Principles and Practice of Insurance Notes
Subject Overview
The second Banking and Insurance elective, covering risk management and insurance fundamentals, life insurance classification and LIC operations, general/
Subject at a glance
4
Units
28
Topics
4
Credits
4
Infographics
Unit-wise Syllabus
4 units — open any unit for detailed topic-wise notes, diagrams and important exam questions
- Nature and scope of risk management
- methods of handling risk
- nature of insurance business
- reinsurance
- classification of insurance
- principles of insurance contracts and insurance documents
Utmost good faith
Disclose all material facts
Insurable interest
Must stand to lose
Indemnity
Restore, not profit
Contribution
Share loss among insurers
Subrogation
Insurer takes over rights
Proximate cause
Nearest cause of loss
Study guide
This unit covers risk management, methods of handling risk, the nature of insurance, reinsurance, classification, principles of insurance contracts and documents. Learn utmost good faith, insurable interest, indemnity, subrogation and contribution.
- Classification of life insurance policies
- assignment of life policies
- Life Insurance Corporation of India
- marketing of life insurance
- role of development officers and insurance agents
Term
Death within term only
None: cheapest cover
Whole life
Death whenever it occurs
Yes
Endowment
Death or maturity
Yes
Money-back
Periodic survival payments plus death
Yes
ULIP
Death or maturity; market-linked
Yes, in funds
Study guide
You study classification of life policies, assignment, the LIC, marketing of life insurance and the role of development officers and agents. Compare term, endowment and whole life policies.
- General insurance business and role of GIC
- nature of marine insurance contracts
- kinds of marine policies
- important marine policy clauses
- marine losses and abandonment
- fire insurance contract nature
- types of fire policies
- fire insurance claims
- miscellaneous insurance
Actual total loss
Subject-matter destroyed
Ship sinks
Constructive total loss
Saving costs more than its value
Badly wrecked cargo
General average
Sacrifice for the common good, shared
Cargo thrown to save the ship
Particular average
Partial loss borne by the owner
Some goods damaged
Study guide
You study general insurance and the GIC, marine insurance (contracts, policies, clauses, losses, abandonment), fire insurance (policies, claims) and miscellaneous insurance. Know the types of marine loss.
- National agricultural insurance schemes
- fidelity guarantee
- property
- motor vehicle
- health and public liability insurance
- IRDA
- privatization of insurance business in India
- current scenario of India's insurance sector
Crop insurance
PMFBY for farmers
Motor insurance
Third-party cover is compulsory
Health insurance
Hospitalisation cover
Fidelity guarantee
Employee dishonesty
Public liability
Injury to third parties
Study guide
You study agricultural, fidelity guarantee, property, motor, health and public liability insurance, the IRDA, privatisation and the current scenario of the Indian insurance sector. Follow IRDAI reforms and new products.
Why Principles and Practice of Insurance Matters
Insurance is a large and growing sector with roles in underwriting, claims, sales and risk management, and it supports insurance licentiate and fellowship exams.
How to Prepare for Principles and Practice of Insurance
- Learn the principles of insurance with an example each.
- Prepare notes on types of marine and fire policies.
- Follow IRDAI updates.
Principles and Practice of Insurance: Frequently Asked Questions
What is subrogation?
Subrogation is the insurer's right, after paying a claim, to take over the insured's rights against a third party responsible for the loss.