Insurance For Beginners
INTRODUCTION
Welcome to the worldwide business guide. during this context, we'll be taking about the insurance industry, the overall definition of insurance, adequate and precise explanation of the definition, brief mention the history, the insurer, the insured, classes of insurance, the role of the underwriter within the industry and the way you as a private can benefit maximally once you get yourself, your car, your house, even that your business insure. We do hope you'll enjoy reading this text and therefore the essence of your go after the subject above are going to be met.
Insurance may be a financial organization classified as a non bank financial organization . they're important financial inter-mi diaries. it's believed to possess originated from the traditional practices of inhabitants of the valleys of rivers Tigris and Euphrates within the present day Iraqi in about 4.000BC. History has it that in 1800BC, the Babylonians code of Hammurabi contained provisions which had elements of insurance within the laws that govern their commerce. But today what we've within the industry, both locally and internationally had moved from just an agreement between two persons into a really big industry across the world .
Going by definition, we learn that insurance means a situation whereby someone protects his or herself against risk and reduce effects of uncertainties also as distribute loss. Other explanation to the present owe it to things whereby a particular amount of cash when collected from someone by an insurance firm agrees to pay a compensation or render services thereto person if and whenever that person suffers the type of loss laid out in the insurance agreement; and from the reason , this is often where an insurance firm comes into play since they're the folks that will enter agreement with the person taking any policy against any of his belongings. This industry has widely been believed as a way whereby people reduce the danger of unforeseen circumstances. As financial intermediaries, they act as middlemen between the excess units and deficit units of the economy thereby sustaining the overall growth of the economy.
One may ask, how do insurance companies generate the cash utilized in compensating their policy holder when suffering from any mishap? the solution to the present question, will lead us into talking about the varied means via which the insurance companies make their money and the way their policy holders are compensated. the reality is that, the cash they collect from their policy holder (i.e one that has an agreement with the insurance company) is invested within the sort of premiums (an extra sum of cash paid additionally to the traditional cost of something. by BBC. Eng. dict) which money is invested fettered , in stocks, mortgages (i.e house) and government securities (in our subsequent article, we'll explain more of this: Bonds, stocks, mortgages and govt. securities). They generate income for themselves and people who are in their service. They invest their policy holder's money in better business that has short term maximum returns on investment and from there meet their numerous needs when needed in claims and losses. These funds themselves are invested, that not only do they earn interest to be added to the funds, but they also benefit the govt , public authorities, and industries whose securities the investment are spread, due to the investment policy of the insurer (we will explain later), their reserve funds aren't left idle butt are used productively.
Another way via which the insurance companies compensate those that are in their service is that the contribution of the many is employed to compensate the few among them who were suffering from the misfortune insured against. therefore the loss of few people is share by many.
We hope that to the present extend, you want to have understood the above explanation about insurance firm . Now subsequent thing we'll be considering is that the functions of the insurance companies.
Amongst other functions, the most function of the insurance firm is risk bearing, the financial losses of people are judiciously distributed among many of us , for instance , within the case of fireside , the policy holder in insurance pays a premium into a standard pool, out of which those that suffer loss are compensated.
FUNCTIONS INCLUDE
1. The insurance industry encourages thrift (i.e money conservation) especially via it's life policies which give funds for family, welfare and adulthood provisions. It provides employment opportunity for people who have the interest of working with the industry.
The insurance companies works hand in hand with commerce. It owes it's existence to commerce (i.e business generally both industrial etc) and commerce reciprocally owes it's strong stability to insurance, this is often because it helped in various ways to reinforce the overall trend in business.
Before we proceed further to other functions, let's explain this two terms: the insurer; the insured because it will aid us in our understanding.
The insured: this is often the party affecting the insurance in other words, the individual or individuals which is taking the policy . this will be done either directly or indirectly or via an agent or broker.
The insurer: this is often the party providing the protection to hide by the policy. The insurer covers every other terms which incorporates the underwriter who may be a senior official of an insurance firm whose business lies in undertaking new business for the corporate .
