In the recent past, the term insurance is a frequently heard word. Insurance is one of the means of transferring risk. It deals with the financial risks that may arise in human life. Risks continue to appear in people's lives and material possessions. We are living a life of risk. Although we cannot prevent such risks during the course of life, we have sought different ways to minimize the harm. Among these is the most important and modern method of risk transfer. This means that in addition to the life of yourself and your relatives, transferring the risk to your property to the insurance company is insurance.
In the event of an incident or loss, the insurance company accepts the indemnity and provides indemnity in the future. For that, the person or entity has to pay the insurance company to the insurance company. Therefore, in recent times, life and life insurance will be insured from the life insurance of a person to big industries, vehicles, livestock, agricultural products. Even if you look at the history of insurance in Nepal, insurance has already crossed seven decades. There are currently 39 insurance companies operating in Nepal, 19 with life insurance and 20 non-life insurance companies. In the course of life, the company takes responsibility for the risks to a person's life. The life insurance company insurers are working with the risk of a large number of projects ranging from physical, personal, home, and automobile to a person This article attempts to discuss the applicability and challenges of life insurance in Nepal.
1. Introduction
The history of life insurance in Nepal is not that long. Institutional development began in 2029 with the establishment of a life insurance business by the National Insurance Institute. The monopoly of the institution continued for about a decade and a half. In 2044 another company was added. The number of competing insurance companies in Nepal's insurance industry increased dramatically after the country adopted an open and liberal economy. According to the number of insurers in Nepal, the market has not expanded.
Life insurance is one of the best ways to save and transfer risk. It reduces the financial risk created by the events in our lives. According to 'Insurance Act 2049', 'life insurance business' means that the life of a person should be considered a contractual business for paying a certain amount based on his age, if he or she dies, then his or her claimant will receive a certain amount. Understand and have insurance. Now there are insurance agents in every village and town. Each municipality has insurance company offices. Every citizen should take advantage of it and ensure. The insurance company is responsible for the financial security by paying a fixed fee. This is also fully guided by the Contract Act. Insurance is a contract or contract between two parties, so any person who violates the terms mentioned in the contract will surely suffer financial loss or loss. Therefore, it is advisable to have sufficient information about the terms of life insurance or life insurance that you must comply with before insuring or agreeing to a contract. Information about insurance and its policies, agents, insurance staff, insurance companies, insurance companies, insurance companies, regulatory bodies can also be obtained by visiting the insurance committee.
Life insurance efforts in Nepal have been around for a long time, but it seems to take time to have a positive impact on the common people. In the recent past, awareness about this has been increasing and people have become attracted. Despite the prevailing problems, the expansion of the insurance sector is a positive factor in Nepal. Although the pace at which this sector is expected to expand has increased dramatically in the recent past, it has made the insurance sector more optimistic. The insurance sector is of great importance in the economic development of any nation. Insurance is a must for all risk management and financial and physical damage from accidents and accidents. But this is a necessity in the insurance sector that the general consumer should understand. Understanding this is often impossible without the expansion of the sector. In this sense, public awareness seems to play a major role in the development and expansion of insurance. Due to the increase in insurance-related awareness in the recent past, the number of insurers in this area has become wise. Expansion of access to the insurance sector is a positive factor even if the country's economic and overall financial indicators appear negative due to adverse political policies due to lack of investment-friendly environment and extreme energy crisis. The expansion of the insurance sector has made it equally exciting to all those directly or indirectly concerned with the sector. Events do not take place at the specified place and time. No one even knows about it. Therefore, there seems to be a need for insurance to mitigate this risk.
