Insurance in our time is a common thing. Life insurance is no exception. What is it? This is a process that includes protecting the interests of the property of the insured, which are related to issues of life and death.
The conclusion of an insurance contract is usually regarded as a long-term cooperation between the agency and the insured person. This is due to the fact that life is a concept that is not limited by a clear time frame. The onset of death can occur unpredictably, at any time.
A bit about history
If we consider this concept through the prism of history, it is worth noting that the first mention of such a process comes from the ancient period. An example is the organization of general monetary funds of collegiums of military affairs in Rome. Special ticket offices with religious overtones, as well as funeral, were also created.
In the Middle Ages, similar charges also occurred. It was at a primitive level, in the workshops of artisans. Further, life insurance switched to the marine theme. It began to ask itself as a kind of step in entrepreneurship, at the level of commerce.
In the 17th and 18th centuries, cargo, expensive equipment, and then the lives of ship captains began to be insured by ships. The first scientific approach to this issue was taken by James Dodson, an entrepreneur from England, at the turn of the 18th century. He calculated average age data from London city cemeteries and cited these figures in insurance premiums.
Two companies, which are assigned the status of the very first, appeared with a difference of 20 years. The first – 1740, its name is “Society for a decent life”, the second – 1762, “Society for a Fair Life Insurance”. This company operates in our time, and bears the status of “mutual life insurance company.” It is rightfully the oldest organization of its kind.
The year 1863 was significant for Russia, because during this period the first such institution, called “Life”, appeared. It was an insurance, commercial organization.
What is the essence of the process
As mentioned above, life insurance is a procedure that provides for long-term interactions between the insurer and the person concerned.
There are two options for endowment insurance in which invariant risk is possible:
- The survival of the insured person before a certain period.
- Fatal outcome.
There are several points prescribed for these options – physical damage (personal injury), the onset of disability, death, as a result of an accident, and others.
Cash payments (contributions) are made by an individual every month. The entire period of accumulation of funds lasts from the moment when the contract was concluded until the day the first insurance amount is issued due to the insured event.
While the period of accumulation of funds is active, the representative of the insurance company makes various financial transactions with them. This may be deposits in real estate, bank assets, deposit rates, shares of enterprises, etc. At the moment when the insured event occurs (the insured survives to the specified deadline), the amount of accumulation exceeds all previous accumulated contributions.
This occurs as a result of capitalization (interest income). The representative of the insurance company provides the insured with several possible ways of calculating the amount of insurance. Here are some of them – a one-time payment and in the form of an annuity for life.
Life insurance provides for the implementation of the function of accumulation of insurance. Also, develops shared life insurance and combining several similar products in one.
What is life insurance for?
Life insurance is an important point in solving many economic and social problems and problems. The complex of social solutions helps fill in the gaps of incorrectly organized aspects of the insurance system. State social security in the life insurance program is also lame.
This is an important point, because every citizen would like to have any accumulation of finances by coming of age or retirement age. The solution of economic problems provides for legal support and protection of the financial issues of an individual in case of death.
How insurance contracts are classified
Life insurance can be divided into the following items (criteria):
- On the object – three types of contract: 1 – If the policyholder and the insured are the same person, they will apply the contract in relation to their own life. 2 – When the insured person and the policyholder are different people, use the contract in relation to another person. 3 – the insurance contract jointly comes into force after the death of one or the other of the listed persons.
- On the subject – 2 types of contract. The first is life insurance for survival. The second – in case of death.
- In the exact order of payment of premiums from the insurance company– 2 types of contract are involved. First, the amount is paid once. The second – premiums are paid at intervals.
- By the term of the insurance policy – 2 types of contract. 1 – Insurance is issued for the rest of your life. 2 – A clear time frame for insurance is indicated.
- According to the version of the conclusion – they are divided into individual and collective.
- By the type of payments by companies : life insurance with annuity payment, life insurance with pension payment, life insurance with a one-time payment of a sum of money.
