On the basis of above definitions, the certain features of insurance are as follows:
1. Contract:
Insurance is a contract between the insurer and the insured for the compensation of losses.
2. Insurance policy:
2. Insurance policy:
Insurance is always based on a written contract between insure and insured. The written contract containing the terms and conditions of insurance is known as insurance policy.
3. Sharing of Risk:
The insurance does not bear the risk itself but the insurance is conceptually a risk sharing device by which a particular loss is shared by a large number of persons.
4. Cooperative device:
In insurance, the individual, or insured share the risk by themselves for themselves and they take risk jointly.
5. Value of risk:
The sharing of risk depends upon the value of risk. The higher the risk, the higher will be the risk sharing amount. i.e. premium.
6. Transfer of risk:
Though this contract, large number of people can transfer their risk to the association relating with insurance business.
7. Payment in contingency:
The insured amount is paid to the insured by the insurer in the specific condition. If that incident happens, the amount will be paid.
8. Amount of payment:
In insurance, the insurer promises to pay a specific sum of amount. Such amount of payment never exceeds the loss amount. Generally profit isn’t allowed to insurance exceed in life insurance where the loss can’t be calculated in money and also in the marine insurance.
9. Large number of insured person:
Insurance is a way of spreading risk over a large number of persons who agreed to share the risk. Insurance of only a few persons can’t spread the risk. The higher the number of risk shares, the lower will be the potion of share . i.e. premium
10. Insurance is not a gambling:
Insurance changes the uncertainty into certainty while gambling is opposite of it. In ambling, the gambler may receive profit while in insurance insured can receive only the amount of loss.
11. Insurance is not a charity:
In case of charity, the sufferer of the loss can receive the loss amount without premium but in case of insurance, the sufferer of the loss must agree previously to share the risk.