What do you mean by insurance

Beginner's Guide to Insurance

Having the right kind of insurance is central to sound financial planning. Some of us may have

some form of insurance but very few really understand what it is or why one must have it. For

most Indians insurance is a form of investment or a superb tax saving avenue. Ask an average

person about his/her investments and they will proudly mention an insurance product as part of

their core investments. Of the approximately 5% of Indians that are insured the proportion of

those adequately insured is much lower. Very few of the insured view insurance as purely that.

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Insurance Policy and how it works

Insurance is synonymous to a lot of people sharing risks of losses expected from a supposed

accident. Here, the costs of the losses will be borne by all the insurers.

For example, if Mr. Adam buys a new car and wishes to insure the vehicle against any expected

accidents. He will buy an insurance policy from an insurance company through an insurance

agent or insurance broker by paying a specific amount of money, called premium, to the

insurance company.

The moment Mr. Adam pay the premium, the insurer (i.e. the insurance company) issue an

insurance policy, or contract paper, to him. In this policy, the insurer analyses how it will pay for

all or part of the damages/losses that may occur on Mr. Adam's car.

Health Insurance Advantages and Disadvantages

In this article we will explore the reasons that motivate employers to get group health insurance

for employees and we will look at the advantages and disadvantages from both points of view.

Group Health Insurance VS Individual Private Health Insurance

Probably the most significant distinguishing characteristic of group insurance is the substitution

of group underwriting for individual underwriting. In group cases, no individual evidence of

insurability is usually required, and benefit levels can be substantial, with few, if any, important

limitations.

Group underwriting normally is not concerned with the health or other insurability aspects of any

particular individual. Instead, it aims to obtain a group of individual lives or, what is even more

important, an aggregation of such groups of lives that will yield a predictable rate of mortality or

morbidity. If a sufficient number of groups of lives is obtained, and if these groups are

reasonably homogeneous in nature, then the mortality or morbidity rate will be predictable. The

point is that the group becomes the unit of underwriting, and insurance principles may be

applied to it just as in the case of the individual. To assure that the groups obtained will be

reasonably homogeneous, the underwriting process in group insurance aims to control adverse

selection by individuals within a group.

Six Common Life Insurance Mistakes

Life insurance is one of the most important components of any individual's financial plan.

However there is lot of misunderstanding about life insurance, mainly due to the way life

insurance products have been sold over the years in India. We have discussed some common

mistakes insurance buyers should avoid when buying insurance policies.

1. Underestimating insurance requirement: Many life insurance buyers choose their insurance

covers or sum assured, based on the plans their agents want to sell and how much premium

they can afford. This a wrong approach. Your insurance requirement is a function of your

financial situation, and has nothing do with what products are available. Many insurance buyers

use thumb rules like 10 times annual income for cover. Some financial advisers say that a cover

of 10 times your annual income is adequate because it gives your family 10 years worth of

income, when you are gone. But this is not always correct. Suppose, you have 20 year

mortgage or home loan. How will your family pay the EMIs after 10 years, when most of the loan

is still outstanding? Suppose you have very young children. Your family will run out of income,

when your children need it the most, e.g. for their higher education. Insurance buyers need to

consider several factors in deciding how much insurance cover is adequate for them.

Home Insurance Savings Tips

Your dwelling is often your most precious asset that you need to protect. We created a list of all

savings opportunities associated with Home insurance. This list is the most complete

perspective on home insurance savings tips. Numerous insurance brokers contributed to this

list. So, let's start!

1. Change your content coverage: Renting a Condo? You can often lower your content

coverage. No need to insure your belongings to up to $250,000 if you only have a laptop and

some IKEA furniture!

2. Renovations: Renovating your house can result in lower home insurance premiums, as home

insurance premiums for older, poorly maintained dwellings are usually higher. Additionally,

renovating only parts of your dwelling (e.g. the roof) can lead to insurance savings.

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What do you mean by insurance