The insurance firm features a contract which promises to pay compensation at a future date for a consideration referred to as premium (i.e. the cash paid by the insured to the insurer for the insurance cover provided within the policy). just like the way we've it in other contracts, i.e having it that contracts is predicated on the principles of offer and acceptance, consideration and capacity to contract. These contract, especially in insurance involves two parties i.e. the insurer and therefore the insured.
FUNCTIONS 2
Insurer, by reason of their principal function accumulate large funds which they hold as custodians and out of which claims and losses are met. Like in some countries, their insurers operate in many parts of the planet and earn vast sums in overseas market in terms of underwriting profit and investment income. This tells us that insurance forms a substantial a part of that country's invisible exports.
As we continue in our functions, let's examine the role of the insured and therefore the insurer.
ROLES OF THE INSURED:
In insurance, when the proposer becomes insured the party effecting an insurance is understood because the proposer throughout the negotiations, and until the contract is fully force. The insurer plays an important role in making this aforementioned contract to return into force, knowing that in insurance contract, a bit like we said before is base on the principle of offer and acceptance, consideration and capacity to contract, the contracts are always evidenced in writing which is formed from various forms to be filled and signed. If the insured doesn't accept the insurance offer and giving meticulous consideration thereto , there can hardly be capacity to contract i.e the insurance contract can never be. So, from this, we now learn that this two parties (i.e the insurer and therefore the insured) must be involved before an insurance contract can becomes a policy.
ROLES OF THE INSURER
Here we are considering the roles of the insurer as a subsidiary functions of insurance; this is often because generally sense (they have a really wide selection of function), the insurer is that the one providing the required insurance services, benefits to the insured, should any mishap, counting on the policy undertaken. The insurer helps also in loss-prevention within the following ways:
We know that the reach which loss prevention is seen, is usually on property. a private or a population can suffer great loss materially, if it weren't for the intervention of loss prevention scheme by insurance companies to their policy holders.
The insurer also assists in boasting business venture: Many large -scale enterprise today can make their business in straightness , having transferred all their risk to the insurance firm , in other words. The insurance companies help to take care of and to stabilize the atmosphere of this day large-scale business and organizations.
Many questions had risen by on onlookers, as on how the policy holder are often compesated, should there be any mishap on the policy covered. it's better for us to notice that the insurance firm , when a loss is incurred to the policy holder can bring his or her loss, but which will only compensate him and make him return to his normal financial position before the occurrence of the incidence and to not profit him from the misfortune. this is often generally because, no amount of monetary compensation pays adequately for the life and health of persons, so life and private accidents are considered benefit policies. So let there be no misconception on this fact when mishap occurs, where the general public is trying to find the victim to tend everything lost, and having a meager compensation given to him or her. So let's not distrust insurance companies during this area, knowing that it's only the restoration to the precise position before the loss that's provided.
Now, as we've gone thus far in understanding the functions of the insurance companies, the roles of the insured and therefore the insurer, we'll be proceeding forward to seem at the varied ways via which one can enjoy being insured altogether spheres of life. For those that against all odds, accept policy adequately, benefits, awaits them in areas like
1. pecuniary insurance
2. personal insurance
3. property insurance
4. insurance
We will take our time to offer you adequate explanation altogether the sub-sections of those areas which will be of help to you.
Welcome to the worldwide business guide. during this context, we'll be taking about the insurance industry, the overall definition of insurance, adequate and precise explanation of the definition, brief mention the history, the insurer, the insured, classes of insurance, the role of the underwriter within the industry and the way you as a private can benefit maximally once you get yourself, your car, your house, even that your business insure. We do hope you'll enjoy reading this text and therefore the essence of your go after the subject above are going to be met.
Insurance may be a financial organization classified as a non bank financial organization . they're important financial inter-mi diaries. it's believed to possess originated from the traditional practices of inhabitants of the valleys of rivers Tigris and Euphrates within the present day Iraqi in about 4.000BC. History has it that in 1800BC, the Babylonians code of Hammurabi contained provisions which had elements of insurance within the laws that govern their commerce. But today what we've within the industry, both locally and internationally had moved from just an agreement between two persons into a really big industry across the world .
