A Good difference in these a bit of personal financial planning insurance blending is very important in my previous lecture and insurance planning i talked about what we mean by insurance why insurance is required that is a life is full of uncertainty these and risk so in order to mitigate our risk in busy the lead a it’s a risk management system
And you can manage your risk you can transfer your risk and uncertainty be at these the financial part of it to some other company that is the some other person and what are the different types of risk i just referred in my previous elected basically i talked about life insurance and the dental insurance in this lectured to start with i’ll be talking about principles of insurance that what are the basic principles on with the insurance policy or the insurance depends
so many company ensures an individual and could be these are the falling principles of insurance as i said in the my previous lecture that two parties it is an agreement between the two parties one is called the ensure was getting the insurer insurance and the other is called insurer with with with so what is called the insurer was getting dangerous and one is insured and of this insurer short is a person or the company which is getting danger insurance and insurer is the company which is giving dangerous right so that is it in form of company the company gives the insurance a policy holders who is called ensure picks a policy and the insurance which is a
Company we do they call insurance company gives the policy to the person or the company or the ndp so there are certain basic principles remains is which must be followed in the in the insurance fasting as we must understand that insurance is not for profit it is for indemnity indemnity means to fulfill the loss to the extent of the insurance policy we’ve got hurt indemnity the insurance company chill indemnify are compensated the insured for certain losses only a buddha ensure interest
What it means is that it’s a it’s a it’s a policy ut’s an agreement all fulfilling the loss two to mitigate the loss to the extent of the insurance policy what it means is i cannot make profit out of it if i begin to policy so was i would take it it got into this which covers if anything happens to the that is an accent picks based in a damaged exposed to the got the insurance company will get the got a repaired and will be the expenses involved in that appear
So i have taken insurance off to the extent of three lakh rupees like so what it means is that i cannot game five lakh rupees from the insurance but we also also building blender new put me let me put this week that an accent takes place and in minor damage to the god takes place for putting the damage to the got two thousand bees has been spending so i gonna go from the insurance company that since my insurance of three lakh rupees you must give me three lakh rupees because it is an agreement to indemnify if my
Lost his to the extent of fifty thousand rupees to give the car in the previous condition before the accident right so whatever the condition of the god was before the accident and after the accident fifty thousand rupees was being spent to get the got in the shins ship like in the same condition i’d spend fifty thousand bees so any most i can game made the most means i couldn’t blame fifty thousand rupees from the insurance company i cannot play more than fifty thousand was because it’s not an agreement of making profit even if my insurance is of three lakh rupees i guess that loss is much higher means if it is the for example two point five or a poodle three lakh rupees then the company will pay me three level with but not if they’re mode spend by me on that a bit of the got his lizard
Three level peace a company will pay me only v level is what it means is it’s not a profitable thing it’s not a
his policyholders should not take the policy for making profit out of it like so it is only indemnity in miss it’s a it’s a fulfillment of the last to the extent of the policy when i’m saying to the extent of wallasey so was a five insurance has been taken and have begun to fire insurance of five lakh rupees and if a loss has taken place of due to the fire of my property to the extent of thirty level be the thirty five luck with so the insurance company will be meme maximally five lakh rupees right so it’s it is a agreement the basic principle is to indemnity miss it is basically to indemnify or compensate the insured for certain
Losses will lead to their insurance and your interest the other thing which is important which is a one of the principle of the insurance is incredible interest the policy which i’m taking as a policy holder like as a as a insured i must have insurable interest in the person in the property in the as it for which i’m taking their injuries this means that the last must be directly suffered by the insured in should have an interest must be present with their property insured or insurance on a person is involved the oral idea is that the insured have a stake in the loss or damage to the properly insured like it is my business i’m reading a shop i’m running a factory and i’m getting laid factory insured against the again limiting the fighting them will flat rate
The greatest web have given me the credit they may have incredible interest was a bank has given me alone but twenty five local be thirty level be or for any sum of money then the bank go get my good insured because bank as a insurable interest that in case if any fired take place in of of the in may of my factories property of my from while buy goods right that is lying there in the stock and use their stock i’ve taken the insurance
I was id i’ve begun the loan from the bank if any damage text based on the that stock i’ll be finding it very difficult to pay back the money of the bank that is a lunar month because if i make a heavy loss in the business because of the damage of that good i’ll be different in a difficult position to pay back the don’t of the back so bank has a insurable interest in the stock that is dead in my factory bank is not directly is not banks property is not banks stop it is my stop my business stock but bank has a insurable interest because the bank has given loan to the company loaned to buy a company and if any damage takes place of to of my stop to my stop
