Life Insurance Companies Roles and Responsibilities
The insurers are responsible for the insurance you got. If anything goes wrong, the agents are to face consequences. Insurance companies are abid of certain roles and responsibilities towards the buyers that they are amid to fulfill.
Roles of Life insurance Companies
The roles of life insurance and the insurance agent towards you are:
Life insurance encourages savings:
Insurance does not only protect against risks and uncertainties, but also provides an investment channel too. Life insurance enables systematic savings due to payment of regular premium. Life insurance provides a mode of investment. It develops a habit of saving money by paying a premium. The insured gets the lump sum amount at the maturity of the contract. Thus life insurance encourages savings.
Promotes economic growth:
Insurance generates a significant impact on the economy by mobilizing domestic savings. Insurance turns accumulated capital into productive investments. Insurance enables to mitigate loss, financial stability and promotes trade and commerce activities that result in economic growth and development. Thus, insurance plays a crucial role in sustainable growth of an economy.
Medical support:
Medical insurance is considered essential in managing risk in health. Anyone can be a victim of critical illness unexpectedly. And rising medical expenses is of great concern. Medical Insurance is one of the insurance policies that cater for different types of health risks. The insured gets medical support in case of medical insurance policy.
Spreading of risk:
Insurance facilitates spreading of risk from the insured to the insurer. The basic principle of insurance is to spread risk among a large number of people. A large number of persons get insurance policies and pay a premium to the insurer. Whenever a loss occurs, it is compensated out of funds of the insurer.
Source of collecting funds:
Large funds are collected by the way of premium. These funds are utilized in the industrial development of a country, which accelerates the economic growth. Employment opportunities are increased by such big investments. Thus, insurance has become an important source of capital formation.
Responsibilities of Life Insurance Company
Insurance companies have a set of responsibilities to which they must abide. Policy-holders trust insurance companies to support them during a time of need and follow through with promises outlined in the policy. In addition to responsibilities to their clients, insurance companies also have the legal responsibility to comply with state and federal laws.
Pay a Beneficiary in the Event of a Claim
When a client purchases an insurance policy, he pays a premium every month as part of the contractual understanding that he will receive a certain amount of money in the event of a specific loss. For example, if a policyholder is in an auto collision, the insurance company may be expected to pay for related medical expenses. It is the responsibility of the insurance company to make sure the beneficiary of the policy is paid.
Act without Discrimination
While an insurance company may reserve the right to refuse service, it cannot refuse service to an individual or cancel a policy based on a client’s marital status, race, disability, religion or sexual orientation. Additionally, an insurance company cannot restrict the terms or benefits listed in an insurance policy because of a client’s marital status, race, disabilities, religion or sexual orientation.
Use Honest Business Practices
Insurance companies cannot use unfair or deceptive acts or practices to gain an edge over the competition or gain new business. Unfair practices include intentionally misinterpreting an insurance policy, participating in a bidding war, making false statements on a policy application or impersonating a client in order to terminate, convert or keep an insurance policy.
Accept and Handle Premium Payments Legally
When collecting premium payment, the insurance company must continue to provide the client with insurance coverage. The company must not keep extra money paid toward a premium. Instead, it must return the excess amount paid to the client in a timely manner.
Handle Claims Accordingly
Insurance companies should make full and prompt claim payments when the liability of a client is not in question. When a client’s insurance claim is denied, the insurance company must provide a reason for the denial. Should the client have a question regarding her claim, the insurance company must respond to the policyholder. Additionally, an insurance company must never harass or intimidate a client during the claims process, ask the client to make false statements or threaten to cancel a policy if a client does not accept a proposed claim settlement amount.