Life Insurance

Topics: Insurance, Life insurance, Insurance in India Pages: 47 (10978 words) Published: August 5, 2013
Chapter-1
Industry Profile
* History of Insurance * Types of Insurance * Life Insurance * Non Life Insurance| * Development of Life Insurance in India * Development of Life Insurance in Rural India * IRDA (Insurance Regulatory Development Authority) * Advantage of Life Insurance * Limitation of Life Insurance|

The History of Insurance

Although insurance may have been used by the Babylonians, the Greeks and the Romans, insurance in the modern sense originated in the Mediterranean during the 13th or 14th century. The earliest reference to insurance which have so far been traced appear in the accounts of North Italian merchant-bankers who dominated the international trade of Europ at that time. Marine insurance is the oldest form of insurance (1347), followed by life insurance some 300 years later and fire insurance (1666). Insurance in these fields followed the pattern that had been established in England.

Socio – Economic Significance of Insurance: The primary function of insurance is to spread the financial losses of insured members over the whole of the insuring community, by compensating the unfortunate few from the funds built up from the contributions of all, including fortunate many who escape losses. Besides, the practice of insurance has many secondary or subsidiary functions which contribute to the welfare of the individual or society. It tends more and more to transform our modern social order, fosters private and public interests, individual prudence, acts as an accelerator and as stabilizer of economic growth. Insurance has attained so great a popularity and importance these days that it has now become almost a “home – word.” The socio – economic significance of insurance has been well realized all over the world and it will be exaggeration to say that individual world without insurance is like a car without shock absorber. A father with a large family to support rests easy because he is insured against death; the farmer with his crop ripening in his field knows his insurance protects him against financial ruin by flood, rain, fire and windstorms, fog etc. The same is true about businessmen. Therefore, it is safe to believe “insurance is the shock – absorber of industry and individual.”

Practically, every kind of risk to which human being or property may be liable can now be insured against such risks. No trade, commerce and industry can function efficiently without insurance.

Insurance only spreads the financial losses of insured members over the whole of the remaining insured whose assets are not damaged. Thus, insurance company acts as a middle man for such social co-operation. It is infect a co-operative device designed to compensate one against losses because insurer collect premium from a large number of policy – holders and distribute to the victims only.

* Some of the important milestones in the life insurance business in India are: 1818: Oriental Life Insurance Company, the first life insurance company on Indian soil started functioning. 1870: Bombay Mutual Life Assurance Society, the first Indian life insurance company started its business. 1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business. 1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses. 1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public. 1956: on 19th of January, 1956, that life insurance in India was nationalized. About 154 Indian insurance companies, 16 non-Indian companies and 75 provident were operating in India at the time of nationalization. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India. The General insurance...
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