It is type of security provided by an insurance company in the event of a payment default by the issuer of the bond or security. Also known as financial guaranty insurance it is a form of credit enhancement that typically leads to the reating of insured security. All bonds are three-party contract which includes Insurance Company, Obligee and Obligor.
Bonds usually fall under two major categories:
1. Surety or Performance Bonds:
It is a contract between atleast 3 parties – Insurance Company, Obligee and Obligor. Surety Bond is a promise by the insurance company to pay the obligee a certain amount in case if the obligor fails to meet certain obligation. This is type of bond which protects the obligee against any losses resulting from the obligators failure to meet the obligation.
2. Fidelity Bonds:
It is a insurance protection which covers policyholders in case of any losses which they might incur as a result of fraudulent acts by an individual. Basically it insures a business for losses caused by the dishonest acts of its employees.
We provide you the best single premium life assurance policy for the purposes of investment. They are common form of investments.