Life
comes at you fast. Insurance is a cornerstone of your financial
security and the peace of mind. The following points should be
bear in mind when going for insurance: -
· Insurance
provides compensation for the actual value of property. It cannot
cover the loss of sentimental value.
· Losses
must not be deliberate and not inevitable.Clearly, you could not
buy fire insurance for a house, which was already burning or life
insurance for someone who is on deathbed.
· There
must be a large number of similar risks so that the likelihood of
a claim can be spread among other policyholders. It must be
possible for insurers to calculate the chance of loss so that a
premium can be set which matches the risk.
· There
are some risks, which have financial implications so vast that
they can be dealt with only by the state. These risks may arise
due to war or nuclear bomb and are normally not insurable. But
things are changing now.
Insurance
takes the risk away from people's lives and businesses. It brings
peace of mind to the policyholder. In return for paying premiums
the policyholder knows that, if the unexpected happens, financial
compensation will be available from the fund of premiums.
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Facts & Figures
I
Insurance
is a legal contract that protects people from the financial costs
that result from loss of life, loss of health, car loss, loss due
to catostrophe or property damage etc....
It helps to manage the risks of everyday life, to recover from the
unexpected and to prepare for the future. Basically, insurance
enables to cover a loss or accident due to misfortune. The
payments come from a fund of money contributed by all the holders
of individual insurance policies. In other words, individual risks
are pooled and shared, with each policyholder making a
contribution to the common fund. The contribution is known as the
premium. Premiums are paid to insurers. Premium varies between
individual policyholder depending on the risk involved. In motor
insurance a young person with a high powered car or a driver with
a long history of accidents will pay a higher premium than a
mature and experienced driver who has been accident free.
Similarly someone who is young, fit and in a risk-free job will
find it easier to buy life insurance, and will pay lower premiums
than someone who has a heart condition or is in a risky
occupation. Insurers are professional risk takers. They know the
probability of different types of risk happening. Clearly, only a
proportion of policyholders will require compensation from the
fund at any one time.