In that case the i use an individual will find it difficult to pay back the banks look right so principal amount and they ensured a more so than in the bank either insurable interest i can get the life and georgia the outer health insurance of a bus or lose passing by your of my neighbor i can get the health insurance or life insurance of my suppose that is my wife my children right because i have insurable interest in the life of their life of my children and life mice both that i have insurable interest so the party which is taking the insurance policy must
Have insurable interest in the object for which are which the person is taking the insurance like so without insurable interest the the insurance should not be taken or insurance is moon not not being taken so intuitive interest is a very very important aspect or important principle of injuries that is a person was taking the danger and must every inch should have bit interest in the object of which the insurance is being taken it maybe in case of the as have given the example it will be a secret trust may have been durable interest in your business because the great does have you knew the money and if anything happens to a business does for
Il supporting i’m taking a buying a got right and for the gotta have taken the learn from the banks or have to get a loan from the company we just selling the got these is even the gum new just selling that are they mix the loan and england so if any accent picks based if any damage to the got to express and if tomorrow i said i no concern with this in that is how the money will be record so the insurance the the the company which is given in which is giving mean long ago that god as it insurable interests to enjoy being dressed must be there for getting the insurance
What’s at stake is will be determined by the kind of insurance involved and the nature of the property ownership all the relationship between the purses i’ve already spoken about it so the requirement of an incredibly interest is distinguishes insurance from gambling right so in the gambling these no insurable into these know just in interest in involved but in the insurance that must meet a interest involved in the things of the of the a blip for which you you’re digging the angeles and targets utmost good fit
You must deal all the blood while taking the insurance will bury my fights would miss the insurer and the insured are bound by good faith bond of honesty and fairness in simple terms medieval facts must be disclosed sometime normally the policy holders always blame the insurance company that many things are being concealed from the policy holders at the time of giving the insurance this will lead the principle of like post good faith similarly the person who’s taking the
Insurance the person should also the will all the facts which he or she knows that million take the example of health insurance so was a person an individual is taking your health policy health insurance policy up to the extent of hobbies say twenty lakh rupees that if any thing happens any element express like the so on medical expenses to the extent of currently lego pieces being encoding a year in it then the insurance company will take care of these expenses but when the person to was taking the policy a deck time itself
He knew it that he has some kidney problem that is a johnson is only one could mean functioning does could mean not functioning like and this fact was not been revealed to the insurance company at the time of getting the policy this means it is the volition of more good at most good faith in that gives the insurance company will have all the right to reject the claim of the person was taken the policy because normally the individual did not reveal this fact to the to the insurance company like that he’s suffering from this element
How do we will it probably either the insurance company would have died in please the be remote or it might not have given the insurance policy so the principle of i was good faith is being violated similarly from the company point of will admit that this example that and the time of health insurance the agent or the person who came from beyond the insurance company we will that all elements will be covered that you together policy and any expenses that will be with just give a statement that any expenses medical expenses take place to the extent of the policy a multi say twenty lakh rupees all it to the lakh rupees will
Be paid by the insurance company in case of the hospital admission but there are certain elements which are not been covered in that insurance policy this fact they have written in the document in a very small words or this fact was not been revealed to the individual to the policy holder those with taking the policy at the time of giving the insurance policy and know what is being booed that the the individual was not being we we that the the falling elements are not being over to the time of good qualities and any medical expenses that will take place to the extent of this big beagle have any element the the it the insurance company will pay for it
But since the individual has taken in good faith that any element x base i’ll be colored to the extent of twenty lakh rupees but the little mini diseases like save for example kenzo kidney failure or some other see there’s elements were not being colored by that policy like they’re different natures a policy they’re different type of policies so that policy with the the policy holders they can do not go does not cover these things so it is a violation of good faith what it means is that both parties insurer and the ensure was getting the insurance with a short and the book and the insurer who’s giving the that is the insurance company must reveal all fit all all facts so that both the parties can make a wise decision and that like this
