Meaning of Insurance:
Insurance means a promise of compensation for any potential future losses. It facilitates financial protection by reimbursing losses during crisis. There are many insurance companies offering a wide range of insurance options to choose from. Some of the popular insurance policies are life insurance, health insurance, automobile insurance and home insurance.
Several insurances provide comprehensive coverage with affordable premiums. Premiums are the amount of money that is charged by the insurance companies from the insurer for a particular insurance policy. These are periodical payment and insurers have diverse premium options. The periodical insurance premiums are calculated according to the total insurance amount.
Mainly, insurance is used as an effective tool of risk management as quantified risks of different volumes can be insured.
Types of Insurance:
Major types of insurances are as mentioned below:
- Life insurance: Life insurance is a financial security for the family after the insurer passes away. It helps the family overcome the loss of income resulting from the death of the insurer. The person who has been named as the beneficiary receives the amount after the insurer passes away.
- Automobile insurance: Automobile insurance is aimed at the owner of a vehicle and covers damages and legal expenditures resulting in financial losses such as accidents.
- Health insurance: Health insurance takes care of the cost of medical treatment and other expenditures. Premium is the amount of money paid by the policy-holder or their sponsor (who is basically an employer to the health plan to buy health coverage. The dental insurance covers the dental costs of the insurer.
- Credit insurance: Credit insurance is a kind of a life insurance and is helpful in times of financial crisis. Borrowers often fail to repay debts, loans and mortgages due to certain unavoidable circumstances. These can be paid off with credit insurance.
- Property insurance: Property protection insurance provide protection from risks associated to theft, fire, floods, and so on. Property insurance will also provide financial protection to the homeowner in case somebody who has been injured on the property decides to sue.This type of insurance can be further classified into specialized forms as follows:
- Fire insurance
- Earthquake insurance
- Flood insurance
- Home insurance
- Boiler insurance
At present insurance market is much vibrant than before and this has an impact on the rates of different insurance premiums.
Types of Insurance Companies:
Insurance companies can be categorized into two main divisions which are as follows:
- General Insurance Companies: These companies provide all types of insurance such as automobile, homeowner’s policies and many more. However, they do not cover life insurance.
- Life Insurance Companies: These companies deal with life insurance, pension products and annuities.
Insurance companies are usually identified as stock companies. Insurance is a device for indentifying an individual against loss and in the recent past due to natural calamities. Few insurance companies have suffered financial setback. Premiums of few insurance policies have suddenly gone uphill as plenty of insurance providers have become insolvent. While selecting an insurance company, financial strength of the company must be considered, as viability of the insurance provider is extremely crucial.
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