LIFE & HEALTH INSURANCE

UNIT 1
INTRODUCTION
 RISK
 MANAGEMENT OF RISK
 INSURANCE
o NON LIFE INSURANCE
o LIFE INSURANCE
 HISTORY
NON LIFE INSURANCE COMPANIES
1) Himalayan Everest Insurance Ltd.
2) Sanima GIC Insurance Ltd.
3) National Insurance Co. Ltd.
4) Neco Insurance Co. Ltd.
5) Nepal Insurance Co. Ltd.
6) NLG Insurance Co. Ltd.
7) Oriental Insurance Co. Ltd.
8) Prabhu Insurance Co. Ltd.
9) Rastriya Beema Co. Ltd.
10) Sagarmatha Lumbini Insurance Co. Ltd.
11) Siddhartha Premier Insurance Co. Ltd.
12) IGI Prudential Insurance Co. Ltd.
13) Shikhar Insurance Co. Ltd.
14)United Ajod Insurance Co. Ltd.
LIFE INSURANCE
COMPANIES
1) American Life Insurance Co. Ltd. (Metlife)
2) Asian Life Insurance Co. Ltd.
3) Citizen Life Insurance Co. Ltd.
4) I.M.E. Life Insurance Co. Ltd.
5) Surya Jyoti Life Insurance Co. Ltd.
6) Life Insurance corporation (Nepal) Ltd.
7) Prabhu Mahalaxmi Life Insurance Co. Ltd.
8) National Life Insurance Co. Ltd.
9) Nepal Life Insurance Co. Ltd.
10) Rastriya Beema Sansthan.
11) Reliable Nepal Life Insurance Ltd.
12) Sanima Reliance Life Insurance Ltd.
13) Sun Nepal Life Insurance Co. Ltd.
14) Himalayan Life Insurance Ltd.
Re Insurance Companies
 Nepal Re Insurance Co. Ltd.
 Himalayan Re Insurance Ltd.
Micro Insurance
Comapnies
 Nepal Micro Insurance Co. Ltd.
 Protective Micro Insurance Ltd.
 Guardian Micro Life Insurance Ltd.
 Crest Micro Life Insurance Ltd.
 Life Insurance 14
 Non Life Insurance 14
 Re Insurance 2
 Micro Insurance 4
 Total 34
RISK
 UNCERTAIN EVENT

 POSSIBILITY OF OUTCOME
DIFFERENT THAN EXPEXTED
 Risk-an unwanted event in the
future. Such as fire, accident,
thefts, explosion etc.
 Risk is in every steps, but world
has to continue, even in the face of
risk, the most we can do is to try to
manage our exposure to risk.
 Can we ban motor vehicles to stop
road acidents?
 Risk-chance or probability of loss.
 Risk- unfortunate things which
may happen in future
 Uncertainty- in this world nothing
is certain except death.
 Uncertainty-unpredictability of
danger.
Classification of Risk
 Pure risk- such as which causes loss
with no possibility of gain. Eg:Fire,
storm, death, injury etc. These are
insurable risk.
 Speculative risk: Outcome of such risk
may causes loss or profit. Eg:
business risk, Change of fashion,
change of Foreign-ex rate. These risk
are uninsurable risk.
MANAGEMENT OF RISK
 AVOIDENCE
 RETENTION
 TRANSFER
 SHARED
 REDUCTION/CONTROL
AVOIDENCE
 Most drastic way to handle risk.
 Ceasing to undertake the activity
which creates the risk.
 Performing it in another way or at
some other places.
 Example: Payment through bank
to avoid loss of cash in transit/
Shift of site to other place to avoid
flooding damage.
RETENTION
 Paying for the small losses out of
own resource when they occur.
 Set aside a contingency fund for
large losses.
 Self Insurance.
TRANSFER
 Transfer of the activity that creates
the risks

 Transfer of the financial losses

arising from the occurrence of risks
 Insurance is simply a risk transfer
mechanism
 With payment of certain amount of
premium one can relieved of the
uncertainty as to how costly any
future loses will be as the benefit
of insuring is that loss costs are
fixed.
REDUCTION
 Elimination of risk is impossible.
 It is loss prevention.
 Reduction of chances of loss
producing events ocuring.
 Reduction of potential size of
losses that do occur. (FEA)
INSURANCE
 Form of risk management from
uncertain loss
 Distribution of risk
 Contract between Insurer and
Insured (Written agreement)
 Insurance is Sharing losses of few
among many
 It’s a technique which provides for
collection of small amounts of
premium from many individuals
and firms out of which losses
suffered by a few are reimbursed
 Individuals or firms are able to buy
protection through payment of
small amount of premium
 Insurance comes in to play only after
there is some loss sustained by insured.
 Insurance is to compensate the sufferer
financially and it tries to restore the
sufferer in original position.
 Thus, It’s a transfer of risk for
consideration i.e Premium and being free
from anxieties and uncertainty
Definition of Insurance
 A contract between insured and
insurer in which insured promise to
indemnify loss suffered by insurer
due to insured perils and insurer
pays premium as consideration.
TYPES OF INSURANCE
 NON LIFE INSURANCE

