23 Frequently Asked Questions (FAQs) in Insurance
Jan 7, 2022 | Investopaper
Insurance is gradually getting popular in Nepal. In this modern and complex life, insurance offers stability and protection against the risks. To enhance your further knowledge about the insurance, here we have compiled some of the frequently asked questions about the insurance.
1. What is Insurance?
Insurance is a contract between two parties in which one party the insurer in return of certain and agreed amount of money called the premium, assure the other party, the insured to make good any financial loss, the insured may suffer as a result of occurrence of the specified, insured and unforeseen events (perils), that take place within the period described in the contract.
2. What is Insurer?
The Party which agrees to pay money on the happening of a contingency is known as insurer. Mostly, the insurers are Insurance Companies.
3. What is Insured?
The party who seeks protection against a particular risk and is entitled to receive money from the insurer in the event of the happening of the stated contingency, is known as insured. An insured is generally a policy holder.
4. What is an Insurance Board (Beema Samiti) ?
It is an autonomous regulatory body of the Government of Nepal established in accordance with the Insurance Act, 2049 BS to develop, manage, and regulate the insurance sector.
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5. What are the types of insurance?
There are three main types of insurance:
1. Life Insurance
2. Non-life insurance
3. Reinsurance
6. What is Life insurance?
Life insurance is a contractual business in which a person pays a certain amount of money based on his age and receives a lump-sum amount to himself or in case of his death, his beneficiary.
Related: Life Insurance And Its Types In Nepal
7. What is Non-life insurance?
Non-Life or General Insurance provides insurance cover for things that are not covered by Life Insurance, for example, cover for house, warehouse, industry, vehicle etc.
Also Read: Non-Life (General) Insurance And Its Type In Nepal
8. How many insurance companies are there in Nepal at present?
At present there are 41 insurance companies in Nepal- 19 Life Insurance, 20 Non-Life Insurance and 2 Reinsurance Companies.
Related: List of Insurance Companies In Nepal
9. How much qualification is required to become an insurance agent in Nepal?
Person who has passed at least S.L.C/SEE and has received training by the insurer as prescribed by the insurance board can become an agent.
10. What is a surveyor?
A “surveyor” is a person authorized to make an economic assessment of damaged property. The term also refers to an adjuster and a loss assessor.
11. What are the qualifications required to become a surveyor?
To work as a suveryor, one of the following qualifications should be fulfilled:
A) At least ten years of working experience in an insurance position in an insurer’s office,
B) At least a bachelor’s degree in engineering,
C) At least a bachelor’s degree in the subject related to insurance from a recognized institution,
D) Passed Chartered Accountancy Examination.
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12. What is an Actuary?
A person who has graduated in actuarial science and is an assesses insurance related liabilities and assets is called an Actuary.
13. What is Reinsurance?
Reinsurance is the process by which the insurer reinsures the portion of the risk to the another insurance company. It is the mechanism of risk transfer from the insurers to the reinsurers.
14. What is the difference between an insurance company and a reinsurance company?
The insurance company protects the insured’s risk, while the reinsurance company re-insures portion of the insured’s share of risk.
15. What is bonus in insurance?
Profit earned by insurer in the process of running insurance company is bonus. It is paid in the event of death of policy holder or maturity of policy, whichever occurs first.
16. What is Premium?
The amount which is paid by the insured to the insurer as consideration of the insurance contract is known as premium. In simple words, premium is the price of insurance.
17. What is an Insurance Policy?
The document which contains the terms and conditions of the insurance contract is termed as the insurance policy.
Also Read: Things To Consider Before Taking An Insurance Policy
18. What is eligible age to apply for life insurance?
Immediately after birth but risk cover will only start after eight years of age.
19. Where can policy holders’ pay their premium?
Policy Holders can pay their Premium in Branch or Sub Branch of the company and through online also.
20. What is the minimum maturity period in life insurance policy?
Usually five years. However, it may differ by policy purchased.
21. What is beneficiary/ nominee?
Beneficiary is a person/party designated to receive life insurance or annuity proceeds upon the death of the insured. The beneficiary is named when a policy is taken out and can be changed at the request of the policy owner.
22. Can one take loan against insurance policy ?
In case of life insurance, Yes.
23. Once all the requirements are submitted, how much time does the Company take to settle the Claim?
As per Insurance regulation, 2049(1993) rule-31, Sub-rule (4), after satisfactory completion of all the documentation which the company will require, the company will determine the liability within 15 days from the date of receipt of such documents.
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