Insurance provides protection against financial losses from uncertain events like accidents, death, or property damage by pooling savings from the public. It eliminates worries over losses by reimbursing for specified risks covered by an insurance policy in exchange for regular premium payments. Insurance is a contractual relationship between an insurer, who agrees to reimburse losses, and an insured, or policyholder, who pays premiums. Its purpose is to protect against risks of loss through mutual cooperation.
Insurance provides protection against financial losses from uncertain events like accidents, death, or property damage by pooling savings from the public. It eliminates worries over losses by reimbursing for specified risks covered by an insurance policy in exchange for regular premium payments. Insurance is a contractual relationship between an insurer, who agrees to reimburse losses, and an insured, or policyholder, who pays premiums. Its purpose is to protect against risks of loss through mutual cooperation.
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Insurance provides protection against financial losses from uncertain events like accidents, death, or property damage by pooling savings from the public. It eliminates worries over losses by reimbursing for specified risks covered by an insurance policy in exchange for regular premium payments. Insurance is a contractual relationship between an insurer, who agrees to reimburse losses, and an insured, or policyholder, who pays premiums. Its purpose is to protect against risks of loss through mutual cooperation.
Copyright:
Attribution Non-Commercial (BY-NC)
Available Formats
Download as DOC, PDF, TXT or read online from Scribd
Wherever there is uncertainty there is risk. We cannot
have control over uncertainties which involves financial losses. The risk may be in certain events like death, retirement, or uncertain events like theft, fire, accident etc and insurance is the method of coping with risk. Insurance is a financial service for collecting the savings of the public and providing them with risk coverage. The main function of insurance is to provide protection against the possible chances of generating losses. It eliminates worries and miseries of losses by destruction of property and death. Insurance is a contractual relationship that exists when one party (the insurer) for the consideration (premium) agrees to reimburse another party (insured or the third party on behalf of the insured) for the loss to a specified subject (risk) caused by designated contingencies (hazards or perils). In other words, Insurance means protection against risk of loss. It is a sort of Provision which a wise man makes against unfortunate happening such as death, fire etc. It is a protective measure in the sense that it gives compensation to the sufferer of loss on the unfortunate happening. The scheme of the Insurance is based upon the Principle of ‘Mutual co-operation’. Insurance may be defined more formally as “A system under which the insurer, for a consideration usually agreed upon in advance, promises to reimburse the insured or to render services to the insured in the event that certain accidental occurrences results in losses during a given period.” “Insurance is the subject matter of solicitation.” Insurance is a specialized contract which has two parties the insurer and the insured. The insurer is the insurance company who will provide the cover to the insured against any financial losses. The insured may be an individual person or a group of people like an employer, members of a society, etc. Issuer issues a policy/contract between the insurer and the insured, which states the risks covered, the exclusions, if any, and the benefits reimbursed on the happening of an event like death, illness, theft, fire etc. and all the terms and conditions about the contract. The policy is paid through a fee called as a premium, which is a set amount that must be paid by the insured on annual basis. Only on the happening of a certain event like death, disability, fire, loss etc; for which the insured is covered, the benefit amount stated in the policy contract can be claimed by the insured.
Need for Insurance
When we hear the word insurance, the word sounds boring
and dull in ones mind. It is realized that insurance is not a fun topic to discuss or think about, yet it is important and serves to protect our financial futur