TYPES OF FIRE POLICIES

The following are some of the more common types of fire policies:

1. Specific Policy : A specific policy is one where the insurer undertakes to make good the loss up to the amount specified in the policy, irrespective of the value of the property. For example, if a property worth Rs. 2,00,000 is insured for Rs. 1,00,000  but the actural loss is only Rs. 1,50,000 he can only recover the actual loss if it is equal to or less than the value of the policy, but if his loss is more than the sum insured, he can recover only the amoount of policy.
2. Valued Policy : A valued policy is usually taken where it is not easy to determine the value of the property. For example, works of art, pictures, sculptures etc., whose value cannot be determined easily. In the case of total loss in the valued policy the insurer undertakes to pay the value of the property as mentioned in the policy, or the declared value, irrespective of its actual or market value. Such policies are however, not very common in fire insurance.
3. Average Policy : A fire policy containing an average clause is called an Average Policy. Under this policy the insured is penalised for under-insurance of the property. In other words, the insured is considered to be a self insurer to the extent of under insurance. For Example : Where the property worth of Rs. 80,000 is insured for Rs. 60,000 and the loss caused by fire is Rs. 40,000 then the amount of claim to be paid by the insurer will be Rs. 30,000. It must be remembered that average clause applies only where there is under insurance and partial loss. If the loss is total, the insure amount will be paid. For instance, if in the above example, the entire property is lost, then the claim that will be admitted is Rs. 60,000.
4. Floating Policy : A floating policy covers loss on goods which are lying in different places. For example ,  a dealer may take out only one floating policy, instead of separate specific policies for all his goods, some of which may be in warehouse, others in railway stations, shop counters etc. This policy is useful when the insured is in a position to declare only the total value at risk and not separate values in separate risks.
5. Replacement Policy : Replacement policy is otherwise termed as Re-instatement policy. This policy is issued in respect of building, plant and machinery, furniture and fixtures and fittings etc. Under this policy the insurer undertakes to pay the cost of replacing the property instead of paying compensation to the insured for the property destroyed. In short, the damaged property is replaced by a new property.
6. Declaration Policy : Declaration Policy may be granted only in respect of stock of inventories (stock of raw material, stock of work in progress and stock of finished goods) of the insured. Generally levels of stock which are subject to frequent fluctuations in value or in volume, present a special problem for insurance. In such a case the businessman takes a policy for a maximum expected amount and the premium is paid. Every month the insured must declare in writing the stock covered under the policy to the insurance company. At the end the premium is adjusted accordingly.
7. Comprehensive Policy : This policy undertakes full protection not only against the risk of the fire but combining with the risk against burglary, riot, civil commotion, theft, damage for pest, lightning. The policy is also termed as all Insurance policy. Here the comprehensive does not mean that every type of risk is covered. Such policies are not common in our country.
8. Consequential Loss Policy : Under this policy the insurer agrees to indemnify the insured for the loss of profits which he suffers due to dislocation of his business as a result of fire. This type of policy is also called as "Loss of profit policy". Thus this policy covers :
1. loss of goods or property damaged
2. loss of net profits
3. outstanding expenses (interest on debenture, salaries rent on building etc.)
4. prepaid expenses etc.
9. Adjustable Policy : This policy is nothing but an ordinary policy on the stock of the businessman with liberty to the insured to vary at his option. The premium is adjustable pro-rata according to the variation of the stock. The adjustable policy is granted to remove the disadvantage of declaration on policy. This is issued for a definite term on the existing stock. The premium is calculated in the ordinary manner and is paid in full at the inception of the policy. Whenever, there is variation in the stock, the insured informs the insurer. As soon as the information of variation is received, the policy is suitably endorsed and the premium is adjusted on a pro-rata basis. The policy amount will, thus, be changeable from time to time.
   

FIRE POLICY

It is a document containing the written contract between the insurer and the insured setting forth the terms and conditions under which the insurance is issued, the particulars of the property insured, risks and hazards covered, the sum assured, the cost or the rate of premium and the period.

The risk on the fire policy commences from the moment of time the cover note or the deposit receipt, or the interim protection note is given and continues for the term covered by the contract of insurance. It is the practice to allow a certain number of days as days of grace within which a fire policy may be renewed after the expiration of the term. In such a case, if a fire should occur within this time the insured would be entitled to recover damages. The days of grace only apply when the insured has the intention to renew the policy, failing which, the policy expires on the day the period runs out. If however, it is expressly stipulated in the policy that unless the renewal premium is paid and the renewal risk is accepted the insurance would expire, the insured would not be able to recover in the case where a fire occurs after the expiration of the term and before the acceptance by the fire insurance company of a proposal for further insurance.

FUNDAMENTAL PRINCIPLES OF FIRE INSURANCE

The following are the fundamental principles essential for a valid contract of fire insurance.

