Insurance is a contract （policy） in which an individual or entity receives financial protection, or reimbursement, against losses from an insurance company, which pools client's risks to make payments more affordable, in exchange for a premium.
Life Insurance
life insurance is income protection in the event of your death. The person you name as your beneficiary will receive proceeds from an insurance company to offset the income lost as a result of your death. You can think of life insurance as a morbid form of gambling: if you lived longer than the insurance company expected you to, then you would"lose" the bet. But if you died early, then you would"win" because the insurance company would have to pay out your beneficiary.
Insurers1 （or underwriters） look carefully at decades worth of data to try to predict exactly how long you will live. Insurance underwriters classify individuals based on their height, weight, lifestyle （i.e. whether or not they smoke） and medical history （i.e. if they have had any serious health complications）. All these variables will determine what rate class category a person fits into. This doesn't mean that smokers and people who've had serious health problems can't be insured2, it just means they'll pay different premiums.
There are two very common kinds of life insurance: term life3 and permanent life. Term life insurance is usually for a relatively short period of time, whereas a permanent life policy is one that you pay into throughout your entire life. These payments are usually fixed from the time you purchase your policy. Basically, the younger you are when you sign-up for this type of insurance, the cheaper your monthly payments will be.
Objectives and Risks
No matter whom you are, one benefit of life insurance is the peace of mind it gives you. If anything happens to you, your beneficiary will receive a check in a matter of days. Life insurance can also be used to cover any debts or liabilities you leave behind. The bank doesn't just write off your mortgage once you pass away - these payments must be made, or your house may be liquidated. Life insurance can also create an inheritance for your heirs, or it can be used to leave a legacy if it's put toward donations to charitable organizations. Most life insurance policies carry relatively little risk because insurance companies are usually stable and heavily regulated by the government. In"cash value" policies you are allowed to invest your policy in stock, bond or money market funds. In these types of policies, the value of your insurance depends on the performance of those funds.
How to Buy or Sell It
There are thousands of insurance brokers4 and banks across North America. Keep in mind that you will usually have to pay a commission5 for the salesperson.
Marine Insurance
Exporters and importers are engaged in international trade and cargo underwriters, who stand their shoes in time of misfortune, are also involved in that trade. Basically, anyone who has an insurable interest in a cargo shipment, i.e. any one who would suffer a loss if the goods were damaged or destroyed or who would benefit from the safe arrival of the cargo, has a need for ocean cargo insurance. One of the reasons for this is the fact that ocean shipments are still exposed to a number of unique hazards. Damage or loss of cargo is, however, still a real possibility from such causes as fire, stranding, collision, rolling off the ship in a heavy storm, tornado, moisture, theft, etc. the primary function of insurance is to spread the financial losses of insured members over the whole of the insuring community by compensating the misfortune few from the fund build up from the contributions of all members.
Cargo insurance protection is an aid to commercial negotiations. It allows traders to proceed with confidence in the knowledge that each party to the transaction is properly protected. In most cases, the cost of marine insurance is nominal when compared with the value of the goods and the freight cost. Insurance is, in fact, based on the mathematical theory of probability.
Parties to the Insurance
The parties to be involved are as simple as only two. One is the insurer; the other is the insured. In some cases, there may be an insurance broker in between. Once damages occur, the party who suffers will lodge a claim against the insurance policy. This party is called the claimant6.
Applying for Insurance
In some countries, the first step the insured party should take is to apply for insurance from a certain insurance company. The applicant should fill in the special form - the proposal form, which gives all the details concerning ownership, value, length of time insurance will be for, risks and coverages, etc.
Determining the Insurance Value
Generally speaking, the value to be insured is based on the value of the commercial invoice. The need for maintaining adequate insurance has already been stressed. The recommended minimum amount is the total CIF7value plus 10% for other fees and normal margin of profit. Probably the best way of determining needed insurance is to estimate the market value of the goods at the port of destination and to obtain coverage for that amount. Other methods of arriving at a valuation of goods may also be agreed upon by the insurer and insured to meet individual needs. The calculation and determination of the value to be insured vary from country to country.
Determining Averages and Overages
Determining the right coverage sometimes can be easy, and sometimes difficult. The decision can be made only on the basis of the following factors: the nature of the products; packing considerations such as sacks or paper boxes, use of the products such as chemicals and tea; the carriers of the transport such as difference of air and sea transport; shipping route and ports considerations such as any transshipment on the way to the final port, etc. Viewing the above factory, the insured should also consider the averages and coverages. The average is closely linked with the goods and the goods, in turn, are related with the coverage.
