The definition of insurance is a procedure or contract between the insurer and insured which secures compensation for loss, damage or injury of an article or person on payment of an agreed premium. Insurance policies have become part of our lives to such a degree it would be difficult to imagine living in society without them. The amount the insured pays, or insurance premium is based on the probability of the event happening and if it doesn't, the risk taker or insurer, keeps the premium paid.
Other types of insurance have a long term saving element where the insured is guaranteed a sum if they die but if they are alive at when the policy becomes due then the invested amount less any charges the insurer makes will become payable which obviously benefits both parties. However, some insurance policies involve investment as well where the insurer invests the premium money and at the end of the policy, will pay any profit (less any charges) to the insured, an arrangement where both parties gain.
Whilst many insurance policies are voluntary, there are occasions where they are mandatory and these instances an activity or event may be stopped if it is found that a person is uninsured. life insurance, health insurance, property insurance, travel insurance, pet insurance, cycle insurance too name a few.
There are also specialist insurance policies for floods, skiing, long-term care, flight, kidnap, extended warranty and many others. To put it simply anyone can take out insurance to cover almost any eventuality.
The agreement which covers the insured person issued by the insurer company is called the insurance policy. The policy is legally binding on both parties provide the requirements for acceptance have been met and means that should the insured incident actually happen then the amount agreed as compensation will be paid out.
A quote for the insurance company will specify the main points of what the insurance is for which the insured must agree with and be prepared to pay the premium for on a regular basis. Providing the insured agrees with the conditions, the agreement is signed and returned to the insurer for checking and once this has been done the policy as issued.
The policy stays in force for a set period of time or if the event insured against happens then the insurance company can be approached to honor their side of the agreement with a pay out of the compensation agreed. Although some people ring the insurance company directly, others will use a broker who will try to find a similar policy for less money.
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