The advantage of reinsurance
can be summarized as follows, : (1)
INCREASES INSURANCE BUSINESS: Reinsurance helps a lot for the development of insurance business. It enables every
insurance to accept insurance business as the total risk will be
distributed among other reinsurer . In
absence of reinsurance , every insurer
will hesitate to accept huge risks and it would
have rather been very difficult
for an insurer, in case he accepted risk exceeding his capacity.
(2) SPREADS THE RISKS: It
continues the basic principle of insurance by spreading the risk over an
even wider field, which reduces
the impact of loss on any one person,. It further helps in stabilizing the incomes of insurance companies and provide facilities to gain
experiences in the incidence of
loss and to find a common basis for rating
the risks. (3) INCREASE
INSURER’S GOODWILL: The financial and risk bearing capacity of the
insurer increases with the help of
reinsurance and with the existing
facilities ,an insurer can accept risk beyond his capacities. This increases
the goodwill of the insurer.
(4) LIMITS THE LIABILITY : It enables the
insurers to undertaken risks and to
spread them. It therefore, helps in
limiting the liability of the insurer to
the maximum amount. (5)
STABLE PREMIUM RATES: Usually the rates of premium are determined on the
basis of information relating to past
loss experience of the risk concerned. the insurer with the help of
reinsurance , can collect larger statistics
regarding past losses and there by
fix premium rates for different
types of risks by mutually
agreeing on the issue. All this helps in bringing about stability in premiums
rates of different types of risk.
(6) PROTECTS THE INSURANCE FUNDS:
It protects the insurance funds of the
original insurer and provides additional security to the insured and insuring community. (7) REDUCES COMPETITION: It reduces inter company business competition
as no one works independently but in cooperative
manner and with helping mind in the area of insurance business. Thus it
helps in curbing competition/ rivalries
in the similar line of insurance business.
A TO Z OF REVERSE
MORTGAGE====== In 2008 the government of India launched a new scheme
which is known as Reverse Mortgage
Scheme 2008, . A glance at this scheme will provide full answer to all the
queries of a tax payer relating to
Reverse Mortgage. However for the benefit of your readers
particularly all those readers
who are senior citizens I am
going to tell them some of the important
aspects connected with reverse Mortgage for maximum used by the senior citizens. 1.
Firstly the most important person is that the benefit or reverse mortgage can be taken advantage of only and only by senior citizen. As the eligibility criteria for
taking advantage of this scheme
is only for male or the female who are individual and who are above the age o
sixty years. 2.. Secondly important
point to be noted is the benefit of reverse mortgage cab be taken only in respect of residential house property
which is located in India. 3. The meanings of reverse mortgage
is that your capital Asset.
I.e against your residential house
property you are able to take a loan
from an approved lending institution.
The persons who have been approved lending institutions . The persons who have
been approved as classified approved
lending institutions for granting the reverse mortgage are only (a)
National Housing Bank (b) A Schedule Bank ( C )
A House Finance Company. 4.
The maximum term for which
reverse mortgage can be granted is twenty years only. The loan approved by the leading institutions
etc., May disburse the loan either under the reverse mortgage Concept
on Periodic payments basis or a lump sum amount may be paid in one or more installments
so that the total payments does
not exceed 50 per cent of the total loan
amount sanctioned. As per the scheme the Reverse Mortgage can be
granted maximum for a period not exceeding
twenty years from the date of
signing the agreement with the bank etc ., Under the Reverse Mortgage if the loan is
taken from the bank etc., There is no income tax liability and moreover the
amount borrowed by way of reverse
Mortgage is not treated as a sale. It s not treated as a Capital Gain and there is no income tax
liability whatsoever of any kind on
taking money order the reverse mortgage concept. Likewise at a later date when the interest has to be
paid up to at that the time also no impact is disallowed nor it is a allowed as the concept of
income-tax is very clear i.e no liability
Of income tax at any point of time. The benefit
or reverse mortgage is mainly for all those persons who have got their
property in their own names but no current income at all and they find that the at this
point of life great difficulty either in
asking for amount on day to day basis
from the relative including the blood relative. Hence this is the best way
without telling anyone you can live on your own money by taking advantage of
the reverse Mortgage Scheme.