Going by definition, we learn that insurance means a situation whereby someone protects his or herself against risk and reduce effects of uncertainties also as distribute loss. Other explanation to the present owe it to things whereby a particular amount of cash when collected from someone by an insurance firm agrees to pay a compensation or render services thereto person if and whenever that person suffers the type of loss laid out in the insurance agreement; and from the reason , this is often where an insurance firm comes into play since they're the folks that will enter agreement with the person taking any policy against any of his belongings. This industry has widely been believed as a way whereby people reduce the danger of unforeseen circumstances. As financial intermediaries, they act as middlemen between the excess units and deficit units of the economy thereby sustaining the overall growth of the economy.
One may ask, how do insurance companies generate the cash utilized in compensating their policy holder when suffering from any mishap? the solution to the present question, will lead us into talking about the varied means via which the insurance companies make their money and the way their policy holders are compensated. the reality is that, the cash they collect from their policy holder (i.e one that has an agreement with the insurance company) is invested within the sort of premiums (an extra sum of cash paid additionally to the traditional cost of something. by BBC. Eng. dict) which money is invested fettered , in stocks, mortgages (i.e house) and government securities (in our subsequent article, we'll explain more of this: Bonds, stocks, mortgages and govt. securities). They generate income for themselves and people who are in their service. They invest their policy holder's money in better business that has short term maximum returns on investment and from there meet their numerous needs when needed in claims and losses. These funds themselves are invested, that not only do they earn interest to be added to the funds, but they also benefit the govt , public authorities, and industries whose securities the investment are spread, due to the investment policy of the insurer (we will explain later), their reserve funds aren't left idle butt are used productively.
Another way via which the insurance companies compensate those that are in their service is that the contribution of the many is employed to compensate the few among them who were suffering from the misfortune insured against. therefore the loss of few people is share by many.
We hope that to the present extend, you want to have understood the above explanation about insurance firm . Now subsequent thing we'll be considering is that the functions of the insurance companies.
Amongst other functions, the most function of the insurance firm is risk bearing, the financial losses of people are judiciously distributed among many of us , for instance , within the case of fireside , the policy holder in insurance pays a premium into a standard pool, out of which those that suffer loss are compensated.
FUNCTIONS INCLUDE
1. The insurance industry encourages thrift (i.e money conservation) especially via it's life policies which give funds for family, welfare and adulthood provisions. It provides employment opportunity for people who have the interest of working with the industry.
The insurance companies works hand in hand with commerce. It owes it's existence to commerce (i.e business generally both industrial etc) and commerce reciprocally owes it's strong stability to insurance, this is often because it helped in various ways to reinforce the overall trend in business.
Before we proceed further to other functions, let's explain this two terms: the insurer; the insured because it will aid us in our understanding.
The insured: this is often the party affecting the insurance in other words, the individual or individuals which is taking the policy . this will be done either directly or indirectly or via an agent or broker.
The insurer: this is often the party providing the protection to hide by the policy. The insurer covers every other terms which incorporates the underwriter who may be a senior official of an insurance firm whose business lies in undertaking new business for the corporate .
The insurance firm features a contract which promises to pay compensation at a future date for a consideration referred to as premium (i.e. the cash paid by the insured to the insurer for the insurance cover provided within the policy). just like the way we've it in other contracts, i.e having it that contracts is predicated on the principles of offer and acceptance, consideration and capacity to contract. These contract, especially in insurance involves two parties i.e. the insurer and therefore the insured.
FUNCTIONS 2
Insurer, by reason of their principal function accumulate large funds which they hold as custodians and out of which claims and losses are met. Like in some countries, their insurers operate in many parts of the planet and earn vast sums in overseas market in terms of underwriting profit and investment income. This tells us that insurance forms a substantial a part of that country's invisible exports.
As we continue in our functions, let's examine the role of the insured and therefore the insurer.
ROLES OF THE INSURED:
In insurance, when the proposer becomes insured the party effecting an insurance is understood because the proposer throughout the negotiations, and until the contract is fully force. The insurer plays an important role in making this aforementioned contract to return into force, knowing that in insurance contract, a bit like we said before is base on the principle of offer and acceptance, consideration and capacity to contract, the contracts are always evidenced in writing which is formed from various forms to be filled and signed. If the insured doesn't accept the insurance offer and giving meticulous consideration thereto , there can hardly be capacity to contract i.e the insurance contract can never be. So, from this, we now learn that this two parties (i.e the insurer and therefore the insured) must be involved before an insurance contract can becomes a policy.
