1.
Introduction to Insurance
Insurance is a legal contract between an individual or organization (insured)
and an insurance company (insurer), where the insurer promises to
compensate financial loss in exchange for a fixed premium. The main
objective of insurance is risk protection and financial security against
unexpected events.
2. Life Insurance
Life insurance is a contract in which an insurance company provides
financial protection to the family or nominee of the insured person in case of
death or, in some policies, survival up to a certain period.
Features of Life Insurance
1. Provides financial security to family members after death.
2. Premiums are paid regularly (monthly, quarterly, or yearly).
3. It is usually a long-term contract.
4. A fixed sum assured is guaranteed.
5. Some policies include savings and investment benefits.
6. Certain policies offer maturity benefits.
7. Loan facility is available against some policies.
8. Helps in long-term financial planning.
Example:
A person purchases a life insurance policy with a sum assured of 10 lakh
taka. If the policyholder dies during the policy period, the nominee receives
10 lakh taka from the insurance company.
3. Types of Life Insurance Policies
3.1 Term Life Insurance
This policy provides coverage for a specific time period. If the insured dies
within the term, the nominee receives the sum assured. No payment is
made if the insured survives the term.
Example: A 20-year term policy of 15 lakh taka pays the amount only if
death occurs within 20 years.
3.2 Whole Life Insurance
Whole life insurance provides coverage for the entire lifetime of the insured
person.
Example: If a person buys a whole life policy at age 30 and dies at age 70,
the nominee receives the policy amount.
3.3 Endowment Policy
This policy combines life coverage with savings benefits.
Example: A 15-year endowment policy pays the sum assured either on
death or on maturity if the insured survives.
3.4 Money-Back Policy
This policy provides periodic payments during the policy term along with life
coverage.
Example: A 20-year money-back policy may pay portions every 5 years and
the remaining amount at maturity.
3.5 Pension / Annuity Plan
Designed to provide regular income after retirement.
Example: A person starts receiving monthly pension after age 60 from the
insurance company.
4. Marine Insurance
Marine insurance provides protection against loss or damage to ships,
cargo, and freight during transportation by sea and related routes.
Features of Marine Insurance
1. Covers marine risks such as storm, sinking, collision, and fire.
2. Protects cargo, ships, and freight.
3. Based on the principle of indemnity.
4. Requires insurable interest.
5. Premium depends on risk factors like route and cargo type.
Example:
Goods transported from Chattogram to Singapore are damaged due to a
storm. Marine insurance compensates the loss.
5. Types of Marine Insurance Policies
5.1 Voyage Policy
Covers a ship or cargo for one specific journey.
Example: A shipment insured only for one trip from Bangladesh to Malaysia.
5.2 Time Policy
Provides coverage for a fixed time period.
Example: A ship insured for one year for all voyages.
5.3 Cargo Policy
Protects goods being transported.
Example: Garments exported overseas are insured against damage.
5.4 Hull Policy
Covers physical damage to the ship.
Example: Repair costs are paid after ship collision.
6. Fire Insurance
Fire insurance protects property against loss or damage caused by fire and
related risks such as explosion and lightning.
Characteristics of Fire Insurance
1. Covers fire-related damages only.
2. Follows the principle of indemnity.
3. Insurable interest is required.
4. Usually issued for one year.
5. Premium depends on fire risk.
Example:
A factory is damaged due to electrical short circuit. Fire insurance
compensates the loss.
7. Types of Fire Insurance Policies
7.1 Specific Policy
Covers a specific property for a fixed amount.
Example: A shop insured for 10 lakh taka receives compensation based on
actual loss.
7.2 Valued Policy
Pays a pre-agreed value.
Example: An antique insured for 5 lakh taka receives full payment if
destroyed.
7.3 Floating Policy
Covers goods at multiple locations.
Example: Goods stored in Dhaka and Chattogram covered under one
policy.
7.4 Comprehensive Policy
Provides wider protection including additional risks.
Example: Factory losses due to fire and explosion are covered together.
8. Conclusion
Insurance plays a vital role in reducing financial risk and ensuring economic
stability. Life, marine, and fire insurance each serve different purposes but
collectively contribute to personal and business security. Understanding
various insurance policies helps individuals and organizations make
informed decisions.