So principle of utmost good faith that is the insurer trust in short and ensure must trust injured and all the money either facts what is mcdougall fact middle of actually means the fact which can impact your decision of taking the policy the for the policyholders white wonderful fact which can infect the company that is the insurer to mid the policy that is had to heat the insurer new the fact that when ensure would not have made the insurance or winner i’ve given the insurance or had increased the premium the insurance like so it missed that was good it must be followed by would the parties
Contribution see book make some contribution in will be pretty premium to the insurer see i use an individual i’m taking a policy i’m also contributing a my contribution is in the form of being a premium to the ensure that is the insurance company what is the contribution of the insurer insurers contribution is if something happens for which the policy was being taken them
The indemnified the loss to the policy holder is that a sponsor bloody of the insurance company that is the insurer so injured with similar obligation to the enjoyed contribute to the compensation or indemnification what it means is both parties and making some conclusion the ensured the person is taking the policy country in the form of being the premium like by being the be with the person is making or the company’s making the risk management company music the injured is not being begin by individually injured and going to dig and my god braves also be those houses and although thing i saw all those entities so
Similarly the company which is giving the insurance contributes if any last x rays for with the insurance has been taken it is a responsibility of the insurance company to compensate to indemnify that loss another important principle of the insurances sub litigation or does brother jimmy’s the insurance company acquired legal rights to pursue recoveries on behalf of the policy holders for example the insurer miss you those liable for the in georgia loss
The insurance can with this obligation right by using a special gloss what it means his some was only when take the example of a fighting chance if i i’ve taken a policy of a fine insurance of my business i’m running a business and there are certain stocks like so of the stock the policy of which against which the fight insurance has been taken if i took place in the last to the extent of fifty lakh rupees dick base i put a claim to the insurance company for giving come visiting of my last to the extent of fifty lakh rupees a but this flag took place because of the negligence of one of the into it hello were smoking and he threw his cigarette in the stock knowingly that this is very sensitive fired sensitive stop so the insurance company as far as i’m concerned it was not my for the insurance company will has to will have to pay me the loss of the
The property which has taken place but insurance company is all that like to find a legal case against an individual that is the person but i’m in the negligence because of the person’s negligence that that take base fight as dick taken place so ago that person and wasn’t negligence that fired to raise the company has out right before a little against him so nice the legal the late bosses on to the insurance company like so so building again and it’s it takes place in a car insurance and the got damaged beyond repair right so i’ll claim to the insurance company for me the insurance a moat the insurance company pays to me they injured in the world
So what do with the remaining portion of that god is that got us right belongs to the company not to me insurance company has paid me the five local bees up subordinate i’ve taken insurance or five lakh rupees of the god and that god is beyond what appeared means the condition of the got is that it cannot be repaired so the insurance company will pay me five lakh rupees and the gosh right will be automatically transferred from myself to the insurance company like so insurers can be that it’s obligation date by using exposure because i’m an it is a danger that it
If he or she if the company so once it gets a little good rights by using special boss cause proxy meal or proximate cause what is the cause of the damage what is a reason of the damage the up to see and with that reason had been injured or not this is important the real reason behind the laws must be covered under the policies in jordan agreement and the armored cars must not be excluded see i’m running it got the bullet in new jersey mr x is running a got and the god is insured against accident against our losses but it is being booed that the person’s to ex was drunk at the time of the bloody at the time of accent mr x was drunk and he was driving the car so the gossip proxy love the accident was that the person was drunk and because of his condition
An accent takes place because he was not in with full sense and because of that the in thickness but under this car insurance a document got policy documents when the insurance took place that is no nothing like that that if the person is not in the food since and the person is driving the got and if an accent tax base i’d in the even in that case the insurance company will cover their mouth so the cause up proxy now the extend was that the person was not in full since and because the person was not in full sense or a person i mean it’s a building he he’s driving in a in a nighttime and in that night because of his grow petition suppose he proved v people sleepy and because of that sleepiness the accident takes place
Who conducted the insurance companies not libel to pay the the damage but because the cause approximate leave the movies and of the accident was that the driver of the god the person was not in full sense and he was drunk the because of that because of individuals negligence been ancient negligence i would say the it’s takes place so that if they need exam picks based because of your negligence they then the insurance company not liable to be that loss to will have to see that vicky’s the reason what is a mean decent of that loss and when did that mean reason is being covered by the insurance policy or not insurance dumped and and beaches or not so this is important that we must see what is a main reason of the loss
