Learn the insurance basics
What Does Insurance Mean
The concept of Insurance refers to passing of any potential or prospective risk or loss by one agent to another. The agent perceiving the risk or loss and deciding to take protection against it is the Insured and the agent taking upon the risk is the Insurer. The price that the insurer charges from the insured for providing protection against the risk is the Premium. Hedging against the unforeseen losses is the primary goal of going for risk or Insurance Coverage. The losses financial or otherwise can arise from accidents, death, burglary, loss of employment, fires and natural calamities. Insurance covers both life and assets.
The insured gets compensated by the insurer in the event of any loss, damage or injury actually suffered by the former. The agreement or contract that binds the insurer to pay such compensation and spells out details of risk coverage as well as terms and conditions for such payment is the Insurance Policy. Insurance policy binds both the insured and the insurer legally.
How Does Insurance Help
An insurance policy protects the insured from any potential financial loss. For this the insured pays a premium to the insurer who in turn takes up the commitment of financial compensation in case of a fatal accident or illness or other such contingencies or health emergencies in the life of the insured. Two kinds of losses are generally covered by insurance- life and assets like health, home, vehicles or any kind of property. A life insurance is one of the most important types of insurances as it covers losses arising from loss of human life. A family may be shattered by the death or debility of a member due to some fatal accident. The devastation is of a more tragic proportion when an accident snatches away the breadwinner of a family especially where he or she is the lone earner in the family. Apart from the emotional trauma consequent upon such mishap, the survival of the family becomes difficult due to sudden pecuniary problems. A life insurance is just the right solution for such eventualities in life by saving the family from financial distress. Such insurance also helps a family when the earning member due to getting incapacitated by some accident loses employment or cannot work for a long period of time. The premium to be charged by the insurer for compensating the family depends on the amount of benefits payable by them and age, occupation and health of the insured. A serious illness may cause a person to incur huge medical expenses leaving him or her in acute financial crisis. The problem is compounded when such illness leads to debility and the affected person does no longer remain capable of doing normal work for a livelihood. Maintaining the family and continuing the medical treatment under this situation become financially difficult. A health care insurance is the answer to this problem especially where the employer does not provide health insurance. This insurance covers any illness. Asset insurance includes home, auto and travel insurance. It compensates for loss or damage to these assets and any loss on travel