What Is Insurance
A insurance is a contract or agreement, called a policy between an individual or entity and an insurance provider. In insurance you will compensated for certain loses. You pay a fee called a premium. In exchange, the insurance company agrees to pay you a certain amount of money if the event you are insured against happens during the term of the policy. Insurance is a legal agreement between two parties.
Many insurance policies include a deductible. That is a portion of the claim that you pay up front, before the insurer pays the rest. If you pay a higher deductible, your premiums may be lower.
Other insurance policies do not have a deductible, but have an initial waiting period during which you cover the financial costs before the coverage begins.
Types Of Insurance
There are mostly 8 types of insurance-
- Life Insurance
- Motor Insurance
- Health Insurance
- Travel Insurance
- Property Insurance
- Mobile Insurance
- Cycle Insurance
- Bite-size Insurance
Some Definitions Related To Insurance
Insured: The persons who are protected by the insurance policy.
Insurer: The insurance company that issues the insurance policy.
Policyholder: The person who holds the insurance policy or contract with the insurer usually, but not always.
Premium: The amount you pay to buy insurance, usually paid monthly, quarterly or annually.
Policy: A legal contract between you and the insurer, which specifies what events are covered by the insurer, under what circumstances the insurer will compensate you, and how much compensation or what type of benefit you will receive if you make a claim.
Grace period: 10 days immediately following the day you purchase an insurance policy, during which you may cancel the policy for a full refund of any premiums paid.
Coverage: The amount of protection you have purchased also, the maximum amount of money the insurance company will pay you for a claim.
Exclusions: Things that are not covered by your policy.
Term: The time period covered by the insurance policy.
What Is Covered By An Insurance Policy
These terms and conditions must be followed by a insurance policy–
- Insurance does not cover deliberate damage caused by the insured person.
- Insurance covers only the time period stated in the contract (the term).
- You may not be covered if you do not mitigate the damage—that is, take reasonable steps to prevent the damage from becoming worse. For example, if your home is being damaged from water leaking from the roof, and you do not cover the hole, your coverage may be limited.
- Compensation is usually based on the actual cash value of the property “as is,” when the damage occurred. For example, if your five-year-old television is stolen, you will be compensated for the value of the used television, not for the value of a new one. However, your policy may compensate you for the cost of replacing an item at its current price (its replacement value), or you may be able to buy additional coverage for replacement value.
- You must inform the insurer of any factors that might affect the risks that the policy covers. The insurer could refuse to compensate you if you misrepresent the risks.
- Insurance may become void if you do not pay your premiums on time.
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