The company which issues insurance policy is called insurer. Insurance company is also called assurer or underwriter. Insurer agrees to pay compensation on the happening of uncertain and unfortunate event.
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The person who is protected against uncertain losses and who is paid a compensation by the insurance company is called insured or assured. He is a person in whose favour insurance policy in issued. He is also called a policyholder.
Proposal is a written request made by the proposer to the insurance company for insurance cover. Insurance companies supply printed proposal forms free of charge to the interested parties.
Premium is a periodical payment which the insured has to make to the insurer in return for the insurer's guarantee to compensate his loss. It is a financial consideration payable to the insurer.
Policy is a written document which contains the contract of insurance. It contains terms and conditions of the insurance contract. It is a sealed document issued by the insurance company (i.e insurer). A policyholder (i.e insured) has to keep it safely for claiming compensation, if necessary.
6. Subject matter of insurance
It is the subject against which the insurance policy is taken. In life insurance, life of the assured is the subject matter. In fire insurance, goods / property / building, etc., is the subject matter. In marine insurance, cargo or ship is the subject matter of insurance.
Claim is a demand made by the insured for compensating the loss to the subject matter of insurance. Insurance companies give claim forms to policyholders for the giving claim. Claim is made on the happening of the event. For example, fire, flood, theft, death, etc.
Reinsurance is a system by which the original insurer enters into a contract with another insurer for sharing a part or all the risks taken by him. It is done when the amount of risk covered is very high. The main objective is to reduce the risk of large contracts.
9. Double Insurance
Double Insurance takes place when the insured insures his property or goods with two insurance companies. In such a case, each insurer will pay the proportionate amount in case of loss. If one insurer agrees to pay the full compensation, then he can claim the proportionate amount from the other insurer. The main objective is to ensure additional safety.
Actuary is a professional person appointed by an insurance company to give advice about premium rates, insurance product development, investments, maintenance of accounts, etc.