Types of Insurance

1. Life Insurance:

a. Whole Life: Under this policy, money is paid at the happening of an event which is death. Premiums are either paid till death or up to a certain period. The advantages of the whole life policy are;

i. It helps to provide for the welfare of the assured dependant after his death.
ii. It is useful to provide for funeral expenses.
iii. It can be used as collateral for obtaining a bank loan.
iv. It provides for the repayment of capital on a partner’s death

b. Endowment: Under the endowment assurance policy, the money is paid after a specified number of years or at the death of the assured, anyone that comes first. The same advantage of whole life apply also to the endowment policy. The endowment policy is generally more flexible. The assured is afforded the opportunity to directly enjoy the sum assured if he outlines the policy. The payment made is called an annuity and is paid for the remainder of the policyholder’s life or for a certain period. 

c. Group Life Assurance: This policy enables employers to provide payments to the dependants of employees who die in service. A group life assurance is compulsory for employers who desire to join the pension scheme. Under this scheme, the employees who suffer temporary or permanent disability are also catered for. Lump-sum payments are usually paid in addition to refunding all hospital bills. It is an incentive to staff to remain on the job. It also increases the morale of the employees.

2. Non-life Insurance:

a. Motor Vehicle: This is the type of insurance which covers damage to a motor vehicle and protects a person from heavy losses, body injury, or death that may result from car accidents. Every motor vehicle driver is required to be insuredThe insured is the party (ies) (person or firm) having property covered against risk. They are covered by an insurance policy. More against liability in respect of the death or bodily injury to any third party caused by the use of his vehicle. This may be of various kinds.

i. Comprehensive Insurance: This policy covers the insured vehicle, occupants and damage to a third party in case of an accident. It also covers fire, theft and damage to the third party and the insured vehicle in case of an accident. This policy attracts a higher premium.

ii. Fire and Theft Insurance: The policyholder is protected against damage to the vehicle through theft and fire. All the attributes of a third party are contained in the fire and theft insurance.

iii. Third-party Vehicle Insurance: This policy covers the risks of damage to the third party in case of an accident. It gives entitlement to the third party, who is not a party to the contract, to be compensated when he suffers injury. It involves all passengers and even non-passengers of the vehicle.

3. Accident Insurance:

This policy covers all unforeseen situations, which may bring injury or death to a person. It involves accidents such as personal injury and sickness.

Export Credit Guarantee:

This policy is taken to cover exporters against risks of bad debt due to foreign trade. The exporters will be indemnified if the buyer refuses to pay for goods delivered to him. Credit sales are guaranteed in foreign trade.

Bad Debt Insurance:

These are debts which cannot be recovered from the customers of an organization. This policy provides cover against losses resulting from the inability or refusal of customers to pay their debts.

Fire Insurance:

The insurerAn insurer is usually a company but can be a person, that provides financial support in the case of specific bad events listed in an insurance policy. e.g NICON insurance company,... More, usually an insurance company, agrees in consideration of a certain sum to indemnifyIn the indemnity clause, one party commits to compensate another party for any prospective loss or damage. More the insured against any loss or damage which is caused by a fire in respect of certain property during a specific period. A trader may insure his premises as well as the goods in it against fire. It can be with or without the average clause.

i. With average clause: If the policy is with this clause, it’s the insured that can only recover a proportion of the claims. In a situation where only part of the property is damaged, the insured will have to bear a relevant proportion of the loss.

Formula = \( \frac{Sum \; insured \; \times \; loss} {Full \; cover} \)

ii. Without an average clause: If the policy is with this clause, the insured will only be liable for the estimated amount of the loss.

Group Insurance:

Group insurance is taken to cover a group of people or workers. These are policies on a collective basis, assuring members of a particular group such as a football team or a group of employees of a firm.

Cash in Transit Insurance:

Cash in transit policy provides compensation to the insured in the event of cash being stolen either from the business premises, home or while it is being carried to or from the bank.

Goods in Transit Insurance:

Goods-in-transit insurance is a type of insurance which covers against accidental damage or loss of goods in transit. It provides compensation to the owner of goods if the goods are damaged or lost in transit.

Fidelity Guarantee Insurance:

This is a type of policy effected by an employer, in insuring him against the possibility of the dishonesty of an employee.

Export Credit Guarantee Insurance:

The export credit guarantee insurance policy provides cover for exporters against the major risks of exporting.

Glass Plate Insurance:

The glass plate insurance policy covers accidental damage to glass plates, windows, doors, and shelves.

Agricultural Insurance:

Agricultural insurance is the type of insurance which provides relief to farmers for losses suffered on their crops as a result of drought, pests, and diseases.

Employers Liability Insurance:

The intention of the employer liability policy is to ensure that the employer does not suffer financially but is compensated for any money he may have to pay in respect of a claim to provide compensation if any employee was injured or killed.

Marine Insurance:

This is a branch of insurance which covers losses or liabilities relating to ship and their cargoes against the dangers or perils of the sea.