Distinguish between: Life Insurance and Marine Insurance - Organisation of Commerce and Management

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Distinguish Between

Distinguish between:

Life Insurance and Marine Insurance

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Solution

Sr. no. Points Life Insurance Marine Insurance
1. Meaning: A contract whereby the insurance company undertakes to pay a certain sum of money either on death or maturity (whichever is earlier) for a consideration (premium) A contract whereby the insurance company undertakes to pay compensation to an insured in case of loss to him due to dangers (perils) of the sea.
2. Policy taken by: It can be taken by an individual for his own life or for his family members. It can be taken by exporters, importers, and shipping companies, etc.
3. Subject matter: In life insurance, the life of the insured is a subject matter In Marine insurance, goods in the ship, cargo, and freight are the subject matter.
4. Insurable interest: It must exist at the time of the contract. It must exist at the time of contract and also at the time of loss.
5. Tenure: The policy can be issued for any number of years, even until the death of the assured. It is generally for a short period and may range from one month to a year. Normally it does not exceed one year.
6. Compensation: It is paid either on death or maturity whichever is earlier. It is paid only if there is a loss-causing event during the term of the policy.
7. Principle of Indemnity: It is not applicable as human life cannot be valued in terms of money for calculating the actual loss. It is applicable as the insurance company compensates for the financial loss and the insured is brought back to the same financial condition that he was before the event.
8. Number of policies: Insured can take any number of policies on the same life. Compensation is paid on all the policies. Generally, only one policy can be taken. However, double insurance is possible. However, compensation does not exceed the actual loss.
9. Beneficiary: The beneficiary can be insured (if he survives the selected term) or else the nominee or the legal heir on the death of the assured. The beneficiary is the insured person or company.
10. Surrender of policy: The policy can be surrendered before the expiry of the term, subject to certain conditions. It cannot be surrendered.
Concept: Business Services - Insurance
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Chapter 4: Business Services - EXERCISE [Page 92]
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