The concept of life insurance

The concept of life insurance

 

Life insurance - a special and rather complicated kind of insurance. In its consumer properties it is directly adjacent to the adjacent types of personal insurance, as well as the services of other financial institutions - banks, pension funds, mutual funds. Therefore it is very important to understand the distinctive features of life insurance to be able to distinguish it from other similar services.
Definition of Life Insurance
Life insurance is a sub-sector of private insurance and combines several types of insurance. In all of these types of insurance accident linked to the unpredictability of the death of man. Therefore, in general, it can give the following theoretical definition of life insurance:
Life insurance - a combination of types of life insurance, where the insured risk is caused by random duration of human life.
Strictly speaking, these risks are only two:
the risk of death;
the risk of survival up to a certain point in time or event.
Therefore, in the narrow sense is a life insurance coverage these risks individually or in combination in any proportion.
However, life insurance contracts often include risks related types of personal insurance. The result is a comprehensive insurance relating to life insurance and other types of personal insurance. Moreover, when long-term insurance risks such as disability and critical illness also have to take into account mortality. Therefore, these kinds of insurance are also sometimes referred to as life insurance.
The principle of compensation and the principle of pre-defined amounts

The principle of payments for life insurance differs from property insurance.
Property insurance operates on the principle of compensation. Insurance indemnity is intended to compensate for it caused as a result of the losses of the insured event. Therefore, it is called "insurance compensation".
In contrast, life insurance, as well as other types of personal insurance (excluding health insurance), there are the so-called "principle of pre-defined amounts". According to this principle, when the insured event payment is made in a particular even in the contract amount (usually the sum insured), irrespective of the amount of actual damages. Therefore, prior to making the 1997 amendments to the Law on Insurance in the Russian Federation, payment of personal insurance reimbursement is not called, and the "insurance coverage". Now legal documents and in practice, a universal concept of "insurance benefit".
Insurance capital and annuity insurance

In life insurance, apply two basic forms of payment:
and a lump sum payment
regular periodic payments.
Insurance with a lump sum is often called the capital of insurance (eg insurance capital in the endowment).
Regular periodic payments in the English-speaking countries are called "annuity" (annuity), in continental Europe - "rent." If regular periodic payments begin in connection with the termination of employment a person because of age or sickness (ie, to achieve the so-called "pension foundations"), they are called "pension"