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ii. Insurance companies do not make the compensation promptly on maturity of the
policy or for the financial losses as compared to the attitude of the insured.
iii. It leads to crimes in the society as the beneficiaries of the insurance policy may be
tempted to commit the crimes to receive the amount insured.
iv. In case of long term policies, the accumulated fund of the premium would be more
than the policy amount receivable at maturity. Moreover, compensation is not
receivable if no loss is incurred even though the premium is paid regularly.
v. It doesn’t compensate all types of loss and damage.
vi. Sometimes total amount of premium might be higher than the insured amount after
the expiry of policy period, etc.
Although insurance encourages saving, it does not provide all the facilities provided by
a bank. So, people may think to deposit their saving in a bank rather than taking an
insurance policy.

24. Types of Insurance
There are various types of insurance as the difference in nature of financial risks and
losses. Since the financial losses may be caused from a number of risks and uncertainties,
the insurance may be made against a number of such causes. For example, some persons
may make personal accident insurance, property insurance, theft and burglary insurance
and so on and so forth. Generally, there are three types of insurance, viz. marine insurance,
life insurance and fire insurance. The other types of insurance may be studied under the
miscellaneous insurance. In this chapter, we will discuss by categorising them into two
types, as shown in chart below:

Insurance

Life insurance General/Non-life insurance
Endowment life insurance Marine Insurance

Whole life insurance Fire insurance
Children education and marriage Miscellaneous insurance
endowment life insurance
Motor insurance
Term life insurance
Employers’ liability insurance
Anticipated endowment life insurance
Fidelity guarantee insurance
Aviation Insurance

Life Insurance

Life insurance came into existence after the evolution of the marine insurance. The first
life insurers were the marine insurers, who started issuing life policies on the life of the
merchants, ship captain and the crew of the ship sailing along with the goods. In case of
the capturing of the ship, the insurer should have to pay the ransom needed to secure
their release.

88 Aakar’s Office Practice and Accountancy - 10 Financial Institutions 89