Averages
To a great extend, the protection your insurance gives you is defined by its"average". The term"average" as used in insurance often causes confusion to the layman. Actually it has nothing to do with the normally accepted meaning for average. Rather, it means a partial loss,"partial loss", in turn, can mean the total loss of part of the insured cargo. Different averages can be grouped as the following:
Total loss: The occurrence of one of the perils of the sea such as beaching, grounding, collision, natural calamities, fire, or some other causes may result in a total loss of the entire shipment. An"actual total loss" is easily understandable. A"constructive total loss" might occur if the cargo is not actually lost, but is so seriously damaged as to make the goods no longer any use for the purpose for which they were originally intended. For example, will tea leaves be of any use after they have been soaked in seawater for days?
Particular average: A particular average is, therefore, a partial loss which is suffered by the one whose goods are partly lost or damaged when there is a particular average loss, other interests in the voyage do not contribute to the partial recovery of the one suffering the loss, a real example of a particular average occurs when a storm or fire damages part of one shipper's cargo, and no one else's cargo has to be sacrificed to save the voyage. The cargo owner, whose goods were damaged looks to his insurance company for payment, provided his policy covers the specific type of loss suffered.
General average: General average is a loss that affects all cargo interests on the ship and the ship itself. It has been defined as a partial and deliberate sacrifice of the ship, freight, or goods undertaken for the common safety of the adventure in time of peril. The idea of its liability is to spread the losses suffered by only some individuals involved in a voyage, so that all interested parties assume their fair share. Today the most typical cause for general average losses is fire where, in the process of its being put out, some goods are damaged by water. In such case it is well established that those interests whose property was saved must contribute proportionally to cover the losses of the one whose property was voluntarily sacrificed.
Scope of Insurance Coverage
The extent of possible insurance coverage that may be purchased varies. There is a wide variety of standard types of coverage - three basic perils coverage are as follows: FPA, WA and All Risks.
Free of particular average （FPA）: The words"free of" followed by other words or phrases mean that the underwriter assumes no responsibility for whatever is enumerated. FPA is the minimum and most restrictive coverage. It covers losses due to ship or aircraft being totally lost. Partial loss is not covered. In other words, the insured must therefore assume the risk for any and all partial loss.
With average （WA）: It insures against the goods being damaged in transit, but not because the ship was danger. Partial loss is normally covered with a percentage franchise, that is, losses above a stated percentage of the value of the insured cargo are paid for. In practical terms and compared with FPA, it is protection against damage from sea water caused by"heavy weather".
All risks: This is the broadest kind of coverage of the three. Under this cover, the insurer is responsible for all total or partial loss of, or damage to, the insured goods arising from natural elements or from sea perils, including all losses caused by accidents to the carrying vessel or craft or by any external causes. Since this risk is very comprehensive, it has become quite popular in today's insurance market. But it is not what the name suggests. Traders must not be misled by the terminology of all risks. Some important hazards are not covered even under a so-called all risks policy. Damage caused by War Risk is excluded. Finally all risks coverage is more expensive than a more limited policy of FPA.
General additional risk: some of the additional risks for which coverage may be desired depend upon a number of factors such as the goods involved, quality of packing, pass experience of the insured, and, most importantly, the amount of premium the buyer or the seller is willing to pay. For instance, it makes little sense to insure against pilferage or rust if you shipping bulk commodities such as iron ore or grains. These risks may cover the following:
Theft, pilferage and non-delivery;
Fresh water or rain water damage;
Risk of short weight;
Risk of intermixture and contamination;
Risk of leakage;
Risk of breakage;
Risk of clashing;
Risk of odour;
Risk of hook damage;
Risk of rust;
Risk of sweating and heating.
The principle of finding the right coverage mentioned is rather simple. The insured, in accordance with the agreed terms of insurance, should weigh up the different factors - goods factors, Transport factors, cost factors, etc., and then pick up one of the basic coverage among the three, namely,"Free of particular Average","With Average" and"All Risks". The last step is to consider the special additional risks and decide which is the most suitable coverage for your intention and your requirement.
Filling in Insurance Policy
Before filling in the document, it is important to know what insurance policy is, and the kind of insurance policies. The most common policies being used now in the world today are insurance policy, insurance certificate and open policy, etc.
Insurance Policy
This is the most commonly used document which contains all the details concerning the goods, coverage, premium and the insured value. All this information must be sufficient enough for the insured party to assess the risk and make insurance decisions. This policy is always filled out by the insured. When all is fixed, the insurer will normally return the duplicate to the insured with their rubber seal. The signed insurance policy will be the legal document that serves as the shipping document evidencing insurance cover.