Insurance questions PART-2

What is Void & Voidable contract?

• Void contract cannot be enforced by law. It is also considered as void agreement and is not a contract et al. Any agreement which is illegal is considered as void contract.
• An agreement between two parties that can be unenforceable for a number of legal reasons like failure or mistake by a party to disclose a fact leading to breach of contract. Then the other party terms it as voidable contract. He may also continue the contract making it a valid contract, as it is decided by both parties.

What is Paid up value?

• The right to change the normal policy into paid up value is given to the insured by the insurance company, if the insured have paid premiums for minimum of three years.
• The paid policy means, after the period if the insured cannot pay premium then the policy is not cancelled but the sum assured is reduced in proportion to the number of premiums paid by the insured.

What is Terminal bonus?

• Terminal bonus is the loyalty bonus paid by the insurance company to the insured for maintaining the policy till the maturity date.
• It is the bonus paid during the time of maturity and the value is not guaranteed by disclosed during the time of policy maturity only.

What is Insurance? 

• Insurance is defined as a contract between two parties whereby one party called insurer undertakes in exchange for a fixed sum called premium to pay the other party called insured a fixed amount of money after happening of a certain event.

• According to the Indian Contract Act 1872, “A Contract may be defined as an agreement between two or more parties to do or to abstain from doing an act, with an intention to create a legally binding relationship.”

What is Banccasurance?

• Banccasurance means selling of insurance products through banks. The insurance companies and the banks come up in a partnership wherein the bank sells the tied insurance company’s insurance products to its clients. 

• Bank Insurance Model is also termed as Banccassurance.