2. The applicability of life insurance
The number of life insurance agents in Nepal is increasing every year. Insurance agents are the strongest means of spreading insurance awareness. Life insurance company offices have been established in all districts. Each company has hundreds of insurance agents. Their organized efforts are also helping a lot to raise awareness about life insurance. The importance of life insurance is immense, some of them are given below:
Best Savings: Life insurance can be considered as the best savings. But such savings cannot be withdrawn at any time. Keeping money in banks and financial institutions can result in unnecessary expenditure as money can be withdrawn at any time. But since the savings collected on life insurance cannot be deducted immediately, it is called the best savings. The insurance company has to pay the insurance company at the prescribed time. In the event of non-payment of insurance charges in the stipulated time, the landlord will also have to pay. Therefore, by deducting unnecessary expenditure through the payment of insurance charges at the stipulated time, it is saved as insurance duty. The optimal savings can also be called compulsory or compulsory savings. In life insurance, the insured repeatedly pays a small amount of money, but even when the insurance is mature, a lot of money is collected. In addition, if the insured dies at the end of the term of the insurance period, the beneficiary receives the sum insured or the insurance and the bonus up to that period.
Financial security: As soon as life insurance is discussed, there is also the issue of financial security. Insurance is an instrument that acts as a cover for the financial security of the insured or the insured's family. Insurance carries a large risk of an insured risk. If the insured person dies within the term of the insurance period, the insurer and the bonus will be paid by the insurance company to the beneficiary. The family of the insured can earn a living from the proceeds from the insurance company.
Tax exemption: According to the Income Tax Act of Nepal, there is a tax exemption on income up to Rs 20,000. Since the tax exemption is insured, the insured can also benefit from it.
After paying two years' insurance fee while insuring the loan facility, up to 90% of the surrender value up to that period can be obtained from the insurance company. The insurer does not have to be put on other property mortgages in order to get credit.
Self-reliance: If the life insured dies for any reason, the insured's family does not have to depend on another person for their livelihood.
Mental peace: People are tormented by the uncertainty they may have in their lives. After his death, people are terrified for various reasons including housekeeping, education of the children, support for old age. Since life insurance plays a vital role in solving such problems, it provides peace of mind.
Agents appear to explain the importance of life insurance to the general public. About 83 percent of Nepal's population lives in rural areas. But most insurance company agents are city-based. In the coming days, the awareness about insurance in rural areas should also be spread. If this happens, the number of life insurers will increase with confidence in life insurance. Recently there are signs of some unhealthy competition in the market. With the fact that only 17 percent of the insurable population has life insurance provided by the public, the future of the companies looks bright.
A life insurance policy promises to provide cash benefits in the event of the death of the insured. Mainly some of this fund is used to pay the expenses related to the death of the insured and the rest is invested to earn income. This helps to predict future income loss due to the death of the insured. Primarily, life insurance provides financial security. Life insurance provides financial benefit in the event of the death of the insured while the insurance is in operation. Still, some types of life insurance provide the value of the accumulated savings even if the insured lives (such as an advance payment life insurance plan). Just as every person's need for money varies, so does the need for life insurance for every person. In the event of the earner's untimely demise, the general personal needs have to be restored. In this way, financial responsibilities such as mortgages, family expenses, and expenses related to dependents can be met. Life insurance can also be used as a fund for educational expenses and retirement income.
Through life insurance, business needs can also be met. Life insurance can provide funding to buy part of a deceased owner's or shareholder's business from a living partner. In the event of the death of a significant person in a business, the business may suffer a great loss. In this case, the main person insurance will provide additional money to the business. As a death benefit and refinance, a business can provide benefits to its employees by purchasing life insurance.
Financial certainty: There is no trust in human life. Every person's death is certain, only the time of death is uncertain. Death does not say anything, young, old, sick, healthy. In a developing country like ours, the income of a single-family member often depends on the family and household practices. If the main person earning income for the family dies suddenly, the family will suffer. Dependents become helpless while the family suffers from the need for shelter, shelter, and cotton. The untimely demise of a key member of the family can cause both social and economic damage to the family. Socially she lacks mutual affection, support, and protection, and financially damages her family.
