What is Life & Health Insurance Industry?
Insurers in this industry directly underwrite insurance policies relating to life, health, accident, and medical risks. Life and annuity insurance covers not only life and annuities but also health and disability. Read more about the health and life insurance industry. Life and health insurers generate revenue not only through the specific activity of insurance underwriting but also by investing premiums.
What is Life & Health Insurance Industry?
Insurers in this industry directly underwrite insurance policies relating to life, health, accident, and medical risks. Life and annuity insurance covers not only life and annuities but also health and disability. In general, life insurance provides a death benefit, health insurance provides coverage for sickness and injury, disability insurance provides for the financial needs of individuals who can't work due to sickness or injury, and annuities provide income. Underwriting insurance policies involves assuming risks and assigning premiums. Life and health insurers generate revenue not only through the specific activity of insurance underwriting but also by investing premiums. The industry excludes social health insurance programs that are established and funded by governments.
Life and Health Industry Products:
- Health and medical insurance
- Fee-for-service
- Managed care
- Long-term care
- Annuities
- Life insurance
- Term Life
- Whole Life
- Accident insurance
- Disability Insurance
Industry Activities:
- Underwriting annuities and life insurance policies
- Underwriting accidental death and dismemberment insurance policies
- Underwriting health and medical insurance policies
- Underwriting disability income insurance policies
- Investing insurance premiums earned in assuming the risk
Life Insurance:
The Global Life and Health Insurance Carriers industry protects people from the immediate and long-term losses arising from illness, injury, death, and longevity. Industry players primarily offer life and health insurance products and are often referred to as L&H insurers. Insurers provide this protection at a fraction of the potential loss by pooling risk.
Term life policies provide protection over a specific period of time and don't accrue equity. Whole life policies provide long-term financial protection. They typically build equity that pays cash benefits and therefore usually have higher premiums than term life policies. Life insurance compensates policy beneficiaries for the long-term, adverse financial consequences of illness, injury, and death (e.g. loss of income). Annuities provide policyholders with protection against their longevity by guaranteeing an income stream until death.
Why Buy Life Insurance:
Life Insurance is a financial cover for a contingency linked with human life, like death, disability, accident, retirement, etc. Human life is subject to risks of death and disability due to natural and accidental causes. When human life is lost or a person is disabled permanently or temporarily, there is a loss of income to the household. Though human life cannot be valued, a monetary sum could be determined based on the loss of income in future years. Hence, in life insurance, the Sum Assured (or the amount guaranteed to be paid in the event of a loss) is by way of a ‘benefit’. Life Insurance products provide a definite amount of money in case the life insured dies during the term of the policy or becomes disabled on account of an accident.
Why Life Insurance is needed:
- To ensure the immediate family has some financial support in the event of the demise of the earning member
- To finance children’s education and other needs
- To have a savings plan for the future so that the insured has a constant source of income after retirement
- To ensure that insured have extra income when their earnings are reduced due to serious illness or accident
- To provide for other financial contingencies and lifestyle requirements
Health Insurance:
Health Insurance covers an array of medical, surgical, and hospital expenses. Many policies also cover prescription drugs and offer some dental coverage. Only long-term care policies provide for the long-term health care needs of individuals, such as nursing home care. Health insurance indemnifies people for the costs of treating an illness or injury.
Why Health Insurance is needed:
The term ‘Health Insurance’ relates to a type of insurance that essentially covers the insured’s medical expenses. A health insurance policy like other policies is a contract between an insurer and an individual/group in which the insurer agrees to provide specified health insurance cover at a particular “premium” subject to terms and conditions specified in the policy.
A Health Insurance Policy would normally cover expenses reasonably and necessarily incurred under the following heads in respect of each insured person subject to overall ceiling of the sum insured (for all claims during one policy period):
- Room, Boarding expenses
- Nursing expenses
- Fees of surgeon, anesthetist, physician, consultants, specialists
- Anesthesia, blood, oxygen, operation theatre charges, surgical appliances, medicines, drugs, diagnostic materials, X-ray, Dialysis, chemotherapy, Radiotherapy, Cost of a pacemaker, Artificial limbs, cost or organs, and similar expenses.
