Life Insurance Policies - Comparison

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    Academia de Studii Economice

    Bucuresti

    Faculty of Business Administration

    Life insurance policies in Romania

    Coordinator: Team:

    Laura-Elly Novac Burciu Andrei

    Badea Otilia

    Dojana Raluca

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    Table of contents

    I . L if e-insurance market in Romania

    I I . Who is it addressed to?

    I I I . What does it insure?

    IV. What r isks are covered?

    V. What are the indemni fi cation clauses?

    VI . Exclusions

    VI I . References

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    Life Insurance Policies in Romania

    -Comparative analysis-

    Abstract: The authors perform a comparative analysis of life insurance offers

    belonging to two major insurance companies in Romania: Grawe Insurance Group and

    Groupama Insurance. An overview of the elements and structure of a life insurance policy

    and a glance at the Romanian insurance market will be analyzed in the following paper.

    1. Life-Insurance Market in RomaniaLife insurance is to ensure the payment of money by the insurer, in case of an event related to

    the insured individual, such as injury, illness, death. Even young people can become ill or die as a

    result of unexpected accidents, which will automatically generate financial difficulties. Life insurance,

    unlike normal insurance, has certain characteristics listed below:

    Financial difficulties in the personal insurance are determined by: needs money for funerals,

    providing financial resources to the heir(s) after the death of the insured. Some of the motivational

    factors that lead to the conclusion of personal insurance are: stress, personal motivations, and the

    concept of death. Risk is defined by most economists as an actual loss, or loss caused by negligence

    that may have an impact on the individual or on a property.

    The sum insured is determined by the insured a lump sum based on his needs and financial

    possibilities. The insured may enter into more contracts of insurance against the same event for

    different amounts, without being hindered by law or by the insurer to do so.

    Not having repairman character, personal insurance has no restrictions as property insurance.

    If, following the occurrence of an insured, the insured suffers an injury or contracted a disease that

    affected his ability to work, he is entitled to indemnity insurance, making it possible to restore its

    financial situation existing before the accident or contacting the disease.

    The premium is the amount of money the insurer pays the insured against the insured risk.

    The insurance contract is concluded in writing (by completing a statement of assurance).

    After analyzing the responses, the insurer agrees to contract, contract drafting and submission of a

    written copy of the insured. The insurance contract is concluded by paying the insurance premium and

    policy issuance.

    Insurance termination is performed in the following modes: normal termination is to arrive atthe end of the agreed period of time, or period for which it was concluded, the contract ceases also in

    case of an insured event. But there are less usual ways such as denunciation, termination and

    cancellation of the contract.

    Denunciation shall be done by the insurer if the insured has not communicated in writing the

    contract changes about the data submitted in the conclusion of the contract.

    Termination means termination of the contract for a while, because of a default of a party for

    reasons that might apply. The effects of the contract are to be valid until termination.

    The cancelation of the contract may be caused by inaccurate or incomplete statements made

    by the insured, or the contractor's lack of insurable interest at the time of its conclusion.

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    Romanian market insurance reached an unexpected growth in 2012 of more than 8.27 billion

    lei more than 5.8%, after the decline of the market from 2009 to 2011 which reached close to 12%

    from 8.9 billion to less than 7.9 billion as stated by CSA.

    CSA stated that there has been recorded an increase of 3.9% more than in 2011 amounting to

    a total of 1.9 billion lei of life insurance.

    2. Who is it addressed to?Life insurances are directed towards people that want to maintain a financial balance

    in case of an unforeseen accident or event. Both companies ( Grawe Insurance and Groupama

    Insurance ) agree that the unforeseen is part of our daily lives and that the best way to defend

    against tragedies is to take preventive measures.

    The first issue to address is to understand to whom are life insurance policies meant

    for. Our research concluded that, according for both of the companies, their simple lifeinsurance policies targeted natural persons, with a minimum age of 15 and a maximum age of

    65 years old. Grawe Insurance has in addition to that a maximum age of cancelation of 75

    years, after which all policies will be null and void.

    3.What does it ensure?When looking to buy a life insurance policy it is important to know what that policy

    ensures, and as explained by the insurance inspectors of both companies, the main object of

    insurance is the life of the insured.

    Groupamas defines this object as the safety of a financial support for the family in

    case of death or the inability to support them. That way in case of an unforeseen event or

    tragedy the family shall benefit the whole insured amount, which will be constant throughout

    the whole contractual period.

    They have a range of life insurance policies available that have as object of insurance

    either the life of a single natural person or more than one in the same policy, or the well-

    being of a child.Grawe Insurance has a similar vision, in that they believe that the necessity of a life

    insurance policy increases as the individual perspective and responsibility of a natural person

    reaches maturity. It can offer the insured a supplementary financial security and can become

    a guarantee of the future. In order to pick the best life insurance policy suited for the insured,

    a preliminary analysis of priorities and expectancies needs to be done.

    Their products include different types such as : Prevent, Start, Profit, Crescendo,

    Omnia, Risk Life, Renta plus, Sa traiti !, Orizont, Unica, Infinit.

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    4. What risks are covered?One of the most important things to ask before completing a life insurance policy with

    a company is to understand what risks are covered and what are not!

    In case of Grawe Insurance their simple life insurance(Prevent) policy they insureagainst the risk of death, death by accident, permanent invalidity due to an accident, and

    hospitalization costs due to an accident and the survival at the end of the policy. This policy

    requires medical exams only for insured sums of over 100.000 lei or insured persons over the

    age of 60 years old. A supplementary clause of death by car accident can be added, and in

    the event that it occurs the insured will pay an extra amount of premium.

    Groupamas life insurance policy covers more than the above stated risks, such that it

    also covers a partial invalidity due to an accident, permanent invalidity due to any cause,

    hospitalization costs due to any reason, surgical interventions due to an accident, or surgical

    intervention due to any cause, payment release from premiums in case of the insureds

    invalidity.

    5. What are the indemnification clauses?These clauses differ from company to company such that Grawe Insurances clauses

    are as follows:

    - If the person insured is alive at the end of the insurance contract, the insurer willpay the insured amount to survival ( sum insured by life insurance ) with

    accumulated profit

    - If the person insured dies of natural causes, at any period of the contract, theinsurer will pay the amount at death ( the sum insured by life insurance ) with

    accumulated profit

    - If the insured person dies as a result of an accident at any period of the contract,the insured will pay the sum insured by life insurance

    - If the insured person dies as a result of an accident at any period of the contract,the insurer will pay three times the insured amount plus the accumulated profit.

    - If the insured suffers an accident after which he is left with a disability with adegree equal or greater than 50% the insurer will pay directly the insured amountin case of disability and the contract continues without premium payments till the

    end

    - If the insured person is hospitalized due to an accident, the insurer will pay thehospital indemnity set for each day of hospitalization. Daily hospitalization has a

    value of 25 pounds and will be paid for each day but not more than 90 days for the

    same insured event and 180 days a year.

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    On the other hand, Groupamas clauses include the following:

    - In case of death due to an accident, if death occurs at most during 180 days after

    the accident, and that the body bruises/damage was entirely responsible for the death of theinsured.

    - In case of death and permanent invalidity due to an accident, if the death of

    permanent invalidity occur at most during 180 days after the accident and that the body

    damage/bruising was