Q-11 Distinguish between life, marine and fire insurance?
Ans: We can distinguish the life insurance from other forms of insurance under the following heads:
NATURE OF CONTRACT
ü Life insurance is not the contract of indemnity.
ü Fire insurance is a contract of indemnity.
ü Marine insurance is a contract of indemnity.
ü Life insurance covers larger duration.
ü Fire insurance duration is from 10 years to one year but it is renewable.
ü Marine insurance is issued for a specified period but maximum period is not more than one year.
ü Against the life insurance policy credit can be obtained
ü Against fire insurance policy credit cannot be obtained.
ü Against marine insurance policy credit cannot be obtained.
ü In case of life insurance policy sometimes income tax concession is granted.
ü In case of fire insurance policy income tax concession is not granted.
ü In case of marine insurance also tax concession is not granted.
NATURE OF EVENT
ü The event of death, which is considered the base in the contract of life insurance, is death that is certain.
ü In the fire insurance event of fire is uncertain it may take place or may not take place.
ü In marine insurance the event of sea perils may take place or may not take place.
SECURITY & INVESTMENT
ü Life insurance possesses the element of security and investment both.
ü Fire insurance includes the element of security only.
ü Marine insurance also includes the element of security only.
ü The word “assurance” is generally used along with life policy due to its certainty.
ü The word insurance along with fire is used due to its uncertainty.
ü The word insurance is also used along with marine due to its uncertainty.
ü Insurable interest must exist when insurance policy is taken but no need at the time of loss.
ü Insurable interest must be present at the time of fire policy taken and at the time of loss.
ü When the marine insurance policy is taken insurable interest may not exist but these should exist at the time of loss.
DOCTRINE OF SUBROCATION
ü In the life insurance it is not applicable.
ü In case of fire insurance it is applicable.
ü In case of marine insurance it is applicable.
SHARE IN PROFIT
ü In a life insurance insured person also takes the share from profit.
ü In case of fire insurance nothing is paid excess from insured amount.
ü In case of marine insurance also not profit is paid.
TRANSFER OF LOSS
ü In case of loss insured person cannot transfer the loss to insurance company.
ü In case of fire insurance loss can be transferred to insurance company.
ü In case of marine insurance also loss can be transferred to insurance company.
ü Life insurance policy has a surrender value after three years of its existence.
ü Fire insurance does not have any surrender value.
ü Marine insurance also does not have any surrender value.
DETERMINATION OF PREMIUM
ü The life insurance policy premium determination is very simple and do not change.
ü Fire insurance premium rate changes according the change in risks.
ü Marine insurance premium rates also changes according the risks
ü In the life assurance after maturity whole of the assured amount becomes payable.
ü In fire insurance case only the actual value of the property destroyed by fire can be claimed.
ü In case of marine insurance contract, shipping charges plus 10% to 15% margin of anticipated profit and cost of goods destroyed by sea perils are payable by the insurance company.