What is insurance?

Rija24 · September 24, 2020, 1:28pm

What is insurance?

Insurance is a kind of legal contract or agreement between two parties, among which one is the insurer and the other is the insured. The responsibility that is taken by the insurer is to compensate any loss or damage to the property or to provide financial help to a family of a deceased person. As the loss can be sudden and you are not always prepared to fill the gaps that occur due to the loss, therefore it provides you a protection in case you need assistance in such a situation. So basically insurance is a backup plan for your future. There are 3 basic components that you will need to come across while getting any sort of insurance:

1). The Premium

Premium is the sum of the money that an insurer and insured agrees upon. It is included in the policy that you are adopting for your insurance. The premium may differ on the basis of the policy that you are choosing or the organization. For example, if you are taking a homeowners insurance and if you live near a place where there is a lot of occurrence of flood then you need to pay an extra amount as the homeowners policy do not cover the damages caused by the natural disasters. Therefore, you need to assign the monthly premiums according to your requirements.

2). The limit of the policy

There are certain limits that are set by the insurer. It’s not possible that you cause a damage everyday and expect the insurer to pay your expenses on daily basis. Rather, they agree on a certain amount. This amount may vary according to the policy adopted by you. For example in a renter’s insurance, most of the companies offer a limit of $1500 to $2500. If your damages exceed this range then you have to recover them by your own selves.

3). The Deductibles

This is a part of policy where the policy holders pay some money out of the pocket before the insurance company actually starts to pay as a part of the insurance policy. If the amount of the deductible is high then the premium will be low.

What are the different types of insurance?

Insurance is offered for different things and is divided into different types.

1). The Health insurance

This is an insurance that pays all the medical expenses related to surgical or other expenses such as the dental expenses. In this insurance, the policy-holder can claim the medical assistance every time you feel sick or goes through any injury and the insurer has to pay for it. The emergency situations often occur suddenly and the most unexpected time when you are not even prepared to deal with them. So it is recommended to everyone to have this insurance for such situations.

2). The Car insurance:

A car insurance provides you expenses for an accident, whether if it is due to your own mistake or not. It includes all sorts of vehicles such as your car, motorcycle, buses, and trucks and provides assistance for both, the damage to the car or any physical damage. It may also recover the expenses if your car gets stolen.

3). Life insurance:

Life insurance is the most common type of insurance and most people adopt this policy for a safe future of their families. This insurance offers a protection to the beneficiary (the person who holds the name of the policy) after the death of the insurer. This insurance is like a safety plan for the family of the deceased as it offers a life time financial support and the other expenses also such as the ■■■■■■■ costs.

4). Homeowners insurance:

The homeowners insurance offers a protection for your house. It is the best plan for your house as it will ensure to pay the expenses in case of any type of damage to your house due to any reason such as your property gets broken or stolen or there is damage in the building of the house. One thing that homeowners insurance doesn’t offer is the protection against natural disasters, so you need to make sure to adopt a policy if you want to include expenses for it too.

5). Liability insurance:

The liability insurance is an insurance policy that provides protection for the people’s property that you accidently damage or the injuries that you cause them. It covers all the costs that are legal or the pay outs if the insured party is found guilty in any matter. It doesn’t cover any damages caused intentionally or if there is any kind of criminal activity involved in it.

6). Renters insurance:

Renters insurance is good for the people who usually spend their lives living in rent houses. As a renter, you face some issues and you need a backup protection against it. So, renters insurance ensures to provide the expenses in case of any damage to the house or the personal property. Some insurances also offer the medical assistance if you get injured within the premises of the house. So it is always good to keep such insurance with you if you are living in a house of rent.

7). Travels insurance:

The travels insurance offer assistance to the people who are the biggest travelers. It covers a range of things such as loss of luggage or personal property during a trip, the cancelation of the flights or medical assistance in case of any accident during the trip. It also covers the expenses if you have rented a car and something happens to that car.

8). Pet insurance:

Pet insurance is almost similar to the medical insurance adopted by the human beings. It saves the cost that you have to pay by visiting to the vets frequently. A pet insurance usually offers two kinds, one which covers the short visits to the vets or the other one include the whole procedure of surgeries in case something severe happens to the pet.

What are the benefits of insurance?

Insurance provides benefit to us in many ways:

The foremost benefit is the provision of loses. You always have a backup plan for the losses so you do not need to be worried all the time.
It helps you in the emergency situation when you do not have money to pay. In that case your insurance company may definitely help you.
It provides a legal contract between the parties and therefore, we can easily rely upon the insurance company as it is totally a legal process.
It gives you a peace of mind and keeps you protected from the financial stress. This provides you a kind of financial security.
The insurance is like a financial legacy that you leave behind before you die. This keeps your family protected after your death.

A list of countries ranking for the insurance:

Rank	Country	The Life premiums	The Nonlife premiums (2)
1	United States	$628,522	$1,831,601
2	PR China	329,432	287,967
3	Japan	341,328	118,019
4	United Kingdom	264,221	102,022
5	France	167,588	94,694
6	Germany	101,550	142,301
7	South Korea	94,483	80,037
8	Italy	124,133	43,705
9	Canada	53,317	79,840
10	Taiwan	97,423	20,40

References

1). 8 Types of Insurance | 8 Reasons You Need Each Kind of Insurance - OppU
2). World Insurance Marketplace | III

What is insurance?