There is no quick short term for defining insurance. Insurance is a self-protective measure utilized to circumvent possible risks of the future. It is a legal contract taken out between an individual and an insurance company. This contract would protect an individual from possible risks or losses through financial means, and provides a way for people and communities to better handle some of daily life’s risks. The above mentioned contacts of insurance are referred to as insurance policies, and are provided by insurance companies. The insurance companies would charge a habitual agreed amount from the insured, which is paid back to the insured either fully or in part in the case of a legitimate claim against the insurance company with regards to a condition set forth in the insurance policy. This regular amount charged by the insurance company is commonly referred to as an insurance premium.
At times in life, it is simply impossible to avoid loss. For instance, individuals may become sick. They may even die of illnesses of accidents, or their houses or other property might suffer damage or theft. In all these examples, the individuals involved would incur loss or damage. Insurance is a way in which ordinary individuals are able to fully financially insure that should such circumstances present itself, the loss would then not affect the quality of life or well being of the insured.
There are various insurance products available on the market geared at meeting the needs of various types of clients. Life insurance policies would insure the life of the insured. Insurance companies would pay out an agreed amount of money to the insured’s beneficiaries in the event of his death. The payout is to be paid to the beneficiaries either in a lump sum, or in an annuity. A narrow description of medical insurance would be that the insurance policy pays the amount to the individual that is insured for his health purposes. The amount would cover the cost of medical treatment. There are basically two kinds of disability insurance. The first one being straight forward disability insurance and the other being total disability insurance. In the event of simple disability, financial support would be provided on a monthly basis by the insurance company to the insured should he be unable to work anymore due to illness or an injury. Total disability insurance would payout if a person becomes permanently disabled. General insurance entails vehicle insurance, home, property and business insurance.
There are certain factors that influence the payout of insurance claims. These stipulate that there should be a definite loss that has taken place. The incident that is the cause of the claim should be incidental and have been completely beyond the control of the insured. The likelihood of loss and the expenditure of recompense should be assessable.
It is clear to see then that the benefits of being adequately insured far outweigh the inconvenience of having to pay insurance premiums each month. It is each responsible individual’s duty to ensure that he or she is adequately insured and covered against life’s unfortunate events.
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