Insurance Brokers

As on date (9th June 2008), there are more than 375 Insurance Broker registered with IRDA. Insurance Brokers are of 3 types:

• Direct
• Re-insurer
• Composite

Insurance Agent & Insurance Broker

An 'Insurance Agent' is a representative of an Insurance Company (either Life or General or both) and can represent only a single Insurance company. An Insurance Agent receives remuneration my way of commissions he / she earns on the policies of the Insurance Company he represents.
An 'Insurance Broker' is allowed to represent multiple Insurance Companies and is allowed to sell insurance products of multiple companies.
An Insurance Broker has the advantage of being able to compare similar products across multiple Insurance companies and offer a 'best-fit' product to the end customer.

Private Companies in the Insurance Market in India

As on date, (9th June 2008), there are 16 private Life Insurance companies and 12 private General Insurance companies. For latest information: http://www.irdaindia.org/

There is 1 Public Sector Insurance Company (Life Insurance Corporation of India) and 1 Public Sector General Insurance Company (General Insurance Company). General Insurance Company used to have 4 subsidiaries :

• The Oriental Insurance Company Limited
• The New India Assurance Company Limited
• National Insurance Company Limited
• United India Insurance Company Limited

All these 4 subsidiaries are now de-linked (wef December 2000) and act as independent companies.

IRDA

The insurance industry in India is regulated by the 'Insurance Regulatory and Development Authority' (IRDA). IRDA was constituted by an act of Parliament and the is a ten member team consisting of
- Chairman
- 5 whole time members
- 4 part-time members

For more details:- http://www.irdaindia.org/

What are 'Traditional Life Insurance Products' ?

'Traditional' Life Insurance products are the plain vanilla variety of insurance products where the premium paid over the term of the policy is calculated based on the certain factors.

The factors that help in calculating the cost of covering the risk of loss of life of an individual are, age, gender, occupation, etc.

The 'Premium' paid is a sum of the mortality charges plus administrative cost of administering an insurance policy for an individual.

What are the types of Life Insurance ?

Life Insurance can be broadly classified into 2 types based on the risks to be covered. The pure risks to life are:
- the risk of living too long
- the risk of dying too early

Insurance products are a mix and match of how they cover the 2 above mentioned risks.
'Pure Endowment' covers the risk for living too long and 'Term Cover' is for insuring against the risk of dying to early.

Other Insurance products like 'Endowment Policies', 'Money Back Policies', etc are a hybrid of the 2 base products and cover both risks.

What are the types of Insurance ?

Insurance can be classified into 2 broad categories
- 'Life Insurance'
- Non Life Insurance or better known as 'General Insurance'

Life Insurance, as the name suggests, covers the risks arising to due to loss of human life whereas 'General Insurance' is for covering risks of loss to all other non life assets.
Examples of 'General Insurance' will be 'Motor Insurance', 'Home Insurance', 'Health Insurance', etc.

What is the meaning of 'Term' in Insurance ?

'Term' in Insurance means the time period for which there's contract of agreement between the 'Insurer' and the 'Insured' for covering a specific risk of loss (e.g. loss due to death, loss due to accidents or robbery, etc) on payment of a certain consideration called 'Premium'.
'Insurer' will be an Insurance Company either public or private company. In India, all Insurance Companies [e.g. Life Insurance Corporation of India (LIC), ICICI Prudential Ltd, TATA AIG, etc] are governed by IRDA.

What is Term Cover ?

'Term Cover' as the name suggests, is the type of Insurance cover an individual would take to cover the risk of loss (namely 'loss of life') for a period of time. This is the cheapest form of Life Insurance for an indivdual as it covers the loss only in event of 'death' during the term of the policy.
There are 2 types of term cover:
Term Cover with 'Return of Premium'
Term Cover without 'Return of Premium'

'Return of Premium' implies that the premium is retuned to the 'Life Assured', at the end of the term, if the 'Life Assured' survives the term.