There are so many kind of business that offer and use insurance. People also need insurance to protect themself from the risk of uncertainty in the future. Nothing can guarantee our future. That’s why insurance is needed to guarantee the risk of uncertainty. Here are introduction, terms, and definition of insurance and everything related to insurance.
1. Insurance Definition
- A practice by which a company provides a guarantee of compensation for specified loss, damage, illness, or death in return for payment
- Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment
- Insurance is a means of guaranteeing you financial protection against various risks. In exchange for a relatively small payment, you gain protection against a potentially large loss.
Some examples of a large loss would include your house burning down or spending weeks in the hospital recovering from an automobile accident.
2. What is an Insurance Policy?
- Premiums can be paid monthly, quarterly, semi-annually, or annually.
- The premium is based on the type and amount of coverage you choose and varies from one insurance company to another.
- Marital status
- Whether you live in an urban or rural area
- Your credit history
- Special type of insurance is going to consider other factors.
This is the maximum amount the insurance company will pay if you file a claim.
It is important that you select an appropriate coverage limit because any amount over your coverage limit becomes your responsibility.
An example of this would be if you were insured with a coverage limit of $50,000 and a claim against you was for $60,000. You would be responsible for the additional $10,000.
- Deductible is the amount of expenses that must be paid out of pocket before an insurer will pay any expenses or before the insurance company will cover the remaining costs.
- An example of this would be if you were in an auto accident and it caused $1000 worth of damage and your deductible was $500.00. After you paid the initial $500.00, the insurance company would then pay the remainder of the bill.
7. How Many Type of Insurance?