The first of the above-mentioned disadvantages is emotional, which cannot be compensated for. But as time goes on, it can be slowly forgotten. Insurance helps reduce the second type of financial loss to some extent. Life insurance can help you make the necessary arrangements for bad and adverse times by saving a small amount of money in good and favorable times. This type of financial arrangement can be made only through life insurance. Because only the amount of capital accumulated can be obtained from the money deposited in the bank and the investment in other assets, from the life insurance deduction, even if the deceased has paid the same amount before death, he receives the full term amount (insurance). It turns economic uncertainty into certainty.
Life insurance can also meet the additional requirements of the insured as follows:
A. Education The future of any child can be a doctor, engineer, lawyer, scientist, chartered accountant, skilled administrator, etc. It just requires good education. It is the responsibility of each parent to pay special attention to the education of the child. If the main person in the family dies or becomes completely disabled and disabled, the child's education in that family stays incomplete and the future of the child is dark. In this case, life insurance provides the necessary financial security. Some life insurance plans are like this, which provide financial support for children's education (such as child protection, new child protection). Such insurance plans help support the child's education at any time if the family member lives or dies.
B. Marriage Children's expenses are required for marriage activities. If the father dies in order to earn income in the family, it becomes difficult for the daughter to marry. The news that women are the victims of violence because of dowry in our society is widely heard. If you buy a life insurance plan aimed at the children's marriage, the family will not have this kind of financial problem. For example, if the daughter is currently 10 years old, if she is insured for a life span of 15 years, then the daughter gets 25 years of insurance and gets financial support.
C. Child Settlement Children need financial support to arrange for their children after their education. This can be covered through life insurance.
D. The death of the main person of the funeral-karma family leads to an additional financial burden to the family. If treated at a hospital before death, it would cost the hospital expenses and funerals and funerals, so life insurance would be needed to protect his family from such a situation as the main person's demise would cause the income source to stagnate and on the other hand to incur additional expenses.
3. Life insurance challenges
Once insured for any area does not matter for years. The life insurance policy has to be paid on the basis of the type of payment on the contract of insurance and insurance. If the insured has to pay annually at the time of the contractual agreement, the annuity is to be paid. After that period, there is a 30-day grace period. After this time, the insurer will not take the risk and the negative attitude towards the insurance can spread. In this sense, the biggest obstacle to the development and expansion of the insurance sector is the lack of awareness about insurance. The role of all concerned is essential to eliminating it. The possibilities for the commercial expansion of insurance in Nepal have not been explored. Everyone is running an insurance business in the traditional way. The companies have not even tried to link them to other sectors where possible. All citizens of the country are equal. It is also the first duty of the state to arrange for the risk of all citizens. For this, the state needs to raise awareness about insurance from the school level.
If it can develop a positive perception among the general public about it, it is sure to play a very positive role in the entire economy of the country. It is also necessary for the government and the concerned agencies to raise awareness about this area from the school level to strengthen the foundation of insurance. Till now, seeking compensation in Nepal has been given priority. No attempt has been made to determine the cause of the accident. Not everyone is interested in how to minimize their damage. In the case of claiming after the rise of life insurance companies in Nepal, it is clear that the plan was taken to assassinate the wife in Pokhara, and the father had murdered his 4-year-old daughter in Maulapur in Rautahat. There is a need to emphasize state-of-the-art prevention and awareness-raising by insurance companies. The incident in Maulapur also appears to be a lack of training and knowledge among the agents. This is also a big challenge for the insurance sector. Government and related agencies should be alert to its quest.
Likewise, false claims payment remains a major problem in this area. Some clinics and hospitals, opened for various purposes, have also caused problems in this area due to misappropriation of money and giving wrong bills. The time has come for the concerned ministries and departments to take action against such acts. Similarly, the police reports regarding the accident have been changed. It is also important that the insurer, insurance committee, client and government pay attention to reality. Various individuals and groups have been pressing into offices for claim payment, pressure from political sources and the use of bullets and grandfathers in these activities has also been seen as a major problem for the region. In recent times, the number of people making false claims by misleading the insurer has increased. This can cause serious problems in the insurance sector. Also, all areas should be careful about this. Although the information about insurance is low in the country, the number of insurers is increasing gradually. The problem of life insurance is increasing more recently than in the area of life insurance.
