What is Insurance?
What is Insurance? Insurance Policy is a Way to Manage Your Risk. When You Buy Insurance Policy, You Purchase Protection Against Unexpected Financial Loss Problems. A Insurance Company Pays You or Someone You Choose if Something Bad Happens to You. If You Have No Insurance & an Accident Happens, You May Be Responsible for All Related Price. An Insurance is a Legal Agreement Between an Insurer (Insurance Company) & an Insured (Individual), in Which an Insured Receives Financial Protection From an Insurer for the Losses He May Suffer Under Particular Condition.
Insurance Policy is a Legal Contract Between Two Parties – the Insurer or the Insured, Also Known as Insurance Coverage and Insurance Policy. The Insurer Provides Financial Loss Coverage for the Losses of the Insured That S/he May Bear Under Certain Conditions.
Under an Insurance Policy's, the Insured Needs to Pay Regular Amount of Premiums Policy to the Insurer. The Insurer Pays a Mature Policy Sum Assured to the Insured if an Unfortunate Event Occurs, Such as Death of the Life Insured, and Damage to the Insured and His Property. An Arrangement With a Insurance Company in Which You Pay Them Regular Amounts of Money and They Agree to Pay the Costs if, for Example, You Die or Are Ill, or if You Lose or Damage Something, the Business of Providing Insurance.
Insurance - Meaning and Definition
The Literal Meaning of Insurance Would Be an Assurance Against Unforeseen and Unfortunate Financial Loss. This Means, That if You Encounter a Less Than Normal Event in Your Normal Course of Life Insurance, or Happen to Incur the Financial Loss Because of It, You Can Be Compensated. For Example, You Met With an Accident on Your Way to the Office in Your Car/bike and the Car/bike Suffers Damage. Your Insurer Can Reimburse the Repair Price in This Case. However, the Insurer Will Not Reimburse Normal Wear or Tear Like a Headlamp Stopped Working.
Legally Insurance Policy Has Been Defined as a Contract Where the Insurer Agrees to Compensate the Insured Against the Losses Incurred Due to Any Unforeseen Contingency. The Contract Also Involves a Consideration Which is Called a Premium Policy. The Maximum Available Benefit Amount is Called Sum Assured or Sum Insured.
How Does an Insurance Policy Work?
To Understand How Insurance Policy Works, You Should Know Below Terms:
Premium: is the Money You Pay to the Insurance Company to Available of Insurance Policy Benefits.
Sum Insured: Sum Insured is Applicable for a Non-life Insurance Policy Like Home or Your Health Insurance Policy. It Refers to the Maximum Cap on the Value You Are Covered for in a Year Opposed Any Unfortunate Event.
As Discussed Above, Insurance Policy is a Legal Agreement Between the Insurer and the Insured. The Insurance Policy Lists All the Policy's Conditions Under Which the Insurance Company is Liable to Payment You or the Nominee the Insurance Costs. When You Buy an Insurance Policy From the Insurance Company, You Will Have to Make Regular Payments (Premium) for a Specified Period Towards the Insurance Policy.
The Insurance Company Collects the Premium Policy From All the Customer. They Pool the Amount for Losses That May Arise Out of an Insured Event. If You Don't Claim During the Insurance Policy Tenure, You May and May Not Receive Any Benefits. It Depends on the Policy Type and the Circumstances.
Insurance Policy Components
An Insurance Policy is Made of All Kinds of Components. Some of the Important Parts of an Insurance Agreement Are:
Premium Policy : This is the Financial Deliberation Which Makes the Insurance Contract a Legally Binding Agreement.
Policy Limit: Policy Limit Applies to Health Insurance or General Insurance Policies Where Compensation Depends on the Amount of Loss. The Insurance Policy May Limit the Maximum Compensation for Certain Types of Financial Losses.
Deductible: Deductible Applies to Common Insurance or Health Insurance Policies. A Deductible is the Maximum Pay of Loss You Will Bear Out of Your Pocket. The Insurer Will Start Paying Only When Your Losses (or Expenses) Rise Above the Deductible Limit.
Sum Assured: Sum Assured is the Amount the Life Insurance Company Pays to the Nominee if the Insured Event Happens (Death of Insured).
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