1. A contract of indemnity : Its object is to place insured as far as possible in the same financial position after a loss as that occupied immediately before the loss. The insured can recover only the amount of actual loss subject to the sum assured.
2. Insurable Interest : In fire insurance the insurable interest must exist at the time of effecting the insurance as well as at the time of the loss. The interest, however, may be legal or equitable or may arise under a contract of purchase or sale. The following have been held to have insurable interest in the subject matter :
1. Owner
2. Mortgagee
3. Trustee
4. Executor
5. Warehouseman
6. Common
7. Bailee
8. Pledgee
9. Person in lawful possession
10. Finder
11. Insurer
12. Commission Agent where the agency is couppled with interest and 
13. Tenants who are liable to pay rent after a fire.It should however, be noted that persons can insure only to the extent of such limited interest.
3. Contract of Good Faith : The contract of fire insurance is a contract of Uberrimae fidei i.e., a contract based upon absolute good faith, and therefore, the insured must make full and detailed disclosure of all material facts likely to affect the judgement of fire officials in determining the rates of premium or deciding whether the proposal should be accepted. The description of the property, when asked for, should be correctly give, and all information that may be required as to the class of goods and articles that are kept on the premises or in the surrounding neighbourhood, should be accurately supplied.
4. Loss Through Fire : Loss resulting from fire of some other cause which is the proximate cause is the risk covered under a fire insurance contract. But where the fire is caused by the insured himself or with his connivance or by the operation of a peril specifically excluded under the policy like earthquake, the loss will not be covered.
5. A Contract from Year to Year : A fire insurance policy is usually for one year only and can be renewed after that.
6. Principles of Subrogation and Contribution : Subrogation is a doctrine applicable to both fire and marine insurance by which the insurer or underwriter, becomes entitled to on his paying compensation to the insure, to claim the advantage of every right of the insured against third parties who may be proved to be responsible for that loss, owning to such third parties negligence, default etc.

Where the subject matter has been insured with more than one insurer, each insurer has to meet the loss only rateably. If he has paid more than his share of loss, he is entitled to recover the excess paid from his co insurers. Thus, the principle of contribution applies in the case of fire insurance.

SUBJECT MATTER OF FIRE INSURANCE

Subject matter of fire insurance may be of any kind of movable and immovable property having pecuniary value. The property intended to be insured must be properly described. As per fire insurance, it is governed by Tariff, the following are the examples of insurable property such as :

1. Building
2. Electrical installation in buildings
3. Contents of buildings such as machinery, plant and equipments, accessories etc.
4. Good (raw materials, work in progress, semi finished goods, finished goods, packaging materials) in factories and godowns.
5. Good in open
6. Contents in dwellings, shops, hotels, etc.
7. Furniture, fixture and Fittings 
8. Pipelines (including contents) located inside or outside the compound etc.

FIRE INSURANCE

A contract of fire insurance is a contract by which the insurer undertakes, for a consideration in the form of a payment of money either in lump sum or installments, to indemnify the insured against the consequences of a fire, or the loss or injury as arising therefrom during an agreed period and up to a certain amount. The contract is to be found embodied in a document known as the "policy of the fire insurance " and usually for a period of one year and renewed each year.

A few notable definitions are reproduced below :

1. " A contract whereby the insurer in consideration of the premium paid undertakes to compensate the insured for any loss that may result due to occurrence of fire ".
2. " Fire Insurance is a contract of indemnity against loss or damage to property arising from fire during  an agreed period of time. Here the insurer undertakes to indemnify the insured against financial loss caused directly as a result of fire".
3. " A contract of fire insurance is a contract by which the insurer undertakes, for a money consideration, to indemnify the insured against the consequences of a fire during an agreed period up to the amount stated in the policy".

Fire : The term "fire" is a contract of fire insurance is used in its popular and literal sense. It means the production of light and heat by combustion. Combustion occurs only at the actual ignition point. Hence, there is no fire without ignition. Loss or damage which occurs as a result of putting out the fire would also be covered by the fire risks. Fire policies are not covered through fire caused by earth qu akes, riots, civil commotion, foreign enemy, rebellion etc.

Example: A, B, and C are three continuous houses insured against fire. An earthquake caused A to fall and as a consequence fire broke out and spread to B where an explosion occured whereby C was wrecked.

In the insurer liable for the loss caused to C ?

Answer : Fire risks don not cover loss caused only by explosion. However, where explosion actually causes ignition which spread into fire, the loss would be taken as a loss by fire. A simple fire insurance, policy covers loss by explosion incidental to fire unless specifically excluded.

In the instant case, the insurer will be liable for the loss caused to house C if (i) the explosion was caused by fire and (ii) the insurer has not excluded his liability for explosion by a special clause in the fire policy.

