Insurance
Insurance
Insurance
Definition
Insurance is an agreement between an individual
policy (or a business) and an insurance company.
Under this agreement, the policyholder pays
premiums to the insurer in exchange for financial
compensation in the event of a covered incident. For
example, auto insurance will reimburse an insured
driver for the cost of auto repairs (up to a limit) after
an accident.
Also known as : indemnity, assurance, coverage
To explain what insurance is in simple terms: it’s a
way to protect your loved ones, property, business
and lifestyle from financial losses and unexpected
costs. By paying an insurance provider, you receive
coverage that will preserve your way of life in case
of unfortunate events. Some insurers, such as
Lemonade, offer several different types of insurance
policies, while other focus on a specific area. Read
on to learn about insurance, how it works and the
types of coverage available.
How does an Insurance Policy Work?
To understand how insurance works, you should
know below terms:
1.Premium: is the money you pay to the insurance
company to avail of insurance policy benefits.
2.Sum Insured: Sum insured is applicable for a non-
life insurance policy like home and health insurance.
It refers to the maximum cap on the costs you are
covered for in a year against any unfortunate event.
3.Sum Assured: Sum assured is the amount the life
insurance company pays to the nominee if the
insured event happens (death of insured).
How Insurance Works
Insurance is available to help you pay for damage to
your property or to pay others on your behalf when
you injure someone or damage their property.
Insurance is a contract that transfers the risk of
financial loss from an individual or business to an
insurance company. They collect small amounts of
money from clients and pool that money together to
pay for losses.
Standard lines
Excess lines
Excess lines
In most countries, life and non-life insurers are
subject to different regulatory regimes and
different tax and accounting rules. The main
reason for the distinction between the two types of
company is that life, annuity, and pension business
is long-term in nature – coverage for life assurance
or a pension can cover risks over many decades.
By contrast, non-life insurance cover usually
covers a shorter period, such as one year.
Reinsurance companies
Reinsurance companies are insurance companies
that provide policies to other insurance companies,
allowing them to reduce their risks and protect
themselves from substantial losses.[60] The
reinsurance market is dominated by a few large
companies with huge reserves. A reinsurer may
also be a direct writer of insurance risks as well.
Captive insurance companies
Main article: Captive insurance
Captive insurance companies can be defined as
limited-purpose insurance companies established
with the specific objective of financing risks
emanating from their parent group or groups. This
definition can sometimes be extended to include
some of the risks of the parent company’s
customers. In short, it is an in-house self-insurance
vehicle. Captives may take the form of a “pure”
entity, which is a 100% subsidiary of the self-
insured parent company; of a “mutual” captive,
which insures the collective risks of members of
an industry; and of an “association” captive, which
self-insures individual risks of the members of a
professional, commercial or industrial association.
Captives represent commercial, economic and tax
advantages to their sponsors because of the
reductions in costs they help create and for the
ease of insurance risk management and the
flexibility for cash flows they generate.
Additionally, they may provide coverage of risks
which is neither available nor offered in the
traditional insurance market at reasonable prices.
The types of risk that a captive can underwrite for
their parents include property damage, public and
product liability, professional indemnity, employee
benefits, employers’ liability, motor and medical
aid expenses. The captive’s exposure to such risks
may be limited by the use of reinsurance.
1.Health Insurance
2.Motor Insurance
3.Property Insurance
4.commercial insurance
5. Asset insurance
6.pet insurance
7.bite sized insurance
1. What are the 5 major types of insurance?
The five major types of insurance are:
o Life Insurance
o Health Insurance
o Fire Insurance
o Marine Insurance
o Vehicle Insurance