Distinguish between life, marine and fire insurance

by • 13/01/2013 • GeneralComments (0)429

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.

DURATION PERIOD

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.

 

CREDIT FACILITY

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.

TAX CONCESSION

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.

 

TITLE

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.

 

INSURABLE INTEREST

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.

 

SURRENDER VALUE

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

 

CLAIM LIMIT

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.

 

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