ANALYSIS OF RISK AND RETURN TRADE OFF BY LIFE INSURANCE COMPANIES WITH SPECIAL REFERENCE TO MAJOR LIFE INSURANCE COMPANIES
SYNOPSIS SUBMITTED FOR REGISTRATIO N OF Ph.D RESEARCH WORK
R.T.M. NAGPUR UNIVERSITY 2011
To examine the challenges faced by insurance companies today. To study the contribution & specialty of insurance companies. Analysis of various risks faced by insurance companies today. To study why do these companies manage these risks and how.
To examine where and how do they make their investments
To study how do insurance companies strike a risk-return trade off
Insurance plays a crucial role in common man’s life.
Insurance companies deals with uncertainty and hence deals with various types of risks. Risk management is necessary for all organisations.
Analysis of risk and its proper management is very necessary to strike a proper risk-return trade off in present scenario. What is Life Insurance?
Human life is subject to risks of death and disability due to natural and accidental causes. When human life is lost or a person is disabled permanently or temporarily, there is a loss of income to the household. The family is put to hardship. Sometimes, survival itself is at stake for the dependants. Risks are unpredictable. Death/disability may occur when one least expects it. An individual can protect himself or herself against such contingencies through life insurance.
Life insurance is insurance on human beings. Though Human life cannot be valued, a monetary sum could be determined which is based on loss of income in future years. Hence in life insurance, the Sum Assured (or the amount guaranteed to be paid in the event of a loss) is by way of a ‘benefit’ in the case of life insurance. Life insurance products provide a definite amount of money to the dependants of the insured in case the life insured dies during his active income earning period or becomes disabled on account of an accident causing reduction/complete loss in his income earnings.
An individual can also protect his old age when he ceases to earn and has no other means of income – by purchasing an annuity product In addition, you should also make a list of what you feel needs to be protected in your family's way of life. With a life insurance policy in place, you can:
• provide security for your family
• protect your home mortgage
• take care of your estate planning needs
• look at other retirement savings/income vehicles
HISTORY OF INSURANCE
Life insurance has its origin way back in Babylonian times, around 2100 B.C., the Code of Hammurabi was the first basic insurance policy. This policy was paid by the traders in the form of a loan to guarantee the safe arrival of their goods by caravan. Of course, caravans faced the same kind of perils our transportation industry faces today – like robbery, bad weather and breakdowns. As history progressed, the needs for insurance increased. The Phoenicians and the Greeks wanted the same type of insurance with their seaborne commerce. The Romans were the first to have burial insurance – people joined burial clubs which paid funeral expenses to surviving family members. In medieval times, the guilds protected their members from loss by fire and shipwreck, paid ransoms to pirates, and provided respectable burials as well as support in times of sickness and poverty. Then came the very first actual insurance contract, signed in Genoa in 1347. Policies were signed by individuals, either alone or in a group. They each wrote their name and the amount of risk they were willing to assume under the insurance proposal. That’s where the term underwriter came from. In...