Insurance is a defensive measure used against future conditional losses to hedge the possible risks of the future. It is a legal contract that protects a person from contingent risk of losses through financial means and provides a means for individuals and societies to handle some of the risks faced in daily life.
These contracts of insurance are called policies and are provided by insurance companies. The Insurance companies charge a regular amount from the customers, which is paid back, either in part, or entirety, to the customers in case of a definite loss. This regular amount charged from customers is called Insurance Premium.
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REASONS OF INSURANCE:
Sometimes in life it is not possible to avoid the losses. For example People may become ill. They may die of illness or accidents or their homes or other property may undergo damage or theft. So in all these cases and they have to face the loss of income or savings. So insurance is a manner of financially insuring that if such an incident comes about then the loss does not affect the present well being of the person.
DOCTRINES OF INSURANCE:
1 There should be a certain definite loss taken place at a known time, in a known place and from a known cause. Therefore the time, place and the cause of loss should be clear enough.
2 The incident that represent the cause of the claim should be accidental or beyond the control of the beneficiary.
3 The size of the loss must be significant from the perspective of the insured. Insurance premiums should cover both the estimated cost of losses, plus the cost of policy, regulating the losses, and providing the principal required to logically assure that the insurer would be able to reimburse claims.
4 The amount of premium should be affordable.
5 The possibility of loss and the cost of compensation should be calculable or estimable
TYPES OF INSURANCE:
Below are some kinds of insurances.
LIFE INSURANCE:
Life insurance policy insures the life of the insured. The insurance company is legally bound to provide a monetary benefit to a decedent's family or the beneficiary after the death of the policyholder. The proceeds are paid to the beneficiary either in a lump sum amount or an annuity
MEDICAL INSURANCE:
Medical insurance is also called medclaim. Under this policy the insurance policy pays the amount to the insured for his health purpose. This amount covers the cost of medical treatment.
DISABILITY INSURANCE:
There are two types of disability insurance.One is simple disability insurance and the other is total disability insurance. In case of simple disability insurance,a financial support on monthly basis is provided by the insurer to the policy holder if he is unable to work due to an injury or an illness. But permanent disability insurance provides the reimbursement if a person becomes permanently disabled.
GENERAL INSURANCE:
It includes automobiles insurance, business insurance, property insurance etc.
Automobile insurance:
In UK this insurance is called motor insurance. It compensates the loss or damage occurred to the vehicle. But in United States auto insurance policy is essential to legally operate a vehicle on public roads.
Business insurance:
Business insurance protects the businesses against risks of losses and damages and compensates in case of loss
Property insurance:
This type of insurance protects the property against the risks like fire, theft etc. This category also includes fire insurance, flood insurance, earthquake insurance etc
Fire Insurance:
It is an insurance covering the damage to the property caused by fire.
Flood Insurance:
This type of insurance pays the policy holder in case of any loss or damage to the property due to flood. It protects the property against the flooding.
Earthquake Insurance:
This insurance compensates any damage to the property caused by earthquake.
IMPORTANCE OF INSURANCE:
Insurance plays an important role in sharing the risks of people in an affordable form.It helps the people to quickly recover from damages and losses.
Importance Of Insurance
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