Next is mitigation in case of any laws or casualty the a settler must try to keep last to a minimum as if the as i was not injured it is the responsibility of the individual who’s taking the policy because as i said in the beginning also the the agreement between the insurer in the ensure is an agreement of blast that would parties trust each other so as a policy order if i’m taking a policy of any property anything i’d as i must try to minimize the loss sagal i begin to housing judas like and would have taken the house insurance
Several the natural calamities some fled the look place like my know for it to please and the minor flag the the water entered into the house what i should try i should try that old the for me judge all the belongings that are there on the ground for i should pick it up or i should give it a please provide lead the time but emerged provide really other things are there so that the loss is being really based i didn’t play that i said okay the goods are good that featured why should i take a lead in the last be like and i didn’t play anything to minimize the loss or minimize the loss of my property
This is again the principle of insurance like so ancient and spoonful is that vanilla the the laws are taking place the holders should try to minimize their loss that is it should try as if the as it is not being injured as if of i’m not going to get any lot compensation of the law that really big place from anybody so i must try to mitigate the loss so that is the principle of mitigation because the this insurance is a the agreement of trust no after talking of the principles of the insurance let me talk will briefly about the meaning of it is although i started with the is good stuff on certain age of in my first like john sauven and start talking about dangerous but like would define what risk is here
Or this is an essential concept in any discussion of insurance an insurance risk is defined as unser dinner the concerning economic loss i so basically this cousins are dirty word is going to happen tomorrow nobody’s nor done for life is full of ones are didn’t live so this uncertainty is basically the uncertainty of the economic loss you may argue that life can be measured in money dumpsters roy economic loss but in case of life insurance nice to read that if anything it it works walks into we won it it works as a saving that a particular period of time you keep on being the premium and after that peter of time that person remains a light than the
A lump sum money is being given back to the person at that is a policy older so it actually a saving also likes get a investment also and at the time and a particular age you get lump sum money a good which is it is the most of the money because or a bit of time the insurance company also mix some proffered in the part of the preferred which we know as as bonus is being transferred to the policy holder the part of the prophet is being transferred to the depending on their time to learn legions of the policy there different type of policy right so
In that case there is no object economic loss but supposing something happens to the individual before the expiry of the policy that in that case the person’s dependent or persons nominees will get the money and with this money they can have that at least two financial lab the monday financial freedom i would say like to some extent so for example will you continue to be employed what happens if who espouses days prematurely what if your home is destroyed by a flood what will happen due to or league when you have not saved enough to retire these are all types of uncertainties between a from insurance border will read you calling it plus safe as one of the finance text books are concerned
Financial textbooks or financial as per the financial demonology i would do the work the dog are two types of less systematic list or unsystematic this system or douglas because l late for everybody so system it exists because deck type of risk with impossible to avoid completely which is which is similar to all right which is impossible to wide examples of the system or douglas concludes recession inflation and war any more takes place so it it will impact the whole economical and bag the whole business it will impact all in all lot of individuals and the recession take place in the economy of the in the world it will impact all business the degree of impact may videos from industry to industry from business to buzz us from a dude you do indeed your
Look recession is going to him back everybody same is a case with inflation like different and see that being impacted differently and the time of from vision she can do very little to protect yourself from systematic risk and no amount of profitable that was division league and elements a with like you’re going to fully diversify the systematic risk
As sort of the unsystematic risk as concern is that the fix an isolated group of companies industries countries are right so if i’m talking and financial dumps so that was a vision substantially decreases or eliminate said unsystematic risk so nice what it means is systematic this is going to impact on that degree of impact may vary from one end into your to another individual wasn’t business stewart another individual but as sort of the unsystematic risk is concerned it affects a particular group of companies and a particular industry and vic burger country so building a wall pick race like between the two countries
It’s all what takes place within a country so from the white by doing the unsystematic list because it is a companies specific or if the if you have i’m looking for the whole point of view from work at this point of view it is the under system meticulous like so diversification will not in back substantially decreases are you a limited on system or degrees that wasn’t is invested in i’m in company as in that particular country and and some board take base in that country maybe civil war so if the company has invested in other companies also other countries also so this could be diversify what it means is unsystematic of us can be diversified systematic risk going on we they were simply by so with these words friends
Ending here so i’ll be contending with insurance blending in my list lecture in today’s lecture of don’t basically about what risk is what a systematic this word is unsystematic list and be towed in the beginning of the lichter about the principles of insurance thank you