ROLES OF THE INSURER
Here we are considering the roles of the insurer as a subsidiary functions of insurance; this is often because generally sense (they have a really wide selection of function), the insurer is that the one providing the required insurance services, benefits to the insured, should any mishap, counting on the policy undertaken. The insurer helps also in loss-prevention within the following ways:
We know that the reach which loss prevention is seen, is usually on property. a private or a population can suffer great loss materially, if it weren't for the intervention of loss prevention scheme by insurance companies to their policy holders.
The insurer also assists in boasting business venture: Many large -scale enterprise today can make their business in straightness , having transferred all their risk to the insurance firm , in other words. The insurance companies help to take care of and to stabilize the atmosphere of this day large-scale business and organizations.
Many questions had risen by on onlookers, as on how the policy holder are often compesated, should there be any mishap on the policy covered. it's better for us to notice that the insurance firm , when a loss is incurred to the policy holder can bring his or her loss, but which will only compensate him and make him return to his normal financial position before the occurrence of the incidence and to not profit him from the misfortune. this is often generally because, no amount of monetary compensation pays adequately for the life and health of persons, so life and private accidents are considered benefit policies. So let there be no misconception on this fact when mishap occurs, where the general public is trying to find the victim to tend everything lost, and having a meager compensation given to him or her. So let's not distrust insurance companies during this area, knowing that it's only the restoration to the precise position before the loss that's provided.
Now, as we've gone thus far in understanding the functions of the insurance companies, the roles of the insured and therefore the insurer, we'll be proceeding forward to seem at the varied ways via which one can enjoy being insured altogether spheres of life. For those that against all odds, accept policy adequately, benefits, awaits them in areas like
1. pecuniary insurance
2. personal insurance
3. property insurance
4. insurance
We will take our time to offer you adequate explanation altogether the sub-sections of those areas which will be of help to you.
1. PECUNIARY INSURANCE: This has to do with money or relating to something of such nature. This insurance policy benefits mostly company owners, directors, managers e.t.c This insurance policy provides cover to the employer against the loss of money unintentionally, or in a situation where an employee defrauds his or her employer on certain amount of money placed under his or her custody or in things relating to other occurrence/loss. Other policies under pecuniary insurance are; fidelity guarantee (known also as surety ship), legal expenses, credit insurance and business interruption insurance. All of these have their various function which in one way or the other relates to pecuniary. Like earlier stated, pecuniary insurance provides cover for C.E.O., M.D'S etc in case of loss of money either by intent or accident placed under the care of their employee or any officer of higher responsibility. These type of insurance cover, which their employee has will help to compensate them (i.e the employer's) and also ease the employee the fear and tension which the mishap might generate for him or her. It is therefore advisable you consider this policy very well as an MD, C.E.O. etc, especially with the assistance of your insurance broker so as to adequately know, and be directed properly on how to go about it.
2. PERSONAL INSURANCE
This involves all classes of life assurance and also accident policies. There are other types of person insurance, and the purpose of each is to meet the different need of individuals in their aim to provide for the future either for themselves or for their dependents. Other sub-divisions of personal insurance are:
i. Life assurance
ii. Personal accident and sickness insurance,
iii. Permanent health insurance,
iv. Social security
These sub-divisions has various similarities which come out at the end to meet the same aim, like in life assurance, personal accident and sickness insurance, this policy ensures that the policy holder when befallen by any misfortune, which resulted into permanent disability or death will still be able to fend for his or herself and also for his or her dependants in the case of death.
3. PROPERTY INSURANCE
Property insurance policy involves insurance cover for property should any risk of damage or loss by fire, accident, burglary or other risks that may occur. Under this, there are other sub-divisions which include:
i. Motor Insurance
ii. Marine Insurance
iii. Fire Insurance
iv. Burglary Insurance
v. Special peril Insurance
vi. All risk Insurance
In all these sub-divisions of property insurance, respective insurance cover is given to them all should there be any damage or loss relating to the type of policy the holder has.
