium before the payment due date or even during the grace period (#13 Grace period).
Regular payment, limited payment term, and single payment (described below #8 Premium payment mode) are all choices for paying the premium.
Premium payment term/mode/ frequency:
Regular Premium Payment – You can pay premiums on a monthly, quarterly, half-yearly, or yearly basis throughout the insurance term. Premium Payment for a Limited Time – You can select to pay the premiums for a set period of time. This option allows you to pay for a specific number of years rather than the entire insurance term. For instance, ten years, fifteen years, twenty years, and so on.
Single Premium Payment – You have the option of paying the premium in one lump payment for the whole period of the plan.
Riders:
Riders are a paid-for provision that extends the coverage of a basic life insurance policy. Riders can be purchased at the time of purchase or on the anniversary of the policy. Riders of various varieties can be purchased in addition to the standard design. The quantity and type of riders, however, will vary by insurer.
Furthermore, the terms and conditions of one insurance policy may differ from another. Here is a list of some well-known riders that life insurance companies offer.
Death Benefit:
When you’re looking to buy a life insurance plan or researching different insurance plans online, the term ‘Death Benefit’ will come up frequently.
The ‘Death Benefit’ is the amount paid to the nominee by the life insurance company if the life guaranteed dies within the policy’s term.
Don’t be perplexed if you’re wondering if the sum assured and death benefit are the same thing. Because the death benefit can be as much as the sum assured or even more, depending on the rider benefit (if applicable) and/or other advantages. Except in the case of term insurance, where no bonus or guaranteed additions are accrued.
Survival/Maturity Benefit:
When the life assured outlives the policy’s term, the life insurance company pays a maturity bonus. When the life guaranteed has lived for the predetermined number of years specified in the policy, a survival bonus is paid.
Term plans provide no benefit in terms of survival or maturity. Other life insurance policies, on the other hand, may include a survival bonus or a maturity benefit.
Free-look Period:
It applies to all newly purchased life insurance policies. A free-look period is a period of time during which you can decide whether or not you want to keep your purchased insurance.
You have the option to return the policy during the Free-look period if you are not satisfied with the terms and conditions. After deducting the costs of the medical examination, stamp duty, and other fees, the insurance provider will reimburse the remaining payment. The free-look period in life insurance is 15 or 30 days after obtaining the policy document, according to the IRDA.
Grace Period:
If you are unable to pay your policy’s renewal premium on time, your life insurance company will grant you an extension in the number of days following the premium payment due date. In the event of monthly premium payment, a ‘Grace Period’ can last 15 days, and in the case of annual premium payment, it can last 30 days.
The insurance will lapse if the policyholder does not pay the premiums before the grace period expires.
Surrender Value:
The life insurance company pays the policyholder an amount called Surrender Value if the policyholder decides to cancel the plan before the maturity age.
However, whether a plan gives any surrender value or not, you must study the terms and conditions carefully. And, if a surrender value exists, how much will it be? Surrender value is not available in all life insurance policies.
Paid-up Value:
Insurance firms will provide the policyholder the opportunity to convert his policy into a reduced paid-up policy if the policyholder fails to pay the payment after a certain length of time. The sum covered is reduced in proportion to the number of premiums paid under this option. If there are any further advantages associated to the sum insured, they will now be related to the decreased sum insured, which is the paid-up value.
Revival Period:
The insurance will lapse if the policyholder does not pay the premium during the grace period.
If the policyholder still wants to keep the coverage, the insurance company offers the option of reactivating the lapsed policy. This must be completed within a certain amount of time after the grace period has expired. A revival period is the name given to this time period. The life insurance firm will submit the request to the team of Underwriters (see #17 Underwriters) for approval in order to reinstate the lapsed policy.
Underwriters:
Insurance underwriters assess the risk involved. The risk evaluation process begins prior to the issue of an insurance policy and concludes with the settlement of a claim (see #20 Claim Process).
The insurance is only issued to the policyholder with the permission of the underwriters. The corporation pays the claim benefit to the nominee only after receiving clearance from the Underwriter.
Tax benefits:
All premiums paid for a life insurance policy are deductible under Section 80 (C) of the Income Tax Act of 1961. The maximum amount of deductible that can be claimed is Rs.1.5 lakh.
Under Section 10 (10D) of the Income Tax Act of 1961, the benefits provided to the policyholder/nominee are tax-free.
Exclusions:
Read the ‘Exclusions’ carefully before purchasing any life insurance. These are items that are not covered by a life insurance policy and for which the insurance company would not pay a payout if a claim is made.
What do you mean by business letter?
A business letter is a communication between two businesses, or between businesses and their consumers, clients, or other external parties. The general tone of the letter is determined by the nature of the relationship between the persons involved. Business letters can be used to request direct information or action from another party, order goods from a supplier, point out a mistake made by the letter’s recipient, respond directly to a request, apologize for a mistake, or show goodwill, among other things. A business letter can be valuable because it creates a permanent written record and is more likely to be considered seriously by the receiver than other types of communication. It’s written in a formal tone.
What are the 3 main types of insurance?
In India, insurance can be split into three categories:
- Life insurance is a type of insurance that protects you from Life insurance, as the name implies, is insurance for your life.
- Health insurance is a need. Health insurance is purchased to cover the costs of pricey medical treatments.
What are the 5 main types of insurance?
Losses are unavoidable in life, and the extent to which they affect our lives varies. By providing financial compensation for covered losses, insurance lowers the impact. There are many different types of insurance, but there are a few that are more important than others. Everyone should have five types of insurance: home or property insurance, life insurance, disability insurance, health insurance, and automobile insurance.
What are the 4 types of insurance?
Fire, floods, accidents, man-made disasters, and theft are all covered by general insurance for your house, travel, automobile, and health (non-life assets). Motor insurance, health insurance, travel insurance, and home insurance are all examples of general insurance. A general insurance policy compensates the insured for losses sustained throughout the policy’s term.
What is the purpose of insurance?
The transfer of risk is the most basic function of property/casualty insurance. Its goal is to lessen financial risk and make unintentional loss more tolerable. It accomplishes this by paying a professional insurer a small, predictable feean insurance premiumin exchange for the assumption of the risk of a significant loss and a guarantee to pay in the case of such a loss.