Insurance is the legal contract between two parties, that is, the person (insured) and insurance company (insurer). In this case, the insurance company give the promises of compensating the insured person’s losses if the insured event occurs. To do this, the insured is required to pay the regular amount in form of the premium and can be considered a small guaranteed loss to avoid a big loss, possibly the devastating loss. The general purpose of insurance is to help mainly the unfortunate, using part of the collected/aggregated money to compensate for any loss to a victim. Using this way, many victims who are unfortunate can continue with their daily lives instantly without worrying about other financial duties. How insurance function The insured and the insurer receive the legal insurance contract, called an insurance policy. This policy contains details of the circumstances and conditions under which insurance company pays insurance amount to the insured person. Insurance protects you and your family from financial losses. In general, the premium for the large insurance coverage in terms of the money paid is much lower. The insurance company gets a risk of offering high coverage for the small premium, since only few insured people apply for insurance. This is the reason why you take out insurance for the large amount at low price. Any company or person can apply for insurance from the insurance company, though the decision to offer insurance is at a discretion of an insurance company. It is the insurance company which evaluates the claim to make a decision. Insurance companies generally refuse to guarantee high-risk candidates. Types of insurance Life insurance Like the name proposes, life insurance is the life insurance. Generally, you buy the life insurance to ensure that the dependent family members are financially insured in an event of premature death. Life insurance is especially important if your family heavily depend on your income or if you’re the sole breadwinner. With the life insurance policy, policyholder’s family receives financial compensation if the policyholder expires in the course of the contract term. Health insurance The health insurance is taken out to cover the medical costs for the expensive treatments. Various types of health insurance cover a variety of ailments and diseases. You can get the general health insurance policies for certain ailment. The premium paid for health insurance generally covers the cost of treatment, medical costs and hospitalization. Car insurance In the world today, car insurance is the essential policy for all car owners. This insurance normally protects you against unwanted incidents, such as accidents. Also, there are some policies which compensate for damage of your car in the event of natural disasters, such as earthquakes or floods. This also covers liability of the third-party if you have paid the compensation to cover other vehicle owners. Education insurance Child insurance is similar to life insurance, designed specifically like the savings tool. Education insurance is the best way to provide large amount of money if your child has completed higher education and is attending university. This fund allows you to pay for your child the higher education fees. Under this insurance, a child is the beneficiary of the funds, whereas the legal guardian or parent is the policy owner. Home insurance Every person has a dream of owning a home. Home insurance can assist cover damage or loss to the home from accidents such as fires and any other natural disasters or hazards. Home insurance covers can other instances such as earthquakes, and lightning, among others. Advantages of insurance
1. Offer security There is always the fear of a sudden loss. This can be the factory fire, loss of the life or marine storm. In these cases, it will be difficult to withstand the loss. The insurance protects against sudden losses. In the case of fire and marine insurance, the damage suffered by an insured is compensated fully and returns to its previous position. If a family member who is the breadwinner dies prematurely, that family receives money to continue with their livelihood. Therefore, insurance provides security for the individual and the employer. 2. Risk diversification The basic principle of the insurance is to distribute the risk among the extensive number of people. The large number of people receive insurance policies and pay the premium to an insurer. In case of the damage, it is compensated by the insurer’s funds. The loss is shared among many policy-holders. The insurance covers the person’s loss, but a social loss can’t be eliminated. For instance, if a person’s property is lost due to a fire, the insurance company will compensate. The loss of the property remains the social loss. 3. Source of finance Instead of insurance coverage, the insured person pays the premium to an insurer. These premiums are received regularly in an installment. A lot of money is collected in form of premium. These funds may be used profitably for the industrial development of the country. The life insurance policies are bought by people from every walk of life. It allows savings to be collected from a great number of people. 4. Promote savings The insurance not only protects the risks, but also offers the investment channel. Life insurance offers an investment method. Insurance companies are used to save money by paying the premium. The value of the policy is normally paid to his agents or the insured. In the case of fixed-term contracts, the insured person receives a fixed amount at the end of the contract. 5. Promote international trade The international trade involves different risks when transporting goods from country to country. If the insurance is not there, retailers will be striving always to ensure the products arrive safely. The value of the exchange can be limited due to risks and uncertainties associated with transit. The insurance offers protection to every type of marine risks. It supported the development of large-scale international trade. Whether life insurance, health insurance, education insurance, name them, you can buy the insurance policy online or offline. Just as there are many insurance agents in different areas to help you purchase the policy, also there are websites where you can buy the policy. Make sure you have done the research before you choose and invest in the insurance.