4. LIABILITY INSURANCE
This provides cover for the insured against his legal liability to others. This can arise via negligence of the insured in failing to act in a reasonable manner. Such manners like crossing the road without properly looking on both side of the road which might result in accident. This may also arise via the insured's unlawful disturbance of another person in the enjoyment of his or property (i.e constituting a nuisance to them) or via the insured's trespass which is an unlawful act committed with force or violent on another person's property. Liability insurance is also sub-divided into employer's liability to his employee and public liability by the insured. The two sub-divisions of liability insurance owe their explanation to their respective liabilities, and since liability generally arises from lawsuits, liability policy covers only claims which the insured becomes legally obligated to.
We should also bear in mind that no insurance policy can prevent theft, fire, or other misfortune or the creation of legal liability, but can provide financial assistance in such situations. It does not also protect for example, the material property which is the subject matter of the insurance, but the financial interest of the insurer. This mean that the insurer can only get a financial compensation when any mishap happens to any thing insured against and not having the property restored back in case of fire or collapse (for building).
CONCLUSION
In all, we do hope that all these explanation will give you a better insight towards getting what you want on the good step to take while taking your insurance policy. But, always make sure that you don't do anything without first of all consulting your insurance broker ( who will take more time to tell you one-on-one the policy that will be suitable for you) before going to any insurance company knowing already that the cost of insurance is less than what would be the cost of insurance because the cost of insurance to industrialist for e.g is passed on to consumers along with other product cost and the consumers benefits from the existence of insurance via reduced prices. So make sure you get insured today. Till I see you again. Thank you.
2. PERSONAL INSURANCE
This involves all classes of life assurance and also accident policies. There are other types of person insurance, and the purpose of each is to meet the different need of individuals in their aim to provide for the future either for themselves or for their dependents. Other sub-divisions of personal insurance are:
i. Life assurance
ii. Personal accident and sickness insurance,
iii. Permanent health insurance,
iv. Social security
These sub-divisions has various similarities which come out at the end to meet the same aim, like in life assurance, personal accident and sickness insurance, this policy ensures that the policy holder when befallen by any misfortune, which resulted into permanent disability or death will still be able to fend for his or herself and also for his or her dependants in the case of death.
3. PROPERTY INSURANCE
Property insurance policy involves insurance cover for property should any risk of damage or loss by fire, accident, burglary or other risks that may occur. Under this, there are other sub-divisions which include:
i. Motor Insurance
ii. Marine Insurance
iii. Fire Insurance
iv. Burglary Insurance
v. Special peril Insurance
vi. All risk Insurance
In all these sub-divisions of property insurance, respective insurance cover is given to them all should there be any damage or loss relating to the type of policy the holder has.
4. LIABILITY INSURANCE
This provides cover for the insured against his legal liability to others. This can arise via negligence of the insured in failing to act in a reasonable manner. Such manners like crossing the road without properly looking on both side of the road which might result in accident. This may also arise via the insured's unlawful disturbance of another person in the enjoyment of his or property (i.e constituting a nuisance to them) or via the insured's trespass which is an unlawful act committed with force or violent on another person's property. Liability insurance is also sub-divided into employer's liability to his employee and public liability by the insured. The two sub-divisions of liability insurance owe their explanation to their respective liabilities, and since liability generally arises from lawsuits, liability policy covers only claims which the insured becomes legally obligated to.
We should also bear in mind that no insurance policy can prevent theft, fire, or other misfortune or the creation of legal liability, but can provide financial assistance in such situations. It does not also protect for example, the material property which is the subject matter of the insurance, but the financial interest of the insurer. This mean that the insurer can only get a financial compensation when any mishap happens to any thing insured against and not having the property restored back in case of fire or collapse (for building).
CONCLUSION
In all, we do hope that all these explanation will give you a better insight towards getting what you want on the good step to take while taking your insurance policy. But, always make sure that you don't do anything without first of all consulting your insurance broker ( who will take more time to tell you one-on-one the policy that will be suitable for you) before going to any insurance company knowing already that the cost of insurance is less than what would be the cost of insurance because the cost of insurance to industrialist for e.g is passed on to consumers along with other product cost and the consumers benefits from the existence of insurance via reduced prices. So make sure you get insured today. Till I see you again. Thank you.
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