Insurance
We all have heard a lot about insurance. As a general notion, insurance is something that keeps you or those things that you have sustained heavy financial loss. But there is much more to it than what you think is capable of taking damage. We will look into this in detail.
What is Insurance?
Insurance is the means by which the risk of loss can be placed on the other side (insurer or insurer) by paying certain fees (called premiums). The party whose risk is placed on the insurance tax is called 'insured'. The insurer is usually a company that is willing to share the loss or loss of the insured and is able to do so.
Why do we need insurance?
This is the question on everyone's mind. Do I really need protection? Life is full of surprises; Some good, some bad. You need to be prepared for the worst that can come to you. It helps you to have a sense of security and peace. There can be many reasons where you might need help, such as a serious illness, natural disaster, unexpected death of loved ones, etc. Being adequately insured in such situations helps your financial position significantly. Thus, one should opt for a right type of security as per their needs.
Types of Insurance.
1. Life Insurance
Life insurance is one of the traditional forms of life cover insurance, designed to protect you and your loved ones from sudden calamity or calamity. It was initially created to protect the income of the families. But since then, it has evolved from being a security measure to an alternative to wealth protection or tax planning. The requirement of life cover is calculated on various factors like number of dependents on an individual, current savings, financial goals etc.
2. General Insurance.
Any type of non-life coverage falls under this category. There are many different types of insurance that cover almost every aspect of your life according to your needs.
- Health insurance.
- F. Commercial Insurance.
- Marine Insurance.
- Home insurance.
- Travel insurance
- Motor insurance.
How does insurance work?
A large number of people are willing to be insured against any particular loss or damage, and for this they are willing to pay the desired premium. This group of people can be called insurance pools. Now, the company is aware that the number of interested people is very large and the possibility of all requiring insurance cover at the same time is almost impossible. Thus, it allows companies to collect money at regular intervals and also settles claims when such a situation arises. The most common example of this is vehicle insurance. We all have a vehicle insurance, but how many of us have claimed it? Thus, you pay for the possibility of damage and get insured and you will be paid if the given event occurs.
So when you buy an insurance policy, you pay a regular amount to the company as a premium of the policy. If and when you decide to make a claim, the insurer will pay the damages covered by the policy. Companies use risk data to calculate the probability of an event - seeking insurance for you - is happening. More likely, the higher the premium of the policy. This process is called underwriting i.e. the process of evaluating the risk of being insured. The company only looks for the actual value of the unit which is insured as per the insurance contract between the parties. For example, you have insured 50 lakhs in your ancestral home, the company will only consider the real value of the house and will not entertain any emotional value that the house can hold for you, because it is impossible to put a price on emotions
Insurance policy is a special type of contract between the insurer and the insured. It is a contract of 'ultimate harmony'. This means that there is a very important understanding between the insurer and the insured person, which does not exist in regular contracts in general. This understanding involves the duty of full disclosure and does not make any false or deliberate claims. This duty of 'goodwill' is one of the reasons why a company can refuse to settle your claim if you have failed to give them all the necessary information. And this is a two-way road. The company has a 'good trust' obligation towards the customer and failing to act on it can cause a lot of trouble to the insurer