COMPARE AUTO INSURANCE

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AUTO INSURANCE QUOTE

The significance of automobile insurance is lost on many vehicle owners till the time they are unfortunate enough to run into some kind of loss bearing event involving their vehicles. Such folks apparently see insurance as an expense and not as an investment as they ideally should. This reasoning has strong fundamental basis for it speaks of a situation where one can actually make good on certain damaging losses that may otherwise remain so. There are different types of auto insurance covers to choose from and in this respect a good agent or broker can work with the customer to decide the cover options that provide the best protection at a price that is affordable to the customer. However the customer would stand to gain considerably in the long run if he takes the trouble of understanding certain basic factors that determine the cost of his auto insurance cover.
Deductible
Deductible is the amount that the policy holder agrees to pay in the event of a claim. Moreover by choosing a higher deductible the policyholder can reduce his premium. The importance of deductible cannot be ignored while considering cheap insurance program. Usually a higher deductible lowers the insurance cost and therefore if the customer’s driving record is good, then he can increase his deductible and pay a lower premium.
Vehicle make and model
The make and model of the vehicle matters a great deal in determining the cost of insurance. For instance, an expensive car would have a higher cost of insurance for the simple reason that any damage or loss to the car would cost the insurance company more than what it would if the car was of standard make.

Vehicle security devices
When the policy holder make his vehicle secure by installing security systems such as an alarm or a tracker device it will enable him to get his vehicle insured at a cheaper rate. This is because the presence of such devices considerably minimizes the risk of theft and therefore insurance companies do not hesitate to provide auto insurance that is affordable.

AUTO INSURANCE

Auto Insurance or Automobile Insurance (also known as Vehicle Insurance, Motor Insurance, or Car Insurance), refers to insurance which can be bought for trucks, cars, and other types of vehicles. The principal objective of an auto insurance policy is to offer safeguards against adverse financial consequences resulting from motor vehicle accidents.

The automobile insurance Company has the discretion to adjudge that a car is wholly destroyed (written-off or totaled) if it seems that the replacement cost would be lower than repair costs. Auto insurance coverage is available for some or all these parties:

• The insured party
• The insured car
• Third parties In a large number of countries, buying auto insurance is mandatory to drive on public or state highways.

The cost of the premium is dependent on the following factors: the coverage, the age, gender, and driving history of the driver, and the distance covered by the car.
The different types of coverage that are available through automobile insurance include the following:
Liability Coverage (Combined Single Limit & Split Limits)
Collision Coverage
Comprehensive Coverage
Loss of Use Coverage
Underinsured/Uninsured Coverage
Loan/Lease Payoff Coverage (GAP Coverage or GAP Insurance)
Car Towing Insurance (Roadside Assistance Coverage)

Auto insurance is a great guarantee you should purchase to avoid money surprises in case an accident occurs. It is also a known issue that the law requires people to carry at least the most basic car insurance coverage, this could be a cheap auto insurance option but you will be safe in legal terms. A policy is designed to give you many levels of coverage that depend on the amount of money a person is willing to pay.
Auto insurance is a need for drivers to have a protection for the life span of their vehicles and to recover the cost caused by the damages the car receives. Normally, this kind of policy is bought to insure trucks, automobiles, and all types of vehicles to prevent withdrawing a lot of money from people own pockets. Finding a cheap car insurance can be a difficult task, but it is possible to get free quotes online to compare the several companies available on the market.
When someone buys an auto insurance, the policy taken means that the user has to pay a premium that can be monthly or just for a fixed period of time. This is an aspect that requires focusing because rates can change significantly from one company to another. It depends on the things you have done in the past with your auto, your current income and the place you live, just to name a few things to consider.
It is required by most of states that you have an auto insurance to drive there in a legal way. Auto insurance is the most common type of insurance that people is requesting around the country. There are many options to get a new auto, and a new auto means buying an auto insurance too, if you do not want to have law troubles.
There are thousands of insurance providers around everywhere and it could be difficult to choose the right option. It is always a good thing to ask several friends or family members who own a car to ask them about the rates and the experience with the company they bought the insurance from. Auto insurance is just about the level of coverage the company is going to provide you depending on the amount of money you are thinking to pay out them.
Auto insurance is a need to keep your assets safe, but as it is costing you money, you have to take your time to research several quotes from different companies in order to save hundreds or even thousands of dollars in the long term.

SCOPE OF LIFE INSURANCE MARKETING

In the present day insurance marketing scenario, the LIC and GIC play the role of an encouraging and supporting force to the entrepreneurs, corporate sector, investors, Government, Co-operatives, individuals and general public. There is vast scope for LIC to enlarge its operations both in domestic and international market. The following areas are identified for the scope of insurance marketing :

1. Changing policy of LIC : With the opening up of the insurance sector at the dawn of the 21st century, LIC has revised its objectives and has focused its vision, mission, values and culture. By constantly analysing the challenges and opportunities, and also considering its strength and weakness. LIC is designed to plan, price, promote and distribute want satisfying products and services to present and potential consumers.

2. Evolying Consumer Needs : Insurance today has emerged as an attractive and stable investment alternative that offers total protection in life, health and wealth. In terms of returns, insurance products today offer  competitive returns ranging between 7% and 9 %. Besides returns, what really increases the appeal of insurance is the benefit of life protection from insurance products along with health cover benefits. Consumers today also seek a variety of insurance products that offer flexible options, prefer insurance schemes with benefits unbundled and customizable to suit their diverse needs. This offers good opportunity to insurance marketers to extend the area of operations.