Life and Health Insurance Industry’s SWOT Analysis:
A robust insurance sector stabilizes any country’s economy as it facilitates long-term funds for infrastructural development by strengthening the overall risk-taking ability. The Global Life, Health and Medical Insurance industry is in the mature stage of its life cycle.
- There is wholehearted market acceptance of the industry's products in the key markets of North America, Europe, and Japan. This is signified by high rates of insurance penetration (percentage GDP represented by insurance premiums) and density (premiums per capita), particularly for lifelines. Therefore, the potential for further growth in these markets is somewhat limited. Ultimately, the key industry drivers are slow-changing demographic trends.
- Health insurance penetration and density rates throughout Europe are quite low. This is because of wider structural factors, namely the prominence of public health care in many European states.
- India’s US$ 40.26 billion insurance industry is at a stage of consolidation wherein many foreign players are eyeing the immense potential of the fast-growing economy. Relatively lower insurance penetration, rising income levels of the middle-class population, and increasing awareness about the concept of insurance are certain factors that promise a bright future for the Indian insurance segment.
- Life insurance products’ penetration in India is around 4.5 percent while that of general insurance products is around 1 percent. The Indian insurance industry is rapidly opening up to foreign players. Currently, 22 out of 24 life insurance players and 18 out of 27 non-life insurers have foreign partners, and many more are vying to enter the Indian landscape.
Related Links
You May Also Like
-
A primary insurer purchases reinsurance to limit its exposure, usually to one specific type of risk, thereby diversifying its book of risk. Businesses in this industry focus on assuming all or part of the risk associated with existing insurance policies originally underwritten by direct insurance carriers. In other words, the primary activity of this industry is insuring insurance companies. Reinsurance occurs when multiple insurance companies share risk by purchasing insurance policies from other insurers.
-
The insurance industry comprises companies and people who develop insurance policies and sell, administrate, and regulate them. Insurance is a means of protection from financial loss. It is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. The insurance Industry manages the risk to people and businesses from the dangers of their current circumstances. Insurance policies are a safeguard against the uncertainties of life.
-
Insurance policies are a safeguard against the uncertainties of life. Insurance policy helps in not only mitigating risks but also provides a financial cushion against adverse financial burdens suffered. From a macro perspective Insurance industry turns capital accumulates as premiums into productive investments thereby promoting trade and commerce activities which result in the sustainable economic growth of the economy.
-
What is Finance? Meaning, Definition & Features of Finance
Finance is the science around the management of money. Finance encompasses banking, credit, investments, assets, and liabilities. The finance function encompasses a variety of functions, activities, and processes. Finance also consists of financial systems. Acquisition, allocation, utilization, and channelizing the funds to maximize the shareholder's wealth. Finance includes public, personal, and corporate finance.
-
What is General Insurance Industry?
General Insurance industry providers perform an essential function in today's economy. General insurance is typically defined as any insurance that is not determined to be life insurance. Depending on the type of occupation, risk exposure, and the money involved, the insurance could be different for each industry or business. In underwriting insurance policies, general insurers earn premiums that they further invest.
-
This article helps the student to understand the legal principles and provisions of the insurance law. Starting with the fundamentals from which law is derived, this article helps the student to understand the salient aspects of any insurance contract, the rights and obligations of parties to the contract, and the legal environment within which insurance practice is carried out. Explore the seven most important principles of insurance.
-
An article to explain key terms used in the Insurance Industry and Insurance Business. Also, learn about various operational and performance metrics used in the insurance domain. Learn the definition and meaning of insurance industry terms like insured, insurer, claim, reinsurance, policy, and policy premium, etc.
-
The Business Model of Insurance Industry
The insurance industry business model can be further categorized into two types of main activities, service domain, and support domain. Service domain activities make up the company's value chain and the support domain provides the infrastructure and support to sustain the value chain. Support activities may include corporate services, finance, human resources, or information systems, and technology.
-
Insurance is categorized based on risk, type, and hazards. Logically, any risk that can be quantified can potentially be insured. Understand the importance of insurance and the different types of insurances like Life Insurance or Personal Insurance, Property Insurance, Marine Insurance, Fire Insurance, Liability Insurance, Guarantee Insurance.
-
Parties in the Contract of Insurance
There are two parties in the contract of Insurance. Understand these parties and their definition in the contract of insurance. Learners will learn about the key stakeholders in the insurance business along with a classification of internal and external stakeholders.
