Insurance (Importance, Relevant act & Sections)

In the current era, the terms “insurance”, has a significant importance among the society. It was first known as a bad act but afterwards it is gradually being upgrade in the society. It is a package which provides protection against a possible eventuality. In other words, it is an agreement by which a company or the state provides a guarantee to compensate for a particular loss, illness, damage or death in return for the payment of a specific amount.

The word insurance is derived from a French word “ensurance” which means “being certain”. People who gets an insurance policy are liable to pay a specific amount annually to the insurance company as a premium and such company ensures to pay the client the specific amount in case of an occurrence for which the insurance was purchased. It is considered a contract between the client and the insurance company. It may be of many types such as life insurance, health insurance, trade insurance, auto insurance, In-transit insurance (also known as letter of credit) Educational insurance and for other specific purposes.

So, it is a contract, so there are some laws for this, known as “Pakistan Insurance Corporation Act 1952.” Act No XXXVIII of 1952 which come into force on 8th of May 952. By which the insurance corporations are established in Pakistan. It would be guaranteed by federal Government as mentioned in section 5 and having separate Capital as in Sec-5(B). Its management and hierarchy are described in sections 8-39 of this act.

In the conclusion we are able to say that it is a certified way to secure the future of the citizens and to secure them from future’s losses which is secured and certified by the federal Government so that the person may be supported economically and its eventual issues may be countered when required.