Disability Insurance

Definitions of Disability

Different policies offer many characteristics and definitions for disability including:

Any Occupation: This is the strictest definition in which the insured is considered disabled only if he or she is unable to perform any duties pertaining to any occupation.

Modified Any Occupation: Disability applies only if you are unable to perform any duties pertaining to any occupation for which you have been trained, received education or have work experience.

Own Occupation: This is the most flexible definition for liability. You are deemed to be disabled if you are unable to engage in the principal duties of your own occupation. Most insurance carriers are doing away with this definition.

Split Definition: This definition can be within one's own occupation for a specific time period or with any occupation after the maximum benefit period has passed. 

Loss of Income: This definition avoids the problem of having to determine partial or total disability. A policy with this definition pays the insured in the event of loss of income due to illness or injury.

The Impact of Disability Definitions

How your disability policy defines disability will influence many things including:

• When you are eligible to receive benefits
• How much the policy will cost - the stricter the definition, the higher the cost
• How long the benefits will last

Duration of Benefits

When talking about disability insurance there are two types of duration: 

Short Term: This type of coverage provides coverage for disabilities of up to two years, but most policies pay up to six months on average.

Long Term: This type of coverage protects for a longer time period (on average more than six months), often until age 65 or for life. 

Certain exclusions may apply to disability policies that are worth identifying, and these may vary from policy to policy. 

GK Insurance quiz

1.IIS is related to Insurance,What is IIS?
International Insurance Support International Insurance Service International Insurance Summit International Insurance Society

2.The Geneva Association identifies fundamental trends and strategic issues where insurance plays a substantial role or which influence the insurance sector,Who was the Secretary General of Geneva Association during 2012-2014:
Prof. Orio Giarini, Mr Patrick M. Liedtke, Mr John H. Fitzpatrick Dr Garen.D.Patrick

3.Which of these is related to Prime Minister Jan Dhan Yojona(PMJDY):
HDFC LIFE IFFCO Tokiyo HDFC Ergo. Tata AIG

4.Where is the HQ of International Association of Insurance Supervisors?
New York London Hyderabad Basel

5.What does GIMAR stands for?
General Insurance Market Report Global Insurance Market Report Growing Insurance Market Report None

Types of Plans

Indemnity Plan

An indemnity plan, sometimes called a fee-for-service plan, is a type of insurance that reimburses you according to a schedule for medical expenses, regardless of who provides the service. These plans cover things such as:

• Hospital stays
• Surgical expenses 
• Major medical coverage

Under these plans, the insurer pays a specific amount per day for a specific number of days. The amount paid can be calculated either as a percentage (80/20) or for actual expenses.

Health Maintenance Organizations (HMO)

The HMO is the most common type of insurance policy people own and the one most frequently provided by employers. HMOs provide a wide range of comprehensive healthcare services to a group of subscribers in return for a fixed periodic payment. With this type of coverage, you select a primary care physician that acts as the gatekeeper for you to receive virtually all the medical care required during a year. The gatekeeper concept is the health insurer's attempt to control the cost and quality of care by coordinating health services with other providers. Specifically, your primary care physician is responsible for determining what care is required and when a patient should be referred to a specialist.

These policies tend to be the least expensive form of health insurance, but they do come with annoying restrictions. Aside from having a gatekeeper, you can only select doctors and hospitals approved in the insurance carrier's network. This becomes a problem if you already have a great relationship with a doctor who is not in the network. If you use a non-network provider, your HMO will not cover the costs unless it's for an emergency. Other than this, most preventive care services are covered.

Preferred Provider Organization (PPO)

PPOs are a group of healthcare providers that contract with an insurance company, third-party administrators, or others (like employers) to provide medical care services at a reduced fee. There are two major differences between HMOs and PPOs in that:

1. The healthcare providers in the PPO are generally paid on a fee-for-service basis as their services are needed, much like a traditional doctor's visit. 
2. You are not required to use the PPO's healthcare providers or facilities - you can go outside the network. That said, going outside the network usually means paying a higher co-payment or deductible.

Point of Service (POS)

A point of service plan is a hybrid plan that combines aspects of an HMO, PPO and indemnity plan. This type of plan is more flexible in that it allows you to decide at the time you need services to elect to use the POS plan's physician to arrange in-network care (HMO feature), or to go outside the network or hospital and pay a higher portion of the cost. 

Insurance types

Flood Insurance

Flood insurance is becoming more and more popular as places that normally would not experience floods are suddenly finding themselves suffering losses as a result of extreme weather. To the surprise of many of these homeowners, their regular homeowners insurance policy did not cover against flood. This is a separate type of coverage that you will have to purchase if you consider flood to be a risk for your business or property. 