- According to the form of the policy (coverage ): 1 – life insurance is registered for the amount clearly stated in the contract; 2 – The amount of insurance is decreasing; 3 – The amount of insurance increases; 4 – There is an increase in the insured amount along with an increase in price indicators; 5 – If the insurer also participates in the profit process, the amount increases; 6 – When there is a direct investment of insurance premiums in investment funds, the amount increases.
Types of Insurance Contracts
The most common contracts in the global insurance market can be compared in one system complex. To do this, you need to know some characteristics and specifics of the main components of such contracts. The differences between them make up the whole scheme. Life insurance can be carried out according to three main (basic) policies – term, life and mixed. Let’s consider them in order:
- Urgent life insurance provides for the payment of the amount of insurance in the event that the insured person leaves this world before the due date specified in the contract. Prizes are often periodic, an investment element is not expected. There is no possibility of redemption, and this type of insurance is considered to be the most budgetary and simplest. But compensation payments after the death of the insured are guaranteed.
- Life insurance for the whole term (lifetime ). Premiums are paid in the same amount or at different intervals; there is an element of investment. Insurance coverage guarantees payment of the entire amount on the day of death, despite its time. There is a possibility of redemption, but it appears only after some time. This is the most complete payment for relatives. It lasts without a time limit and contains moments of capitalization.
- Mixed life insurance does not give serious guarantees for payment upon the death of the insured. If we are talking about deposits and savings transactions, this is a pretty profitable option. It provides for the possibility of redemption, premiums are paid for a certain period or in a one-time amount. Insurance coverage provides for the payment of the entire amount if the insured dies before the end of the contract line or if the conditions stipulate the survival.
Life insurance in Russia
Recently, life insurance in the Russian Federation is becoming more and more popular. Over a certain time frame (3 years, from 2010 to 2013), the volume of issued insurance policies (premiums) has grown by almost half of the total amount issued earlier. The growth of premiums for the annual period in 2013 decreased, and in 2016 growth indications were again noted.
Previously, the largest performance was represented by OSAGO. In the first half of 2017, statistics on the increase in life insurance premiums exceeded these indicators.
Of course, the life insurance system in Russia is not yet as developed as the more economically powerful cities and countries of America, Europe and Asia. Lame key parameters – the penetration and density of the insurance policy.
A serious problem of past years for Russia in terms of life insurance was the so-called “gray schemes” of optimizing the tax system for various funds and companies. The solution to this problem was the issuance of insurance policies, as they significantly reduced the mandatory taxes.
The Ministry of Finance of the Russian Federation and tax inspectorates completely stopped these operations in early 2005. There are a dozen leaders who have drawn up almost 90% of life insurance premiums by 2016.
According to the Central Bank of Russia, this is:
- Life insurance Sberbank.
- Renaissance Life.
- SIV Life. According to the Central Bank of Russia, this is:
- Life insurance Sberbank.
- Renaissance Life.
- SIV Life.
- Rosgosstrakh Life.
- VTB Life Insurance.
- Life Insurance Discovery.
- Raiffeisen Life.
- Ingosstrakh – Life.
- Societe – General Life Insurance.
- Alfast insurance – Life.
Inspections of insurance supervision disclose statistics on the collection of life insurance policies in the Russian Federation.
Life insurance is divided into three points:
- Actually life insurance (2012, 2013 were the most active in terms of registration of the policy).
- In case of death before the agreed time or age of the insured person. The highest rates were recorded in 2009 and 2013.
- Subject to temporary cash payments for insurance or if the policyholder takes part in the investment process. 2010 – 2011 became the peak among the growth in insurance for this item.
Pension insurance, surprisingly, has much lower digital readings than life insurance.
The main sources for the distribution and sales of life insurance policies are rightfully considered banking organizations, that is, those who are able to issue loans. In recent years, Russian banks have been issuing reports on proposals for the development of the insurance industry.