3. Distribution Gains Importance : The intermediaries in the insurance business and the distribution channels used by carriers  will perhaps be the strongest drivers of growth in the sector. Multi-channel distribution and marketing of insurance products will be the smart strategy for the Nepali Mrket. While tied agents will continue to play an important role in distribution of insurance products, alternative channels like Development Officers, Inspectors, Executives will assume a greater role in distribution of insurance schemes. The trend is expected to continue in future.

4. Innovations in Insurance Marketing : The Nepali insurance market has witnessed innovations in the constantly explored avenues to increase the number of distribution channels through a variety of distribution patterns, given the rapidly changing customer profile. Internet and telemarketing is also expected to play an increasingly critical role in customer relationship. Rational intermediaries have played an important role as a distribution outlet for insurance services and products. This is likely to provide good business to insurance marketers in future.


5. Development of Rural Markets : Nepal is a predominantly rural country of more than one million people, mass marketing is always a profitable and cost effective option for gaining market share. The rural sector is a perfect case for mass marketing. The predominant insurance market leader, the LIC of Nepal, feels that the lion's share of its new business comes from the rural and semi-rural markets. The development of rural insurance market offers tremendous opportunity to insurance market.


6. Entry of Public Sector Banks : The Insurance Regulatory and Development Authority Act 1999 seeks to open up the insurance sector for private companies with a foreign equity of 26 percent. It is also aimed at ending the monopoly of the Life Insurance Corporation (LIC) and General Insurance Corporation (GIC) in the insurance sector of the country. LIC entered into strategic alliance with corporative banks at the corporate level to improve its reach and also take advantages of mutually beneficial competencies. It also tied up with several other banks and organizations for marketing its insurance products and rendering  services like collection of premium.


7. Pension Plans: As a result of liberalization and globalization the competition in the insurance sectors is becoming intense. To survive in the competition, the Insurance Regulatory Authority is permitting insurance companies into the pension business without forming separate companies for the purpose. As the Hindu joint family concept intended to disintegrate the social security cover it has thus far provided was no longer available to  a population increasingly adding numbers to the old generation. This is likely to provide good business to Insurance companies in future.


The above discussion highlights, that the scope of insurance business is vast and there lie immense opportunities ahead of insurance companies.

IMPORTANCE OF LIFE INSURANCE MARKETING

Life insurance marketing is the design, implementation and control of programmes seeking to increase the acceptability of a social idea or practice in a target group. It utilizes concepts of market segmentation, consumer research idea configuration and communication, facilitation, incentives and exchange theory to maximize target group response.

Absence of insurance market acts as a deterrent factor to capital formation and economic growth. The insurance market serves as an important source for the productive use of the economy's savings.

The importance of life insurance market can be briefly summarised as follows :

1. It mobilizes the savings of the people for further investment in unproductive uses and thus avoids their wastage.
2. It provides incentives to saving and facilities capital formation by offering stable rate of interest and bonus as the price of their investment.
3. In facilitates increase in production and productivity in the economy and thus enhances the economic welfare of the society.
4. Insurance market consisting of expert intermediaries promotes stability in value of defferent insurance schemes.
5. Insurance marketing generates employment.
6. Insurance marketing makes available new variety of useful and quality life insurance products to consumers.
7. Insurance marketing is the sole sources of business income.
8. Insurance marketing converts latent demand in to effective demand and thus enables people to raise their standard of living. Insurance marketing converts latent demand in to effective demand and thus enables people to raise their standard of living.
9. Insurance marketing is a connecting link between the consumer and producer.
   

ELEMENTS OF LIFE INSURANCE MARKETING MIX

The definition cited above clearly indicate the four components of marketing mix. In the case of life insurance marketing of services requires an expanded marketing mix comprising (1) the product, (2) price (premium), (3) physical distribution / place, (4) promotion , and (5) policy servicing. These elements should be taken as instruments by the life insurance management when formulating life insurance marketing marketing plans.

The marketing mix is a dynamic concept, it keeps on changing with changing marketing conditions and environmental factors. The following chart depicts the life insurance marketing mix of a business enterprise. The four ingredients of the marketing mix are discussed briefly as under :