 LIFE INSURANCE
NON LIFE INSURANCE
 Fire
 Motor
 Marine
 Engineering
 Aviation
 Miscellaneous
LIFE INSURANCE
 Contract between an insurance
policy holder and an insurer
 The insurer promises to pay a
designated beneficiary a sum of
money (the benefit) in exchange
for a premium, upon the death of
an insured person (often the policy
holder).
 The goal of life insurance is to
provide a measure of financial
security for your family after you
die
 Before purchasing a life insurance
policy, you should consider your
financial situation and the
standard of living you want to
maintain for your dependents or
survivors
HISTORY
 Insurance like activities since
ancient period in the form of
trust/Society
 Modern Insurance-14th Century-
Northern Italy through marine
insurance.
 In 1680-UK-Edward Lloyd’s coffee
house-practice of individual
underwriting
 1666 Great Fire of London. (85%
houses destroyed)
 1680 Est of Fire office in London
 1681 Nicholas Barbon established
Englands first Insuarnce company
(Insuarnce office for Houses)
 1732 USA established their first
Insuarnce co.
 1780 to 1850 Industrial revolution.
 19th Cent. Accident insurance
started with invention of railways
 1898-UK-Motor TP insurance
started with invention of motor
vehicle
 And continued to develop
 The first company to offer life
insurance was the Amicable
Society for a Perpetual Assurance
Office,

 Founded in London in 1706 by

William Talbot and Sir Thomas
Allen
 Each member made an annual
payment per share on one to three
shares with consideration to age of
the members being twelve to fifty-
five.
 At the end of the year a portion of
the "amicable contribution" was
divided among the wives and
children of deceased members, in
proportion to the amount of shares
the heirs owned.
 The Amicable Society started with
2000 memebers.
 The first life table was written by
Edmund Halley in 1693

 In the 1750 the necessary

mathematical and statistical tools
were in place for the development
of modern life insurance.
 After being refused admission to
the Amicable Life Assurance
Society because of his advanced
age, James Dodson, a
mathematician, and actuary, tried
to establish a new company aimed
at correctly offsetting the risks of
long term life assurance policies
 Edward Rowe Mores, was able to
establish the Society for Equitable
Assurances on Lives and
Survivorship in 1762.
 It was the world's first mutual
insurer and it pioneered age based
premiums based on mortality rate
 The framework for scientific
insurance practice and development.
 The basis of modern life assurance
upon which all life assurance
schemes were subsequently based.
 Premiums were regulated according
to age, and anybody could be
admitted regardless of their state of
health and other circumstances
 From 1905 to 1912 Insurance
Business started in India.
 1938 The Insurance Act
 1956 Life Insurance Act
 Life Insurance Corporation (LIC
India) established
INSURANCE IN NEPAL
 Insurance like activities-Guthi systems
 In 2004 BS Indian Insurance Co. writing
business in Nepal
 Malchalani Ra Bima Company in 2004 B.S
 Est. of Nepal Insurance & Transportation
Co. in 2016 B.S (Known as NIC at
present) a captive co of Nepal Bank Ltd.
 Nepal Insurance Co ltd in 2048 B.S
 Rastriya Beema Corp under
insurance act in 2025
 New Insurance act introduced in
2043
 NLGI established in 2043
 2024 BS est. of Beema Sansthan
as a life & Non life insurance Co.
 2025 BS Est. of Beema Samitee
and Insurance Act 2025
 2044 BS Est NLGI
 2049 BS Insuranc Act 2049
 Open to Public limited Co
Principles of Life Insurance
 Element of a valid insurance
contract
 Offer from one party and acceptance
from another party
 Both parties should be legally
capacity and free from pressure to
enter into the contract
 Utmost good Faith
 Premium
 Need to be paid in advance for the
coverage. Based on mortality table
(age, health conditions, profession
etc.)
 Insurable Interest
 Husband/Wife, Parents/Children,
Employee/employer, Debtors and
creditors
 Assignment and Nomination
 Transferring the rights of the assured
in respect of the policy holder to the
assignee. In case of nomination person
is named to collect the amount after
the death of insurer
 Return of Premium- Premium
amount is returned after the
maturity or death
Essential Elements of a
valid/legal contract
 Offer & Acceptance (Proposal,
policy&premium)
 Consideration (Premium for
promise to indemnify)
 Agreement between the parties
(Consent for common intention, No
fraudulent intention)
 Capacity of the parties(Not
disqualified from contracting by
any law to which he is subject)
 Legality of Contract (Legality of
subject matter of contract, lawful
object of an agreement)
 Protection
 Investment
 Financial Security
 Social Security
An economic Overview
 All important insurance operations,
practices and regulations related
to economics.
 Economic Security.
 Many consumers do not save
money unless forced to do so by
regular savings plan, such as the
one incorporated in Life Insurance
policies.

 Even people who save sometimes

spend their savings once they
reach a significant amount.
 Experts invest savings in these life
insurance policies

 People saving with the life

insurance receive income tax
advantages
 The saving element of a whole life
policy provides some protection from
creditors’ claims in the event of an
insured bankruptcy(The creditors
cannot claim in the money that come
from insurance in the case of
bankruptcy)
 People also go with life insurance
policy for the security for their
dependence