If you live in a flood-prone area and you have a mortgage, the lender will require you to purchase adequate coverage to insure the property. If you own the property, you can elect to self-insure and not buy insurance, but you have to remember that any damage caused as a result of flooding will be your financial responsibility. The cost of this kind of damage can run from the hundreds to thousands of dollars, so it's worth considering purchasing the insurance to transfer this risk, especially, if you live in a flood zone. If you don't live in a flood-prone area, you may qualify for a discounted rate, which means a lower premium for you. 

Windstorm Insurance

Like flood insurance, windstorm insurance is a separate type of coverage that protects your home or business against wind damage. Wind damage may result from items flying and destroying your property as a result of a hurricane, hail, snow, sand or dust.Coverage for windstorm may be limited in states prone to hurricane and tornadoes. If you live in a state likeFlorida, Louisiana, Texas or the Carolinas, which are frequently barraged by tropical storms or hurricanes, this should be an integral part of your asset protection planning. Consult with your agent or broker for more details on this type of coverage.

Umbrella Liability Policies

Umbrella insurance helps you protect your assets if you are sued. If you are worried that the liability insurance coverage you have through your auto or property policies is still not enough, you can consider adding an umbrella policy. An umbrella policy is basically an additional policy that kicks in when your other insurance policies have reached their limits. The amount of coverage and types of coverage offered by these policies varies, as will their premiums. You can tag on an umbrella policy to your homeowners or auto insurance policy to protect your assets against liability or lawsuits. 

Certain exclusions apply, including:

• Owned or leased aircraft or watercraft
• Business pursuits
• Professional services
• Any act committed by the insured with the intent to cause personal injury or property damage

Umbrella policies are fairly inexpensive to acquire, and coverage ranges from $1 million to $ 5 million or more. You might expect to pay between $200 to $500 for $1 million in coverage. There is no specific "umbrella deductible". Because an umbrella policy is written on top of any auto or personal property coverage you have, the benefit does not kick in until you satisfy the deductible on those policies and have used up the coverage from either the auto or property policy.

Property And Casualty Insurance

Auto Insurance

• Coverage: An auto insurance policy typically covers you and your spouse, relatives who live in your home and other licensed drivers to whom you give permission to drive your car. The policy is "package protection", which provides coverage for both bodily injury and property damage liability as well as physical damage to your vehicle. This damage can include both that caused by the collision and damage cause by things "other than collision", such as flood, fire, wind, hail, etc. 
  
  
• Common Types of Coverage: Auto insurance typically covers personal injury (PIP), medical payments, uninsured motorist, underinsured motorist, auto rental, emergency road assistance and other damages to your car not caused by a collision such as flood, fire and vandalism. Other coverage is available, too.
  
  
• Deductible: The deductible is the amount that you will pay out of pocket when you file a claim. Typically, the higher the deductible, the lower your premiums.
  
  
• Insurance Rates: How much you pay will depends on many factors, including your driving record, the value of your vehicle, where you drive, how much you drive, your marital status, your desired coverage, your age, sex and even your credit history. 

Homeowners Insurance 

Our homes and their contents are our greatest assets. That is why it is so imperative that we protect their value. Homeowners insurance helps us achieve that goal. Let's break down the different concepts that encompass this area. 

• Coverage: Homeowners insurance typically covers the dwelling (the structure), personal property and contents, and some forms of personal liability. The policy may cover direct and consequential loss resulting from damage to the property itself, loss or damage to personal property, and liability for unintentional acts arising out of the non-business, non-automobile activities of the insured and members of that insured's household.
  
  
• Types of Insurance: Are you ready to decipher the codes? There are six standard forms of homeowners insurance containing personal property coverage. 

GK quiz

1.The representative for IMF in Indian Constituency is:
Raghuram Rajan T.S.Vijayan Virman Arvind Arun Jaitley

2.According to 1956 index,LIC absorbed how many Provident Societies
245 107 154 75

3.Institute of Insurance and Risk Management is situated in
Jodhpur Mumbai Hyderabad Chennai

4.IRDA’s HQ was shifted to Hyderabad (Now Telungana) in the year
1999 2000 2001 None of these

5.The Institution of Insurance Ombudsman was created in accordance of Government of India’s notification dated
11th Nov 1998 11th Nov 1999 12th Sept 1947 12th Sept 1973

The Risk Management Process

After you have determined that you would like to insure against a loss, the next step is to seek out insurance coverage. Here you have many options available to you but it's always best to shop around. You can go directly to the insurer through an agent, who can bind the policy. The process of binding a policy is simply a written acknowledgement identifying the main components of your insurance contract. It is intended to provide temporary insurance protection to the consumer pending a formal policy being issued by the insurance company. It should be noted that agents work exclusively for the insurance company. 

There are two types of agents: 

1. Captive Agents: Captive agents represent a single insurance company and are required to only do business with that one company. 
2. Independent Agent: Independent agents represent multiple companies and work on behalf of the client (not the insurance company) to find the most appropriate policy.