1. Product (Scheme) : It is the first element, product is the sum total of physical, social and psychological benefits. Managing the product component involves product planning and development. The life insurance marketers must define their market in terms of product function. What the customer expects from the product. It may offer a single product of several products. Life insurance as product has also to be designed, keeping in view these basic requisites, in case of life insurance the needs are in the form of two broad economic contingencies viz., death of the breadwinner and the subsequent financial insecurity of his dependents, and secondly, longer life insurance is sold as plan of LIC of Nepal developed term assurance and whole life policies and for the second category various pension plans and annuities. Apart from whole life insurance, endowment insurance and money bank plans, LIC has several products specially suited for children, exclusively for women, the handicapped, senior citizens, to cover occurrence of terminal diseases, term assurance and pension plans. There are also group insurance schemes that can be taken by employer for their employees. The LIC also administers schemes for people who are below or just above the poverty line.
2. Price (Premium) : The price is another powerful element in the life insurance marketing mix and vitally affect the volume of sales. Price is the valuation placed upon the product by the offerer. In the case of life insurance, premium is the price which the person seeking insurance pays to LIC for purchase in the life insurance policy. The management must take decisions regarding pricing (premium), investment return, level of premium, node of premium, commission, insured sum, life to be covered, interest on loan, price strategy, under writing and price related situations. It deals with price competition.
3. Physical Distribution / Place : Marketing channel policy is another integral part of the life insurance marketing mix. Physical distribution is the delivery of insurance products at the right time and at the right place. In the case of life insurance, it is the combination of decisions regarding channels of distribution, Agents, Development Officers, Brokers, Branch Office, Retail financial service distributors, alliances with banks, tie-ups with non-governmental organization, corporate agencies, Bank assurance, e-trade, proper infrastructure and training facilities, technical and material know - how on part of instructor etc. At present the strength of LIC's distribution channel comprising over 6.10 lakhs active agents and over 19,000 Development officers appears to be phenomenal. This is indeed a great advantage to cover the vast Nepali population, diverse in nature and spread, for which a strong marketing network is imperative. The net work duly supported by 2100 servicing branches.
4. Promotion : The business enterprise should inform the customers about its products and persuade them to buy. It covers methods of communicating with consumers through personal selling, advertising, publicity, sales promotion, social contracts, public relations, exhibition and demonstration used in promotion. For promoting life insurance business sales promotion activities are carried out by the agent, development officers and branch offices. Calendars, diaries, bags etc are also given to policy holders as a token of gifts. All these activities increase the volume of sales by expanding as well as retaining the market share for the insurance products.

5. Policy Servicing : Customer satisfaction predominates the success of an enterprise. In the service industry where intangibles are marketed, the importance of customer satisfaction is all the more significant. Service is said to be the sharpest edge of any marketing strategy. Sales and services are the two powerful wings of life insurance industry. Prompt and effective service boosts the morale of the sales force to present a bold form and hold their prospects. Service encompasses the service rendered to clients before the insurance contract, during the policy term and after sales (policy becoming a claim).

LIFE INSURANCE MARKETING MIX

Marketing mix is the policy adopted by any concern to get success in the field of marketing. The life insurance marketing emphasizes the importance of the consumers preference. Therefore, a life insurer first analyses the nature of the consumer's needs. All the life insurance marketing efforts focus attention around the consumers needs. Then the management plan his product in such a way that he can give satisfaction to the consumers and face the competitors. All these programmes involve a number of functions which are to be planned carefully. Planning needs analysis of the insurance market to take a decision, prediction and forecastiong as to the future needs of the consurers. Thus, identification of demand and supply involves various functions of life insurance marketing to attain success in the insurance market and the combination of these function is known as Life Insurance Marketing Mix.
According to Prof. Neil H. Borden, " The marketing mix refers to the apportionment of efforts, the combination, the designing and the integration of the elements of marketing into programme or mix which, in the basis of an appraisal of the market forces will best achieve the objectives of an enterprise at a given time. Thus, the marketing mix is an integration of marketing elements.

OBJECTIVES OF LIFE INSURANCE MARKETING

The first and formost objective of all marketing activities is the satisfying of human wants. Besides life insurance has other objectives too. Some of the objectives are :

1. Spread of life insurance message
2. Mobilization of savings in the form of pension
3. Profit maximization
4. Successful distribution of life insurance products
5. Improving customer services
6. Increasing customer base and its spread
7. Developing corporate image
8. Developing guiding policies and their implementation for a good result
9. Suggest solution by studying the problems relating to life insurance business.
   

MARKETING OF LIFE INSURANCE

The economic activities can be divided into three main categories - Primary, Secondary and Tertiary. The primary activities include agriculture, fishing, forests and mining. The secondary activities include agriculture, construction, and industry. The tertiary activities include services like insurance, banking, finance, transport, communication etc. The list of services include utilities, civil, insurance banking, defense services, transport etc.
In LIC, life insurance service are rendered with a view to protect the people against the risk of loss due to accident, fire, death, sickness, unemployment and so on.
Some people might argue that there is service marketing, but only marketing in which the service element is greater than the product element. We do agree that, in the sale of majority of the goods, there are both a product part as well as a service part. However, there are so many service organizations like insurance companies, banks, transport companies who do not think of themselves as marketers of goods. They see themselves as providers of services.

Definition of Services
The term service has been differently defined by different authors. According to Ivanovic, "Service is the work of dealling with customers, or payment for the work, services are benefit which are sold to customers or clients such as insurance, transport and educationa". According to Philip Kotler, " A service is an activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or nay not be tied to a physical product".

