What is Insurance?
Insurance is a contract that provides protection to an individual or entity against a loss. This protection guarantees reimbursement from an insurance company.
Protecting oneself is not an uncommon experience but becomes more sacred when the law is involved. There is a legal agreement that covers two parties – that is, the insurance company known as the insurer and the individual (the insured).
The insured pays the insurance company, regular amounts, and the insurer agrees to make good of the losses of the insured on the happening of the insured contingency.
Importance of Insurance
In situations where a loss occurs, for instance, the death of the insured who has paid a premium for life insurance, the insurance company ensures that it compensates the beneficiaries as at when due.
Imagine someone’s life toil gone in a flash and regained by a cover got from insurance. Now imagine one who toils with insurance and can not make it through a fire occurrence that has claimed his/her properties.
Types of Insurance
There are lots of different types of insurance depending on what exactly you wish to protect. Below are a few of them:
- Life Insurance
- Health Insurance
- Property Insurance
- Renters’ Insurance
- Auto/Car Insurance
- Engineering Insurance
Insurance Terms You Should Get Familiar with
- Insurance Policy: Insurance Policy is a contract between an insurer and the insured which determines the claims which the insurer is required to pay by law. More
- Insurance Premium: Insurance Premium is the amount of money an individual/entity pays for an insurance policy.
- Insurance Broker: An Insurance Broker is an insurance risk management specialist that provides advice in the interest of their clients. More
- Insurance Agent: An Insurance Agent is an individual or organization that solicits and negotiates contracts on behalf of the insurer. More
- Insurance Underwriter: An Insurance Underwriter is a person who evaluates and analyzes risks involved in insuring people and assets.
Frequently Asked Questions
What is an insurance company?
An insurance company is a company that provides and sells insurance. Insurance companies only pay out a percentage of the replacement cost.
What is risk in insurance?
Risk is the chance that something harmful or unexpected could happen. This might be loss, theft, or damage of valuables.
What is a proposal form in insurance?
A proposal form is a form completed by the policyholder when applying for insurance.
What is an insurance claim?
An insurance claim is a formal request by a policyholder to an insurance company for coverage or compensation for a covered loss or policy event.