Insurance Policy

Insurance is the process of spreading the risk of personal or property financial loss among the maximum number of people subject to the same kind of risk. It protects the individual from the outcome of financial loss due to death, accidents, sicknesses, damage to property, and injury caused to others. The principle of insurance is based on the laws of probability backed by substantial numbers.

The individual who intends to cover himself against risk is the insured or policyholder. He pays a premium (cost of insurance) to the insurance company, the insurer, which issues an �Insurance policy� which is an assurance by the insurer to the insured for any losses covered by the policy.

The insurance policy is a financial contract between the insurer and the policyholder where the details of the policy is mentioned including the benefits and the premium that policyholder has to pay. Insurance Policy usually made for specific purpose that covered a group of specific incidents. A number of predictable risks with loss potential can be quantified and in most cases has an insurance solution to cover it.
The Insurance Policy usually cover uncertain events whose occurrence can’t be predictable. It is usually made by the Insurer or the Insurance Company that makes all the details in the policy.

The Insurance Policy usually consists of these parts :
Declaration Statement : It tells who is insurer, who is insured and his address, details of risks and property covered, Premium amount , the policy period.
Definitions : It defines the important terms used in the policy.
Insuring agreement : It states about the risks assumed and the nature of coverage.
Exclusions : It states about the losses that arise from specific causes that are not covered by the policy.
Conditions : It states about rules of conduct , duties and obligations required for the insurance coverage.
Policy Rider : It states about the terms of policy amendment that becomes a part of the policy.

Make sure to read the insurance policy document very carefully and ask as much questions to the insurer as possible so that when you make a claim that claim is denied. Insurance Policies are written in legal document manner so understanding it fully without ambiguities is a bit difficult so ask for clarifications to the insurance company on policy coverage.

Some of the different types of insurance are:
Life insurance
In the event of death of the policyholder of a life insurance cover, a cash benefit not exceeding the mutually agreed (between insurer and insured) amount is paid to a nominee of the deceased or any designated beneficiary. The payment may also provide for burial, funeral and other last rite expenses.
There are various types of Life insurance available :
Term Life Insurance
Whole Life Insurance
Universal Life Insurance

Health Insurance
For policy holders who want to avail of quicker and better health care, health insurance policies are the answer as they cover the cost of private medical treatments which are expensive but highly effective and markedly superior.

Property Insurance
Next to life and health, it is the property owned by an individual that he considers his most precious material possession. Property insurance covers the individual against risks to property from fire, theft or weather damage and includes different forms of insurance like fire insurance, flood insurance, earthquake insurance, home insurance, etc.

Casualty Insurance
In the event of accidents that are not necessarily tied to any specific property the individual is covered by casualty insurance to the extent of the coverage mutually agreed upon (insurer and insured).
Disability Insurance
When a person is permanently disabled and can no longer work in their profession he will be covered by total permanent disability insurance to the extent of the coverage mutually agreed upon (insurer and insured).
There are many other form of insurance and some of the main types of insurance are:
Credit Insurance
Travel Insurance
Automobile Insurance
Financial Loss Insurance
Aviation Insurance
Equipment Breakdown Insurance
Directors and Officers Insurance
Income Protection Insurance
Liability Insurance
Purchase Insurance
Locked Funds Insurance
Marine Insurance
Nuclear Incident Insurance
Environmental Liability Insurance
Pet Insurance
Political Risk Insurance
Professional Indemnity Insurance
Title Insurance

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Last Updated on : 12th June 2013

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