Characteristics of Life Insurance Services
Life insurance services, as described above, have a number unique characteristics that place them in separate category compared to physical goods. These characteristics create special marketing challenges. They are given below :

1. Intangibility : Llife insurance services are intangible in nature. It is quite different fromm other commercial products. The consumer has to have faith in the services of life insurance provider. Services are intangible and therefore, cannot be seen, felt or tasted. The customer has to be encouraged, enthused and helped to visualize the unforeseen tomorrow and usefulness of a life insurance products. Unlike tangible products, there are no factories and production lines for life insurance.

2. Heterogeneity : Life insurance services are heterogeneous in their nature. That is, they are highly variable. Each life insurance product of the service i some what different from other products of the same services. Different kinds of insurance products are developed from time to time to cater to the specific needs of customers.
3. Inseparability : Very often services cannot be separated from their provider. It is very important to understand the heart and soul relationship between product and service, cost and quality. Life insurance products continues to exist over a long period of time, and for making its service available, the insured person has to go on paying the purchase price (premium) through out the term of the policy. This ensures that the benefits already accrued under sale are not lost. Hence due to inseparability, direct sale of services, is the only channel of distribution. In LIC, insurance agents represent and help in promoting inseparable services.

4. Changing Demand : The success of life insurance service marketing in turn depends on the ability of the firm to find a customer and to satisfy his wants. For this purpose instead of trying to sell what can be produced the business firm should produce what is really needed by the customer and what would satisfy his wants. It is a buyer's market, by and large, the seller i.e. the LIC has to take decision whether to sell a particular policy to particular person or not on the basis of information disclosed by the buyer himself in the proposed form.

KINDS OF LIFE INSURANCE POLICIES

Different insurance company can introduce different kinds of life insurance policies. Some of them are classified in to the following kinds.

1. Whole life policy

The whole life policy will mature only on the death of the insured. This kind of policy is done to protect the dependents of insured in which low premium is paid up to his life. Although, this type of policy has no financial gain to insured, reach persons prefer to take this kind of policy to make provision for the payment of death duty. The policy can further be classified as under.

• Ordinary whole life policy : Under the ordinary whole life policy premiums are payable throughout the life of the insured and the insured sum is payable to his dependents or nominee only after his death.
• Limited premium whole life policy : Under the limited premium whole life policy, the premium is paid for a limited or selected period (say up to 20 years) but the policy will mature for payment only on the death of the insured.
• Single premium whole life policy : Under this policy, the insured is liable to pay the total premium once in a life but the insured sum is payable to his dependents only after his death.
• Convertible whole life policy: The convertible whole life policy gives the option to the insured for conversion into endowment policy after the expiry of five years of the policy.

2. Endowment policy

Endowment policy is issued for a fixed period and the premium is payable during that period only. The insured sum is payable to policy holder after the expiry of the period or to his nominee on his death which ever is earlier. This type of policy is most popular because it provides financial security on old age sufferings. The following are the different types of endowment policies.

• Ordinary Endowment policy : The ordinary endowment policy will mature for payment on the survival of the date or his death within the endowment policy which ever is earlier.
• Pure Endowment policy: The pure endowment policy will mature for payment, only if the insured person survives up to the endowment period otherwise the insured sum is not payable by the insurance company.
• Double Endowment policy : Under this policy, if the insured survives up to the endowment period, he will get double the sum insured or only the insured sum is payable on his death within the endowment period.
• Anticipated Endowment policy : Under this policy, a part of sum insured is paid at certain intervals during the endowment period and the balance of insured sum is paid at maturity period.
• Deferred Endowment policy : Under this policy, after the expiry of specified period, the insured sum is payable to insured person or nominee. The sum is payable only after the end of specified time, so there is no major factor of when the insured died.
• Joint life Endowment policy : This policy is taken on the life of two or more persons and will mature for payment on the expiry of the endowment period or on the death of any one of the life insured before the endowment period.

3. Term insurance policy

The term insurance policy is used for short term ranging from one year to specified number of years and will nature for payment only on the death of insured within the period, but if he survives, nothing is payable. Following are the types.

• Ordinary term policy : The ordinary term policy is used for very short period of years and the premium is generally paid in one installment called the straight premium. The insured sum is payable only if death occurs within the term.
• Decreasing term policy : This policy is issued to the borrowers of money and the amount of policy payable at the end of each year is automatically reduced and equal to the outstanding loan which will be paid if the insured dies before the end of term.
• Renewal term policy : This policy can be renewed after the expiry of the term without medical examination but a different rate of premium is applicable to the age at the time of renewed.

4. Other life policies
There are other life policies also. Some of there are as follows:

• Multi purpose life insurance policy which provides several benefit under one insurance contract, such benefits are old age benefits, regular income maintenance, children education, cost benefit, marriage cost benefit etc.
  
• Employee life insurance which is taken by the employer to provide security and safety of employee for better performance and productivity.

LIFE INSURANCE POLICY

Insurance is a transfer of risk. Life insurance policy means a written document which says a payment of money is made on death but not one which says payment is made only if the death is accidental or if death happens in certain circumstances or during the period a person has agreed to pay premiums. A life insurance policy is a legally binding contract between an individual and insurer (insurance company) in which the individual transfers some or all of his or her human life value to the insurance company.

