Insurance can be termed as a form of risk management which is mainly used to protect an individual against the risk of prospective financial loss, if any. Insurance can be used as a tool to shield an individual against potential risks like travel accidents, death, unemployment, theft, property destruction by natural calamities, fire mishaps etc.
Different types of insurance is used to cover different properties and assets such as vehicles, home, health care etc. Basically, an insurance policy can also be known as a protection net which secures you from any financial losses in future.
All you have to do is pay the insurance agencies a specified amount every month, known as premium, so that they can take care of you by providing you financial back up in case of a sudden health emergency or a fatal incident.
There are two ways for getting an insurance done.
One way is to visit an agent and consult him for the best option you can avail for your situation. And then, trust him/her for their suggestion on the type of insurance they feel is right for you.
The other way is to research and choose on your own, the type of insurance which will be best suited for your situation. You should research the market as well as the net, to look for the best insurance companies, and further more, the most suitable type of insurance that they offer.
Also explore the various types of policies which are available to you in the market, and then compare to decide which one to choose finally.
Different types of insurances.
Insurance is Mainly two category 1 General insurance 2 Life insurance. but based on services we can divided in following 5 types
Health Care Insurance
With such high medical and health care costs these days, it’s hard to even think about visiting a doctor. But what about an unexpected mishap or an unforeseen disability or attack, where the potential medical bills could shoot up to a sky? Where would you get so much money from?
These are exactly the situations where you feel you had a security, something which could come to your rescue and save you from such financial crisis. While some companies do provide its employees with health insurance, for others, this is a must.
Especially for the aging couples, who have a comparatively more chances of needing emergency bill money. The health insurance does it all, so that they do not have to worry for the huge payments at the last minute.
A health insurance can cover all from a routine immunization to a major illness.
Life Insurance
Loss of a family member is a catastrophe which glooms a family’s life. But even more tragic is the death of a sole bread earner for the family, who then has to go through the pain of losing their loved one, as well as the financial loss putting their survival in jeopardy.
This financial hardship due to a sudden death of a family member or a disability resulting to a loss of job or inability to work can be avoided to a great extent by taking up a life insurance policy.
A Life insurance or disability insurance covers such losses and pays a family, compensation to restore the earnings lost by them due to a sudden death or disability.
The monthly premiums for a life insurance are generally based upon the age, health, and occupation information of the applicant, in addition to the total benefits to be paid to him for his policy.
Home Insurance
Real estate property and hard assets are subject to accidental risks like theft, destruction due to natural disasters or fire accidents etc. with such huge investments gone into buying a real estate property like your home or office, the risk involved is a loss of large amount of money.
Home and property insurance helps you in managing and protecting against these risks. The cost of a real estate property and its insurance is mostly based upon the worth of the already insured hard assets and also the location in which the assets are situated.
Travel Insurance
This is intended to cover any of the financial or any other losses which were incurred by the insured while traveling, be it nationally or internationally, such as mountain trekkers, cruise travelers etc.
Auto Insurance
Any vehicle on road, no matter how safe its driver is, is bound to meet with an accident or two, which may leave it with just a few scratches, or crash it up totally. Most countries today require you to have an auto insurance while on road in your vehicles.
If you have an accidental car crash, a total repair could cost you a fortune. On the other hand, a little scratch on your Land Cruiser might also soar up your bills to a high.
Whether or not you need an auto insurance mostly depends on the type of car you own.
If you have an expensive car and a little repair could wipe you out financially, you should very well go in for a buying an all-inclusive and crash insurance which could protect you against any and every harm done to your vehicle.
Thursday, June 30, 2011
Basics of Insurance
Meaning of Insurance
Insurance provides financial protection against a loss arising out of happening of an uncertain event. A person can avail this protection by paying premium to an insurance company.
A pool is created through contributions made by persons seeking to protect themselves from common risk. Premium is collected by insurance companies which also act as trustee to the pool. Any loss to the insured in case of happening of an uncertain event is paid out of this pool.
Insurance works on the basic principle of risk-sharing. A great advantage of insurance is that it spreads the risk of a few people over a large group of people exposed to risk of similar type.
Definition
Insurance is a contract between two parties whereby one party agrees to undertake the risk of another in exchange for consideration known as premium and promises to pay a fixed sum of money to the other party on happening of an uncertain event (death) or after the expiry of a certain period in case of life insurance or to indemnify the other party on happening of an uncertain event in case of general insurance.
The party bearing the risk is known as the 'insurer' or 'assurer' and the party whose risk is covered is known as the 'insured' or 'assured'.
Concept of Insurance / How Insurance Works
The concept behind insurance is that a group of people exposed to similar risk come together and make contributions towards formation of a pool of funds. In case a person actually suffers a loss on account of such risk, he is compensated out of the same pool of funds. Contribution to the pool is made by a group of people sharing common risks and collected by the insurance companies in the form of premiums.
Insurance provides financial protection against a loss arising out of happening of an uncertain event. A person can avail this protection by paying premium to an insurance company.
