Insurance all reasons

Insurance   all reasons

What is insurance?

Insurance is a way to protect against financial loss in a variety of situations. It is an agreement whereby a party agrees to pay for another partys financial loss arising from a particular event.

Insurances work on the principal to share losses. If you want to be insured against any kind of loss, accept to make regular payments, called premiums, to an insurance company. In return, the company gives you an agreement, the policy. The company promises to pay a certain amount of money for the kind of loss specified in the policy.


Insurance is thousands of years old. Hammurabi Code, a collection of Babylonian laws of 1700 BC, is believed to be the first form of credit insurance. A borrower did not have to pay back if personal injury made it impossible to do so. Insurances that we know today can be traced to the Great Fire of London in 1666, which struck 13,200 houses. In the aftermath of this disaster, Nicholas Barbon opened an office to insure buildings.

Types of insurance

The insurance generally covers situations with pure risk that is, situations where only losses can occur. Such situations include fire, flooding and accidents. People also buy insurance to cover unusual types of financial losses like, a dancer can insure her legs from injury. There are mainly three types of insurance sold

  1. Life insurance

A life insurance means that the insurance company pays a certain amount when the person dies. This can be paid for a certain amount or periods to the recipient [persons named by the policyholder for a death benefit]. Some types of life insurance also make it possible for policyholders to save money. Such policies have a cash value. An policyholder may borrow money against the cash value or transfer the policy for his cash value.


These are savings plans sold by insurance companies to provide a regular and regular pension income. If the annuity annuity dies] before receiving the guaranteed number of payments, the insurance company must continue the payments to the recipient.


Some insurance policies repay part of the premiums in the form of dividends. Such policies are called participating policies. An insurance company pays dividends if the money collected in premiums exceeds the amount required to pay benefits and administrative expenses. Dividends may also include a portion of the profits that the company earned on investments made with premium funds. Dividends are usually paid on life insurance.

  1. Private health insurance

The health insurance pays all or part of the cost of hospital stay, surgery, laboratory tests, pharmaceuticals and other healthcare. The rising cost of healthcare has increased the need for adequate health insurance. You may suffer from major financial difficulties without such cover, especially in case of serious illness or accident.

Dental insurance is one of the fastest growing types of health insurance. It helps to pay for a wide range of dental services.

  1. Property insurance

Individuals and companies buy property and liability insurance to protect their assets against financial loss. Property insurance provides direct compensation if the policyholders property is damaged, destroyed or lost as a result of hazards. Liability insurance protects individuals and companies from potential financial losses if their actions lead to personal injury or damage property owned by others.

The main types of individual coverage are

Homeowner Insurance

This provides protection against losses from damage to the owners home and its contents.

car insurance

This is the most purchased and most important type of insurance. Drivers are legally liable for any costs incurred as a result of accidents that they cause. This insurance protects a policyholder against financial losses from accidents.

Insurance companies financial viability

Financial stability and strength of the insurance company should be an important factor when purchasing an insurance contract. A paid insurance premium currently provides coverage for losses that may arise for many years to come. For this reason, the insurance carriers profitability is very important. In recent years, a number of insurance companies have become insolvent and leave their policyholders out of coverage or coverage only from an insurance pool with government funded insurance with less attractive payouts for losses.

How insurance is sold

Most insurance companies sell policy through agents. Exclusive agents are employed by an insurance company that only sells the companys policy. Independent agents sell policies for multiple companies.

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