What are the principles of insurance
Life Insurance Facts
In today's uncertain economic climate, buying an insurance is a smart and astute financial move
for people who want their family or other dependents to be financially secure even after they die.
Sadly, however, many policy holders are under insured, putting their loved ones at risk. On the
other hand, many are also over-insured, paying for coverage they don't really need.
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Insurance Policies
Insurance policy can be categorized into indemnity insurance and non-indemnity insurance.
What is indemnity insurance?
This is a guarantee for providing security or protection against possible hurt, damage, loss or
liability. Here, an agreed lump sum (as stated inside the policy) is paid as compensation on the
risk insured against any incurred loss or damage.
Indemnity insurance is broadly divided into three forms, as follows:
Insurance Policies and types
Term Life by definition is a life insurance policy which provides a stated benefit upon the holder's
death, provided that the death occurs within a certain specified time period. However, the policy
does not provide any returns beyond the stated benefit, unlike an insurance policy which allows
investors to share in returns from the insurance company's investment portfolio.
Annually renewable term life.
Historically, a term life rate increased each year as the risk of death became greater. While
unpopular, this type of life policy is still available and is commonly referred to as annually
renewable term life (ART).
Insurance- is it affordable?
Is insurance affordable or not? Insurers tend to think the cover they offer is very affordable,
considering all the risks involved. However, most consumers think insurance is unaffordable due
to their own financial situations. So how does one go about determining the affordability of
insurance?
How insurers determine affordability
When insurers determine affordability, they have to decide whether someone or something can
reasonably be insured at a fair price. The insurer has to be able to assume the risks involved at
a fair price to both, the insurer and the insured person. If the insurer cannot provide it at a
reasonable price, the individual won't purchase the policy.
However, these people are the ones who need insurance the most. They're the ones who would
have the greatest financial difficulty if something did happen. They couldn't afford to replace all
their possessions simultaneously, nor could they afford to pay compensation and legal fees if
they caused another person's death or injuries. If they couldn't afford to replace their own
belongings, they certainly couldn't afford to replace someone else's property if they damaged it.
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What are the principles of insurance |