A pool is created through contributions made by persons seeking to protect themselves from common risk. Premium is collected by insurance companies which also act as trustee to the pool. Any loss to the insured in case of happening of an uncertain event is paid out of this pool.
Insurance works on the basic principle of risk-sharing. A great advantage of insurance is that it spreads the risk of a few people over a large group of people exposed to risk of similar type.
Definition
Insurance is a contract between two parties whereby one party agrees to undertake the risk of another in exchange for consideration known as premium and promises to pay a fixed sum of money to the other party on happening of an uncertain event (death) or after the expiry of a certain period in case of life insurance or to indemnify the other party on happening of an uncertain event in case of general insurance.
The party bearing the risk is known as the 'insurer' or 'assurer' and the party whose risk is covered is known as the 'insured' or 'assured'.
Concept of Insurance / How Insurance Works
The concept behind insurance is that a group of people exposed to similar risk come together and make contributions towards formation of a pool of funds. In case a person actually suffers a loss on account of such risk, he is compensated out of the same pool of funds. Contribution to the pool is made by a group of people sharing common risks and collected by the insurance companies in the form of premiums.
Wednesday, June 15, 2011
Mutual Fund -KYC Requirements for an NRI or PIO ,Investing in India
InvestmentYogi takes a look at what it takes to become Know-Your-Customer (KYC) compliant if you are an NRI or a PIO card holder.
As of 1st January, 2011, Know-Your-Customer (KYC) norms are mandatory for all retail investors, irrespective of the amount you are investing. In the past, retail investors who had invested less than Rs 50,000 had not been required to follow KYC guidelines. That has now changed.
How to become KYC Compliant
CDSL Ventures Limited (CVL), a wholly owned subsidiary of Central Depository Services (India) Limited (CDSL), has been appointed by the mutual fund industry, to do the KYC verification of the investors in India.
You will need to submit the following mandatory documents at a CVL Points of Service (POS) location:
1) Completed KYC application form
2) Address Proof (A utility bill, passport, letter from your employer or housing society, ration card, voter ID card, or drivers licence are all acceptable forms of residential proof.)
3) PAN Card
If you are submitting your KYC application in person you will need to have the original documents with you, as well as the copies to be processed. Originals will be returned to you after they are verified as accurate.
If you are sending the document through a courier, documents need to be attested by a Notary Public, Gazetted Officer, or Manager of a scheduled commercial bank.
As of now, there are no charges/fees for KYC verification.
Additional Information for NRIs and PIOs
Additional information for NRIs and PIOs (Person of Indian Origin) will be:
1) Certified True Copy of Passport
2) Certified True Copy of the Overseas address
3) Permanent address
4) For PIO – A certified true copy of the PIO Card
All documents must be submitted in English and can be attested by the Consulate office or overseas branches of scheduled commercial banks registered in India.
How to be compliant if you live outside India
As mentioned above, you will need to get the soft copy of the KYC form that is made available on the website of all Mutual Funds, AMFI and Central Depository Services (India) Limited (CDSL). The same duly completed along with the necessary attested documents (see above list) can be submitted at the POS or mailed to your representative or distributor who can complete the KYC formalities.
As of 1st January, 2011, Know-Your-Customer (KYC) norms are mandatory for all retail investors, irrespective of the amount you are investing. In the past, retail investors who had invested less than Rs 50,000 had not been required to follow KYC guidelines. That has now changed.
How to become KYC Compliant
CDSL Ventures Limited (CVL), a wholly owned subsidiary of Central Depository Services (India) Limited (CDSL), has been appointed by the mutual fund industry, to do the KYC verification of the investors in India.
You will need to submit the following mandatory documents at a CVL Points of Service (POS) location:
1) Completed KYC application form
2) Address Proof (A utility bill, passport, letter from your employer or housing society, ration card, voter ID card, or drivers licence are all acceptable forms of residential proof.)
3) PAN Card
If you are submitting your KYC application in person you will need to have the original documents with you, as well as the copies to be processed. Originals will be returned to you after they are verified as accurate.
If you are sending the document through a courier, documents need to be attested by a Notary Public, Gazetted Officer, or Manager of a scheduled commercial bank.
As of now, there are no charges/fees for KYC verification.
Additional Information for NRIs and PIOs
Additional information for NRIs and PIOs (Person of Indian Origin) will be:
1) Certified True Copy of Passport
2) Certified True Copy of the Overseas address
3) Permanent address
4) For PIO – A certified true copy of the PIO Card
All documents must be submitted in English and can be attested by the Consulate office or overseas branches of scheduled commercial banks registered in India.
How to be compliant if you live outside India
As mentioned above, you will need to get the soft copy of the KYC form that is made available on the website of all Mutual Funds, AMFI and Central Depository Services (India) Limited (CDSL). The same duly completed along with the necessary attested documents (see above list) can be submitted at the POS or mailed to your representative or distributor who can complete the KYC formalities.
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