Docstoc

Importance Of Insurance

Document Sample
Importance Of Insurance Powered By Docstoc
					Importance Of Insurance
Insurance is a defensive measure used against future conditional losses
to hedge the possible risks of the future. It is a legal contract that
protects a person from contingent risk of losses through financial means
and provides a means for individuals and societies to handle some of the
risks faced in daily life.
These contracts of insurance are called policies and are provided by
insurance companies. The Insurance companies charge a regular amount from
the customers, which is paid back, either in part, or entirety, to the
customers in case of a definite loss. This regular amount charged from
customers is called Insurance Premium.
REASONS OF INSURANCE:

Sometimes in life it is not possible to avoid the losses. For example
People may become ill. They may die of illness or accidents or their
homes or other property may undergo damage or theft. So in all these
cases and they have to face the loss of income or savings. So insurance
is a manner of financially insuring that if such an incident comes about
then the loss does not affect the present well being of the person.
DOCTRINES OF INSURANCE:

1 There should be a certain definite loss taken place at a known time, in
a known place and from a known cause. Therefore the time, place and the
cause of loss should be clear enough.

2 The incident that represent the cause of the claim should be accidental
or beyond the control of the beneficiary.

3 The size of the loss must be significant from the perspective of the
insured. Insurance premiums should cover both the estimated cost of
losses, plus the cost of policy, regulating the losses, and providing the
principal required to logically assure that the insurer would be able to
reimburse claims.

4 The amount of premium should be affordable.

5 The possibility of loss and the cost of compensation should be
calculable or estimable
TYPES OF INSURANCE:
Below are some kinds of insurances.

LIFE INSURANCE:
Life insurance policy insures the life of the insured. The insurance
company is legally bound to provide a monetary benefit to a decedent's
family or the beneficiary after the death of the policyholder. The
proceeds are paid to the beneficiary either in a lump sum amount or an
annuity
MEDICAL INSURANCE:

Medical insurance is also called medclaim. Under this policy the
insurance policy pays the amount to the insured for his health purpose.
This amount covers the cost of medical treatment.
DISABILITY INSURANCE:
There are two types of disability insurance.One is simple disabilit y
insurance and the other is total disability insurance. In case of simple
disability insurance,a financial support on monthly basis is provided by
the insurer to the policy holder if he is unable to work due to an injury
or an illness. But permanent disability insurance provides the
reimbursement if a person becomes permanently disabled.
GENERAL INSURANCE:

It includes automobiles insurance, business insurance, property insurance
etc.
Automobile insurance:

In UK this insurance is called motor insurance. It compensates the loss
or damage occurred to the vehicle. But in United States auto insurance
policy is essential to legally operate a vehicle on public roads.
Business insurance:

Business insurance protects the businesses against risks of losses and
damages and compensates in case of loss
Property insurance:

This type of insurance protects the property against the risks like fire,
theft etc. This category also includes fire insurance, flood insurance,
earthquake insurance etc
Fire Insurance:

It is an insurance covering the damage to the property caused by fire.
Flood Insurance:

This type of insurance pays the policy holder in case of any loss or
damage to the property due to flood. It protects the property against the
flooding.
Earthquake Insurance:

This insurance compensates any damage to the property caused by
earthquake.
IMPORTANCE OF INSURANCE:

Insurance plays an important role in sharing the risks of people in an
affordable form.It helps the people to quickly recover from damages and
losses.
Sadaf

				
DOCUMENT INFO