Insurance is an arrangement of full or partial financial compensation for specified loss, damage, treatment, illness, injury or death caused by events beyond the control of the insured individual or party.
It is a financial contract between an individual and an insurance company. For a certain amount (called premium), an insurance company will take the responsibility of compensating our financial losses. This payment on agreement ensures the policy holder that the Insurance Company will cover some portion of a loss or damage.
How Insurance Works
Insurance work as a safeguard for you and your property against the risk of loss, damage, theft, illness, and death. With insurance, you can choose what you want to be protected against. You can buy an insurance policy in many aspects of your life such as health, home, car, business and child future planning. Insurance Policy work as a contract to protect you against specific risks under agreed terms.
When you buy an insurance policy, you pay a specified amount to the Insurer, known as Premiums. Premiums are usually paid in monthly installments, but you may also pay it all at once. If something happens that is covered by the policy, you can claim your insurance. The Insurer checks all the aspects covered under the insurance policy then the insurer will payout for the loss.
Listed below some common Insurance Terms:-
Annuity: It is a contract by an Insurer (Insurance Company) that an amount to be paid to the policyholder or his spouse. In a case of death of both during the policy period, the amount will be offered to the next of kin.
Beneficiary: A beneficiary is a person who will receive any insurance benefits, in case the policyholder passed away during the policy period.
Coverage: It is the range of protection provided under an insurance policy. Insurance coverage such as life insurance, health insurance, vehicle insurance and much more covered by the Insurance Company.
Deductible: Deductible is an amount that we have to pay from our own pocket before the Insurance Company will begin paying towards any covered expenses.
Insurer: Insurer is the company that provides the Insurance Cover. The company in an insurance contract undertaking to pay compensation.
Insured: The person or policy holder who will be compensated for loss or damage by an insurer under the terms of Insurance Policy.
Policy: It is a written contract-document between Insurance company and policy holder, which define the terms & conditions of a Policy.
Premium: An individual or institution pay a specific amount of money to the Insurer for an insurance policy, it is called Premium.