Malaysia Insurance Law - Life Insurance

Legal Forms | Legal Documents | Tell-A-Friend | Legal Terms Dictionary | Today's News

Looking for an Attorney or Law Firm ? Click here for Lawyers Directory

INSURANCE LAW - Life Insurance

Related Topics : Auto Insurance . Business Insurance . Disability Insurance . Health Insurance . Insurer's Bad Faith . Life Insurance Law . Property Insurance

[1][2][3][4][Next Page]

WHAT IS LIFE INSURANCE ?

The idea of life insurance did not spring up overnight. It resulted from an evolutionary growth - a search on the part of men and women to solve a sociological problem.

Death struck blindly into homes of the rich and poor alike and placing unbearable hardships and handicaps upon the survivors. So it was centuries ago in England, small groups of people banded together into guilds and societies.

Members, by paying small sums into their organizations, were assured that a certain small measure of relief would be given to their home when the breadwinner was taken away.

Such were the efforts of the early days of life insurance to meet people’s need for help - of their frantic efforts to find some ways to soften the economic blow of death.

Today, life insurance has emerged as the provider of financial needs of mankind in various forms that suit their needs. It is primarily purchased to provide an immediate estate. It protects your family’s financial resources when you die, such as your home, car and the income your family needs to pay household bills. It’s a contract between you and the insurance company requiring the company to pay someone you name (beneficiary) a certain amount of money when you die.

Life insurance has evolved as an economic instrument which has stood the tests of time - and given people the security they need to maintain financial soundness, morale and faith.

WHAT ARE THE FUNDAMENTALS OF LIFE INSURANCE ?

The fixing of prices or rates as is usually called in life insurance is based on scientific principles. It is a science that rests upon hundreds of years of study, of record keeping and of constant checking.

In some lines of industry, the fixing of prices is more of less a matter of rule of thumb. Within certain limits , prices are fixed largely on the basis of competition. But not so in the fixing of life insurance rates.

The fundamental principle of life insurance is the sharing of the risk of death by the members of a group. People standing together can do what an individual standing alone cannot do. After centuries of struggling with the problem of risk, people finally learned that the financial loss incident to death can be distributed among the members of a group in such a way that loss falls lightly upon each one in the group, rather than heavily upon the families of the unfortunate individuals who die.

The rate which must be paid by each member of the insuring group cannot be determined until the member or the members of the group who will die within a given period of time is known (mortality studies).

The statistics of the rate of death, compiled for all ages, are known as the mortality tables. The data are based on the mortality figures of very large groups of people accumulated over long periods of time.

The price you pay for an insurance policy is called premiums. This premium is determined by three factors, namely:

the mortality rate,
the management expense, and
the interest factor i.e. the investment yield from the life insurance fund.

[1][2][3][4][Next Page]

Last Updated : ©1999-2000
Lawyerment is a leading Malaysian legal site for consumer & small businesses. It provides general legal information to help people understand their legal rights in Malaysia, but it is not a substitute for personal legal advice from an attorney. You are welcome to view Lawyerment for your own personal, non-commercial purposes, AS IS, subject to our disclaimer & conditions of use & Privacy Policy. Lawyerment is a unit of Magnificent Communication. 1999-2000 - All rights reserved.
Comments ? Please send them to webmaster@lawyerment.com.my
Advertising Opportunities | Contact Us