Due to the lack of effective control of the concerned body, there is a need to compensate for the wrongful claims from the third party. This process is increasing. If such a claim is not paid, then there are complaints from different regions that there are threats. If such problems and challenges are not resolved in a timely manner, it is sure to bring about a major crisis in the future.
In Nepali society, it is customary to store a permanent property for the family rather than spend it for yourself. In such a social environment, raising awareness about insurance can increase the number of insureds for a secure future for the family. If the country's economic growth rate is satisfied, the increase in the ability to save the general public will increase the number of insurers. Due to the increase in the salary of the employees, their ability to save is seen as a good way to ensure that they remain financially secure. If the provision of excluding income tax on the entire amount paid as insurance charges and even the profits earned from insurance, this provision will encourage employees and other middle-income people to fall under the income tax category. The insurance business is a direct economic concern of the industry, trade and the public. In case of misuse in the name of business, it can be negatively affected if insurers do not take time to think about it. Can be created.
Assessing risk in the life insurance business is not enough simply to outline the basis for life insurance choices. The Moral Hazard should also be taken into consideration in the life insurance business. The insured's honest conduct also increases the risk. Which conduct insurers want to hide within themselves. The agent's primary responsibility is to investigate such conduct. Since the agent is the agent of the insurer, the conduct of the person who wants to insure should be presented to the real insurer.
Therefore, if the moral conduct of a person who wants to insure is perennial, prostitution, body trading, addiction, excessive drinking, drug consumption, etc., such person may have a higher risk of risk, so it is the moral obligation of the agent not to encourage insurance.
In the same way, choosing the insured person can be considered a beneficial principle of insurance for family members. Because insurance will help to cover the financial loss of the family from the untimely death of the insured (but this principle does not apply to loan insurance). Therefore, arbitrariness can also be viewed as a moral risk. Similarly, in order to evaluate the moral risk of the insured based on the social status of the insurer, the conduct, the business activities, the business situation, the financial situation, etc., the agent must open the fact to the insurer.
4. Conclusion
Life insurance encourages saving. Life insurance is the only way to get more financial security with less investment. This does not require a lot of money at once. It involves minimizing risk and collecting large sums of money. If you are collecting only a small amount on a daily basis, then you can ensure a large sum of money. The insurance company provides financial security to the insured's dependents by paying gross insurance and bonuses.
In the financial sector globally, insurance companies are more dominated by banks and financial institutions, but this is not the case in Nepal. There is still not much discussion about insurers in Nepal. Life insurance companies, in particular, have long-term large funds. Since life insurance is used for a long period of time, the structure of the fund will be constructed in the same way. Therefore, if the insurance companies can use the funds as a suitable tool for investing in infrastructure and hydropower sector, it will benefit both the country and the insurance company. Investors, insurers, employees and the government that benefit the insurance company are also to benefit. In addition to establishing the real identity of the insurance sector, Uchiyasat also holds a stake in the development. For this, the regulatory body Insurance Committee has to play a vital role in the regulatory realm. Insurance companies appear to be involved not only in depositing government bonds, banks, and financial institutions but also in infrastructure construction and hydropower. If the insurance companies can invest in such infrastructure and also invest in hydropower, then changing the public perception of insurance will positively help the development of the insurance sector.
In such a country where there is a volatile political like Nepal, there are challenges on the one hand and challenges on the other. By taking these possibilities and challenges in a positive way, the importance of best saving, financial security, peace of mind, self-reliance, tax deductions, credit facilities, etc. is also increasing in importance day by day.