Life insurance policy is the insurer (insurance company) is the entity that will decide if the insured individual is worth the risk of paying out a death benefit upon the insured's death. The death benefit is the amount of insurance the insurer is required to pay upon the person's death. The insured pays premiums on a monthly, semiannual or annual basis for the insurance. Depending on the type of life insurance, the life insurance policy may last 10, 15 or 20 years, or even for the entire life of the insured, no matter how long he or she lives.
Trying to purchase the best life insurance policies can be confusing. Since each person's situation is different, careful research will help in making the right decision.
Different insurance company can introduce different kinds of life insurance policies. The choice between whole of life insurance policies, term life insurance or any of the other options available is not about which one is better or worse than the other. Each has its place. By doing a proper financial needs analysis, life insurance applicants will have a far more accurate idea of exactly how much life insurance to purchase, in what areas and how much they can afford to spend. Another option is to mix and match the various options to better fit in with one's needs.
In simplest definition, a life insurance policy, for which premium payments have been paid as agreed upon according to the terms of the contract, pays out to your beneficiary upon your death the value of the policy. From your viewpoint, the biggest advantage to carrying a life insurance policy is peace of mind knowing that in case of your untimely demise, your nearest and dearest will be clothed, shod, fed and educated so they can make their way in an uncertain world with at least a minimal financial buffer to protect them. From their viewpoint, in your absence, they will have the means to make any necessary adjustments with somewhat less misery than if they would if not provided for.

PROCEDURES OF EFFECTING LIFE INSURANCE

Those persons who are interested to enter in to life insurance contract should follow the following procedures to make effective of life insurance contract.

1. Submit the proposal form
The interested person can obtain the proposal form from the agent or insurance company. The person is requested to answer all the questions in the proposal form and give accurate and adequate information on all the material items. By this duly filled proposal form i.e. printed questionnaire paper, insurer receives detail information of the person such as name, address, occupation, date of birth, mode of payment etc.

2. Submit certificate of age
The proposer has to mention the exact date of birth in the proposal. The risk of life insurance depends on age and the rate of premium is fixed according to it. For this purpose, proposer is obliged to submit any one of birth certificate, citizenship certificate, horoscope, school certificate.

3. Medical examination
On the receipts of proposal along with birth certificate, the insurance company arranges a medical, examination of the interested person by one approved doctor on its official. Normally the medical examination is out of charge which helps to ascertain the risk of life.

4. Submission of Agents report
If the proposer came from an agent, it is the responsibility of agent to submit the report of proposer in prescribed manner including proposer’s character, health, financial position and other information.

5. Scrutiny of repots
The proposal form, filled by proposer, report of medical examination and report of agent are examined by an expertise team of life insurance company to decide whether the proposal is acceptable or not.

6. Acceptance of proposal
When the scrutiny is in favour of insurance and all the submitted documents are favourable, the insurance company accepts the proposal. If the proposal is accepted the insurance company communicates the acceptance to the insured and demands the first premium.

7. Payment of first premium
On the receipts of communication of acceptance and demand of first premium the proposer should submit the first premium. If the first premium is paid, the insurance comes in to operation and risk is converted to insurer.

8. Issue of insurance policy
At last, a formal document called the life insurance policy is prepared. It should be sealed, singed and stamped deed or contract of life insurance describing all the terms and conditions, rules and regulations of life insurance contract. This policy is sent to the insured through registered post or other means of Nepal.

FEATURES OF LIFE INSURANCE

1. General contract

Life insurance contract is just like a general contract where offer and acceptance is of typical nature. Submission of proposal along with premium is an offer and dispatch of acceptance letter is the acceptance. Like a general contract, a minor cannot enter into a contract without guardian acceptance. Person of sound mind can enter in to a contract and contract with alien enemy is void. To make a contract, both parties must have free consent, legal objectives and no chances of coercion. Undue influence, fraud and misrepresentation.

2. Investments
Insurer is liable to return premium along with some benefit to the insured person after the expire of time or the death of insured person. Thus premium paid by him regularly is like depositing money in a bank. In case of his premature death the fixed amount is paid to his nominee.

3. Conditional contract
Life Insurance is a conditional contract because the insurer shall pay the insured sum only when the contract is continuing by payment of premium. In addition, the insurer promise to pay the sum is also conditional upon the satisfactory proof of death and other condition as mentioned in the policy.

4. Assignment and nomination
Life insurance can be assigned freely for legal consideration, love or affection. The assignment shall be complete and effective only in accordance on the policy mention itself or by a separate deed. Life insurance policy holder can nominate a person or person to whom the money secured by the policy shall be paid in the event of his death. In case if nominee dies, the sum shall be paid to the policy holder or his legal representations.
5. Insurable interest
Life insurance must have insurable interest means monetary gain from the continuation of life or loss from its destruction. Although the loss of the insured cannot be measured in terms of money. But in practice certain sum of money, sometimes a bonus is fixed to be paid.

