What is Insurance? Insurance is a form of management of risks or danger, which on loss can be covered with other form of entity. Generally insurance companies provide policies for the customers to get protection financially when they incur loss of things or person that are insured. By taking an insurance policy the customer has to pay some amount called as premiums annually or monthly to get protection against any loss. The loss can be reduced by claiming the insurance.
The insurance company collects premiums for providing protection against the loss or damage of any asset or the insured. The insurers earn more through premiums and the investment. The profit made by them is the money left after giving away the incurred loss and underwriting expenses.
The insurance companies give the insurance compulsorily when the loss is definite and the details of loss are completely known like the time of loss, its cause and the place where it happened. For example, if a person insured dies or if a person gets injured badly due to fire accidents or other accident. The insurance is given against accident loss, large losses, calculable losses, affordable losses. In US the government and insurance companies’ gives insurance is against the loss due to hurricanes or earthquakes or winds or floods.
Basic Requirements for Insurance: When an individual gets insured there are legal requirements. Some legal principles are that the insurance company should compensate the insured if a loss is incurred. The insured must suffer directly from the loss. The company can pursue recovery on behalf of the insured. After the loss or casualty of the asset the owner must keep the loss to minimum as if the asset is not insured. There should be good faith bond of honesty and fairness among the insured and the insurer.
Importance: Even when we have savings and stable financial budgets sometimes the situations may arise beyond our thinking and expectations and cannot be completely secured. In order to face such situations it is better to take safety measures to attain financial stability. The best way is by insurance to get financial stability. By taking insurance we come in contract with the insurance company which is called as insurance policy. With this risks and financial losses can be transferred to the insurance company. For this the company takes monthly payments or installments which are referred as premium. According to the policy the company covers the complete losses or only part of them.
Having an insurance policy saves you from financial troubles when you have to pay sum which exceeds your possibilities. Insurances are available for cars, vehicles, property, health, business etc. Automobile insurance has become compulsory, without the insurance the vehicle cannot be taken on roads. It covers the damage caused to the vehicle. It also gives the liability coverage for the damage caused to others property or bodily injuries. Medical coverage is given for treating injuries and other expenses.
Types of Insurances: Insurance is available for homes. There may be numerous dangers which can cause damage to your home, like fire, threats, and natural disasters. By having the insurance you can reduce the loss caused to our homes. Life insurance is one of the important insurances which give security against premature death and also for old age sufferings. By having the security it will be easy to work without having tensions and gives peace of mind. Property insurance is also another type which gives security to our important assets. You can get the furniture, vehicles, and other expensive assets insured as any unexpected damage or theft can reach these assets. The situations are not under our control; to overcome these situations insurance is the best option which reduces losses.
Health is wealth. Health comes in first place, it should be insured. Health insurance covers any unexpected and expensive medical services which may be needed when you suffer illness or injury. You can also get income protection insurance which protects your business. With this type of insurance the expenses of office rent, equipment leasing costs and bills can be covered. In business get the key staff member covered. The loss of important staff member may effect the profitability, management of the business. It is very difficult to recover this loss. By covering the key person you can fund the loss of valuable employee with cash for revenue or capital purpose.
You can also get the liability insurance which can be claimed when the insured is asked to pay someone else for the harm caused at his home or with any of his assets or by thrashing someone accidentally with the vehicle. These liability policies cover the insured only when the harm is caused due to negligence and unintentional. If the act is willful or intentional the insured will not get covered. To recover from unexpected dangers and uncertainties of life getting insured is the best defensive measure you can take.
We accept your comments on this article on Insurance and Its Importance