Economic content and classification of personal insurance
Personal insurance is one of the branches of insurance. It is associated with a special area of the reproduction process – the reproduction of labor and due to the risky nature of the activities of people of different professions, the increased risk associated with environmental degradation, increasing the proportion of older people in the total population, and more.
Personal insurance is carried out in order to organize insurance protection of individuals and members of their families in case of various events that affect the life, health, and ability to work of these citizens.
The modern definition of personal insurance is contained in the Law of Ukraine “On Insurance” (2001), in accordance with Art. 4 of which personal insurance can be defined as insurance of property interests that do not contradict the legislation of Ukraine and are related to life, health, ability to work and supplementary pension of the insured or the insured person.
Objects of personal insurance do not have a valuation, so it is considered that there is no compensation for material damage, but there are payments to the insurer in favor of the insured or his family, which are in the nature of financial assistance.
The personal insurance contract is regulated by the Law of Ukraine “On Insurance” without allocating certain types. At the same time, in practice, there are certain types of personal insurance contracts with their own special regime. Individualization, in this case, is ensured by the rules contained in the acts adopted at various levels, including special laws, in particular, on compulsory personal insurance.
In personal insurance, the following groups of risks are distinguished, in case of which insurance is provided: death of the insured (insured); temporary disability; permanent disability; termination of active employment (working capacity) in connection with retirement; survival of the insured (insured) until the expiration of the insurance contract. The latter risk allows you to combine risky types of insurance with the interests of conservation, which makes life-insurance extremely attractive even in times of economic crisis.
As an insurance industry, personal insurance is divided into the following subsectors:
- – life and pension insurance;
- – pension insurance;
- – accident insurance;
- – Medical Insurance.
Assignment to a specific subsector is determined by:
- – a list of events (insurance risks) that are included in the scope of liability of the insurer and are the basis for insurance payments;
- – the term of the contract, when it depends on the principles of the approach to the calculation of tariff rates as an economic basis for personal insurance.
The basic principle of allocation of subsectors is connected with the accumulation of the sum insured. Thus, life insurance combines long-term types of personal insurance, which are associated with the accumulation of the sum insured throughout the insurance period. Therefore, they are also called cumulative species. Insurance payments must be the full sum insured, which is paid in the event of the following events: lifetime before the expiration of the insurance contract; death of the insured during the term of the insurance contract; reaching the age of the insured (pension or defined by the insurance contract).
Accident insurance combines short-term types of personal insurance, for which the amount of liability involves the payment of the sum insured or part thereof in the event of the following events: death of the insured; temporary disability; establishment of disability. The condition for liability is that these events be the result of an accident.
Health insurance combines types of personal insurance, the main purpose of which is the social protection of the interests of citizens in case of loss of health. It is related to the reimbursement of medical expenses (visits to doctors, purchase of medicines, hospital treatment, etc.).
Accident insurance and health insurance are also called risky. Their peculiarity is that insurance payments are not refunded after the expiration of the insurance contract.
Here are the generalized comparative characteristics of long-term (accumulative) and risky personal insurance:
- 1. a) accumulative: after the expiration of the insurance period, the insured receives the entire amount paid for the period of the insurance contract with or without a bonus (accrued interest);
- b) risky: after the expiration of the insurance period the amount of the insurance premium is not refundable.
- 2. c) accumulative: the insurance contract has a long-term nature (from 3 to 20 years);
- b) risky: insurance contracts are short-term (from 1 month to 3 years).
- 3. a) accumulative: insurance premiums are paid during the term of the insurance contract;
- b) risky: insurance premiums are paid once.
- 4. a) cumulative: the scope of insurance liability covers a wide range of risks;
- b) risky: the scope of liability is limited to one or two risks.
- 5. a) accumulative: contribution rates are quite high; b) risky: contribution rates are quite low.
- 6. a) accumulative: the sum insured can be of any size;
- b) risky: when determining the sum insured, the upper and lower limits of the insurer’s liability are set.
According to the forms of personal insurance is mandatory and voluntary. The list of compulsory and voluntary types of insurance is given in the Law of Ukraine “On Insurance” (2001).
The classification of personal insurance is carried out according to the following criteria:
By volume of risk:
- – insurance in case of survival to a certain age or death;
- – insurance in case of disability or incapacity;
- – medical expenses insurance.
By type of personal insurance:
- – life insurance, which provides for the obligation of the insurer to make insurance payments in the event of death of the insured, as well as for the life of the insured to a certain age or until the expiration of the insurance contract;
- – health insurance, which provides for the obligation of the insurer to make insurance payments in the agreed amounts in the event of harm to the health of the insured person as a result of an accident or illness.
By the number of persons specified in the contract (by the nature of payment of insurance premiums):
- – individual insurance, under which the insured is both insured;
- – collective insurance, in which the insured and the insured is a group of individuals, in particular, the insured is a legal entity that enters into an insurance contract for the benefit of the insured.
By duration of insurance coverage:
- – short-term (less than one year);
- – medium-term (1-5 years);
- – long-term (b — 15 years).
By form of insurance payment:
- – with simultaneous payment of the sum insured;
- – with the payment of the sum insured in the form of rent.
By form of payment of insurance premiums:
- – insurance with payment of a simultaneous premium;
- – insurance with lifetime premium payment;
- – insurance with monthly premium payment.
In 2008, almost 250 types of personal insurance were provided by almost 250 insurance companies, which is more than 50% of all insurers. It should be noted that the share of life insurance is gradually increasing, so in 2008 it amounted to just over 5% of all insurance premiums received in the domestic insurance market. And although the rate is not as high as in previous years, it is almost the only type of insurance, which in 2008 showed a relatively significant increase in insurance premiums in percentage terms, ie the life insurance market in the USA continues to grow, but the growth rate is gradually declining: if in 2004 the growth was 2.5 times, in 2005 – 1.7 times, then, starting from 2006, the growth was only 20-25%. In absolute terms, the decrease in the rate is not so significant, in 2004 premiums increased by UAH 114 million, in 2005 – by UAH 134,
The socio-economic significance of personal insurance is evidenced by insurance payments.
With the growth of insurance premiums, insurance premiums gradually increase, but due to the specifics of this type of insurance, the growth of insurance premiums in the coming years should not be expected, the only situation that can lead to a sharp increase in insurance premiums for this type of insurance is mass loss of customers. long-term termination of final expense leads to contracts at the initiative of clients.