6. Utmost good faith
The life insurance requires the doctrine of utmost good faith. In life insurance, both the party insured and insurer should supply all the material facts to each other which help to ascertain the risk. Both the party has duty and responsibility to make full and true disclosure of all the material facts to the risk which can influence the decision of proposer whether to apply or not to apply for insurance.

TYPES OF LIFE INSURANCE

Life insurance has changed with the time. There are basically three types of life insurance:

1. Term Life Insurance
Term life insurance is the simplest form of life insurance. It is also the most inexpensive. It covers you for a specific term. During this period of time, your premiums do not change.
Like all life insurance, term life insurance is an agreement between you and the life insurance company. You agree to pay a predetermined premium rate. Your life insurance company agrees to pay a sum to your beneficiary if you die—as long as you were still paying your premiums at the time of your death.
With term life insurance, coverage pays off if needed during a specific time period. Term life insurance provides protection for a specific period of time - like 20 years. Because it does not accumulate cash value, Term insurance is inexpensive when compared to Whole life insurance (Permanent insurance.) Term life insurance is in low initial premiums provide greater coverage for the money & good for covering large loans such as auto loans or mortgages loans.

2. Whole Life Insurance
Whole life insurance is purchased as a long-term policy that may serve as not only an insurance policy but depending on type, as an investment vehicle as well.The whole life insurance will mature only on the death of the insured. This type of insurance is done to protect the dependents of insured in which low premium is paid up to his life. Although, this type of insurance has no financial gain to insured, reach persons prefer to take this type of insurance to make provision for the payment of death duty.
Whole life insurance, like term, is exactly what it sounds like. A policy without company specific modifications will have a level premium and level face value for your entire life. Unlike Term, however, whole life builds a cash value which you can claim if, in later years, you decide that you no longer need the life insurance.

3. Universal Life InsuranceUniversal life insurance is a type of life insurance that builds a savings plan out of which your premium is paid. Universal life insurance is flexible combination of Term life insurance and Whole life insurance, so it is commonly known as 'flexible' life insurance because you can change the premium or face value, although it usually has to prove insurability if you want to increase the face value. The interest it accumulates can also fluctuate with the economy. So if you start with an unusually high interest, you may find it necessary in future years to increase your premium slightly to keep the policy in force.
It has many of the features and minimal premiums of a term policy, and yet offers flexibility to increase those premium payments and accumulate equity using some of the features and advantages of a whole life policy.

LIFE INSURANCE

Life insurance may be defined as a contract where insurer pays certain sum of money either on the death of the insured or on the expire of the fixed period in consideration of premium undertaking. Life insurance contract is not a contract of indemnity because life of a person cannot be measured in terms of money. In life insurance, insurer promises to pay certain sum of money to the insured person on the expire of policy or to the nominee on the death of insured which ever is earlier. As such life insurance provides financial protection against the risk of early death and at the same time life insurance is a good investment. Let us see an example, if an insured person dies before the maturity of the policy, the insurer provides financial protection to his dependents. But if the person lives up to the maturity of the policy, the insurer replaces the certain sum of money to him. So life insurance is no only a protection against the uncertainty of life, life insurance is an investment too.Life Insurance.jpg The life insurance contract can also describe as ‘contingent contract’ because the loss of the life cannot be compensated and only a specified sum of money is paid, if the insure die.

Life insurance is designed to cover the final expenses, including funeral expenses and bills, of the policyholder upon his death. Life Insurance can also provide a means for a policyholder to provide for his heirs financially. Life insurance is issued either as a term policy, which does not build equity but which generally has lower premiums, and whole life insurance, which does provide equity the policy holder can borrow against. Whole life policy premiums are generally more expensive than term insurance. For most people, the purpose of life insurance should be to replace the financial contribution made by a family member. Life insurance can be pure insurance, which pays only on the death of the insured, or cash value insurance, which also has a savings vehicle. Most people who need life insurance are better off with pure insurance and saving for retirement through other vehicles. Proceeds from life insurance cover three types of expenses: replacement of the policyholder's income or work, estate taxes, and burial costs. When you consider the amount of insurance to buy, consider the following:
1. Most of the life insurance should be on a family member whose salary is important to the family budget.
2. Consider a relatively small life insurance policy on a stay-at-home parent to cover child care and other expenses.
3. Don't buy life insurance on children. Instead, buy life insurance on other family members for the benefit of children.
4. Consider reducing the amount of life insurance you have as you build more financial assets.
5. Pass on credit life insurance and mortgage life insurance if you can. These plans are restrictive and expensive. Buy more general life insurance instead if you feel a need.
6. Pass on life insurance altogether if you are single and don't have anyone depending on you. At most, get a small policy to spare your family burial expenses. You should buy about 12 times the amount of money you would need annually to replace what the family member is contributing. For example, if you would need $50,000 a year to replace the death of an employed member, you would need a $600,000 policy.