Underwriting

Underwriting is the process of evaluating the risk to be insured. This is done by the insurer when determining how likely it is that the loss will occur, how much the loss could be and then using this information to determine how much you should pay to insure against the risk. The underwriting process will enable the insurer to determine what applicants meet their approval standards. For example, an insurance company might only accept applicants that they estimate will have actual loss experiences that are comparable to the expected loss experience factored into the company's premium fees. Depending on the type of insurance product you are buying, the underwriting process may examine your health records, driving history, insurable interest etc. 

The concept of "insurable interest" stems from the idea that insurance is meant to protect and compensate for losses for an individual or individuals who may be adversely affected by a specific loss. Insurance is not meant to be a profit center for the policy's beneficiary. People are considered to have an insurable interest on their lives, the life of their spouses (possibly domestic partners) and dependents. Business partners may also have an insurable interest on each other and businesses can have an insurable interest in the lives of their employees, especially any key employees.

Fundamentals Of Insurance

How does insurance work? 

Insurance works by pooling risk.What does this mean? It simply means that a large group of people who want to insure against a particular loss pay their premiums into what we will call the insurance bucket, or pool. Because the number of insured individuals is so large, insurance companies can use statistical analysis to project what their actual losses will be within the given class. They know that not all insured individuals will suffer losses at the same time or at all. This allows the insurance companies to operate profitably and at the same time pay for claims that may arise. For instance, most people have auto insurance but only a few actually get into an accident. You pay for the probability of the loss and for the protection that you will be paid for losses in the event they occur.

Risks

Life is full of risks - some are preventable or can at least be minimized, some are avoidable and some are completely unforeseeable. What's important to know about risk when thinking about insurance is the type of risk, the effect of that risk, the cost of the risk and what you can do to mitigate the risk. Let's take the example of driving a car. (For more insight on the concept of risk, see Determining Risk And The Risk Pyramid.)

Type of risk: Bodily injury, total loss of vehicle, having to fix your car

The effect: Spending time in the hospital, having to rent a car and having to make car payments for a car that no longer exists 

The costs: Can range from small to very large

Mitigating risk: Not driving at all (risk avoidance), becoming a safe driver (you still have to contend with other drivers), or transferring the risk to someone else (insurance) 

Let's explore this concept of risk management (or mitigation) principles a little deeper and look at how you may apply them. The basic risk management tools indicate that risks that could bring financial losses and whose severity cannot be reduced should be transferred. You should also consider the relationship between the cost of risk transfer and the value of transferring that risk.

Risk Control 

There are two ways that risks can be controlled. You can avoid the risk altogether, or you can choose to reduce your risk.

Risk Financing

If you decide to retain your risk exposures, then you can either transfer that risk (ie. to an insurance company), or you retain that risk either voluntarily (ie. you identify and accept the risk) or involuntarily (you identify the risk, but no insurance is available).

GK Insurance

1.Tsunami Jan Bima Yojona was a special insurance plan associated with:
UIICL LIC GIC NICL

2.NIACL was started in the year:
1938 1947 1973 1919

3.The Chairman of Agricultural Insurance Company of India is:
Mr.Millind Kharat Mr. Joseph Plappallil Mr.G.Srinivasan Mr.K.P.Brahma

4.“Rest Assured with us”This tagline is associated with:
SBI Life Insurance NIACL Kotak Mahindra Life Insurance UIICL

5.“Twins of Wood” is related to Financial system as well as to Insurance market.These are:
RBI & IRDA RBI & IMF World Bank & RBI World Bank & IMF

Insurance Quiz

1.RTI facility is not completely applicable in
ICICI Lombard General Insurance Company Export Credit Guarantee Corporation United India Insurance Company None Of these

2.IRDA has the power to frame the regulations under___of the Insurance Act. 1938.
Section 112A Section 114A Section 114B None of these

3.Parliament passed a bill delinking its 4 General insurance subsidaries in:
June 2007 August 2005 July 2000 July 2002

4.According to 1st Januray 1973 reports How many insurer were amalgameted & grouped into four General Insurance companies:
102 107 245 None of these

5.The General manager of NICL is:
Joseph Plappallil. G.Srinivasan K.P.Brahma A.V.G.Kumar

Insurance Awareness - GK

1.General Insurance(Public Sector) Association of India’s HQ is situtated in?
Telengana Mumbai Delhi Chennai

2.Which of this recently got RBI’s permission to enter Non Life sector of Insurance?
Karur Vysya Bank Indusind Bank Kotak Mahindra Bank ICICI Bank

3.Aditya Birla group announced their decision to foray into:
Personal accident Insurance Life insurance Marine insurance Health Insurance

4.IIB stands for:
International Insurance Board Intellectual Insurance Board Insurance Information Bureau NONE

5.India’s Agricultural Insurer is:
NABARD GIC KIshan Bima Sanstha AIC