Introduction to Insurance

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Table of Contents

Abstract
Insurance
Types of Insurance
Conclusion
References

Abstract

The main aim of Insurance is to minimize the risks involved in various aspects of life and to cover and compensate the owner for any loss is suffered by the owner. Insurance may be taken to cover the risks involved in life, property, and business. Mainly there are two types of insurance, namely, life insurance and general insurance. General insurance involves fire and miscellaneous insurance. This type of insurance covers a host of things ranging from burglary, theft, fidelity guarantee, livestock and crops, employer’s liability, and lastly insurance of the motor vehicle. Insurance is a system of sharing risk and is responsible to pay the owner who suffers any kind of damage covered in the contract. Insurance plays a pivotal role in minimizing risk and in compensating against the damage suffered.

Insurance

The term life assurance better known as life insurance is a contract between two parties, one is the policy owner and the other is the insurer. In life insurance the insurer agrees to pay compensation to the policy owner upon occurrence of an undesired event and the compensation is paid for the same, this undesired event can be death or accident or any other event which causes damage to the policy owner. In return, the policy owner pays a premium, which can either be a stipulated amount or can be a lump sum. There are many terms included in most of the policies, one such common term is suicide, if the policy owner commits suicide the policy becomes null in other words the policyholder will be paid no compensation if he commits suicide. Another common term is the face amount; this is nothing but the initial amount which is paid by the insurer to the policyholder when the policy becomes mature. A life insurance policy covers all the risks involved in a person life but it does not cover other risks like fire, damage of assets, etc, to cover such risks there is another insurance called non-life insurance, this type of insurance covers all the risks involved other than the risks involved to one’s life. Nonlife insurance covers risks ranging from fire, health, house, and other important things. There are many agents involved in the process of getting a secured life insurance policy; these agents form a link between the insurer and the policyholder. The policyholder is expected to pay premiums at regular intervals to make sure that his policy does not lapse; these reoccurring payments are termed renewal premiums. When a premium is paid by the policyholder, the agent is also benefited by getting commission; the agent gets his part of commission when a policyholder pays his due premium. The policyholder can make appropriate changes in his policy related to the increase/decrease in the sum assured, and the insurer makes the desired changes for the policyholder. During the term of the policy, the policyholder can claim compensation, and upon verification of the same by the insurer the policyholder gets compensation. When the term of the policy ends the policyholder gets the assured amount and on top of that the benefits of maturity, in addition, the client also gets maturity bonuses and a host of other things depending upon the policy chosen by the client or the policyholder.

There is a lot of importance to life and even more important is to secure it and these days it can only be secured by taking up a life insurance policy. There are many risks involved in the day to day life, to minimize the risks it becomes inevitable to go for a policy that covers all the risks involved. There are a lot of uncertainties and the maximum we can do to reduce these certainties is to go for a good policy that covers all the necessary things which should be covered. Planning for the future is required and this can only be done with a good thought out insurance policy. The general perception of people towards insurance is negative, they regard insurance as a tool that makes them lose a lot to gain a little but no one can deny the fact that insurance remains the most powerful tool to a secure future. The chances of an injury to an individual are not very high even though if an individual suffers such an injury, he should have a good backup, and an insurance policy provides exactly that. No one can deny that insurance is an important area which at no cost can be ignored; the main aim of any insurance company is to ensure the financial well-being of the policyholder and the people who are dependent on him.

There is a lot of paperwork involved in the process of insurance, a handful of forms need to be filled, some of these forms are necessary to fill while the others are for you to decide. These things depend on one company to another. After filling all the documents and forms, a contract is developed between the insurer and the client. An insurance policy includes all the details the client is supposed to know, like the premium date, advantages, the term of the insurance, and other important details.

Types of Insurance

Home Insurance: Real estate assets are always at very high risk from various factors such as theft, accidents, and natural calamities, or other mishaps, home insurance covers all the risks and provides the clients with total security which they have dreamt of.
Health insurance: These days due to inflation the cost of the medicines has also taken a sharp rise, the cost has picked up a lot, so in this case, it becomes inevitable to assure yourself from any mishap related to your health and this can only be done by getting health insurance done.
Travel Insurance: This type of insurance is for all those who travel a lot, people who hold such insurance cover themselves from all the risks involved in traveling such as theft, injuries during traveling, and other factors.
Auto Insurance: This type of insurance favors those who own a car or a truck or in a broader sense a vehicle, this insurance covers all the risks involved and the biggest of them all is accidents, the client gets the money in compensation if the accident occurs during the term of the policy.

When getting insurance or for that matter, any other insurance one must know the total value of his assets, in case of costly assets like jewelry it’s always advisable to go for a mid net value or a high net value. When taking an insurance policy the most important thing which should be kept in mind is, one must always take professional help either from the agent or directly from the insurer, this makes sure that one opts for the policy which he requires the most and which would benefit him the most in the future. When selecting a policy one must make sure that the policy he has selected covers the value of his total assets, the costly items should be listed in the insurance plan, and the case of goods, the insurance should be provided even if the goods are taken out of the house, keeping all these important things in mind one must take up the policy. It is also very important to compare and contrast all the policies which suit the needs of one the best. It is also very important to evaluate the policy at the end of the year because constant changes take place. If a person takes up auto insurance, he must inform the insurer about the changes which he has made in his vehicle. All these important points have to be kept in mind before choosing an insurance policy.

Insurance is a process that involves shifting of risk from one party to another so it is always advisable to have good faith in the insurer on in other words the policyholder should have trust in the insurer. The insurer is duty-bound and is expected to disclose all the details to the client who is going to sign the contract of insurance. Another important thing is one must make sure his coverage is sufficient and in doing so must also make sure not to drain unnecessary funds by covering things that are not required. So a well-planned strategy is required to give thoughts a practical shape. The agents are well-informed people and can often be very handy in choosing the right policy; a good agent guides the client in the right direction and makes sure that he gets the best out of the deal. On the other hand, if a client falls into the trap of the wrong agent, he is sure to get deceived. This is how agents play a key role in getting the clients good or bad deals.

Another important thing is purchasing multiple policies from the same insurer; this will result in the policyholder getting a good discount on the policies.

Conclusion

These days the uncertainties are very high and it’s not worth taking the risk, the most powerful tool to cover these uncertainties is insurance, so no matter what assets you have been it your house, a car, or anything else which you dearly value, the first thing which you should do is insure it. By ensuring it the risks are minimized and there is very little to lose unless it’s the case of death or a fatal accident. Insurance is a very essential tool these days, simply because it can cover all the risks involved in any field. It’s strongly advisable to get an insurance policy or if possible get multiple policies to cover all the risks involved in your life.

References

Insurance. (2008). in helplinelaw. Web.

Life insurance. (2008). Web.

Need for Insurance. (2008). In Insure magic. Web.

Insurance. (2008). in loan bazaar. Web.

More about insurance. (2008). in loan bazaar. Web.

Insurance basics. (2008). In Investor guide. Web.

Member education guides. (2008). in neamb. Web.

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Introduction to Insurance

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