Nov 28, 2004 01:33 PM
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(Updated Nov 28, 2004 01:33 PM)
Is your insurance done..??Do you think it is unimportant?.?? Well if Yes, this is for you.. I haven?t tried to tell you which insurance company you should try? but to tell you why you should look for an insurance company.
Insurance is the business of providing protection against financial aspects of risk, such as those to property, life, health and legal liability?. It is one method of a greater concept known as risk management.
In insurance, the insured makes payments called ''premiums'' to an insurer, and in return is able to claim a payment from the insurer if the insured suffers some kind of loss. This relationship is usually drawn up in a formal legal contract.
In one classic example of insurance, a ship-owner insures a ship and receives payment if the ship is damaged or destroyed?. This example is one of the earliest uses and developments of concepts like insurance. Interestingly, ships are now more often insured through risk pooling and spreading organizations because the loss of a large ship going down is too great for one insurer to accept.
In the case of annuities, such as a pension, similar concepts apply, but in some sense in the reverse. When applied to annuities, the terms risk? and loss? are somewhat different from traditional insurance as they concern the chances of living beyond life expectancy and the need for income during the period between amortization and death.
Insurance attempts to quantify risk by pooling together a large number of risks. This makes use of the law of large numbers?. As applied to insurance, this means that the greater the number of similar risks, the greater accuracy with which insurers can estimate the overall risk.
For example?. many individual people purchase health insurance policies and they each pay a small monthly or yearly premium to an insurance company. When a policyholder gets ill, the insurance company provides money to cover medical treatment. For some individuals the insurance benefits may total far more money than they have ever paid into the insurance policy.
Others may never make a claim. When averaged out over all of the people buying policies, value of the claims even out. Insurance companies set their premiums based on their calculated payouts. They plan to take in more money than they pay out in the end to cover expenses. For-profit insurance companies set their rates to make a profit rather than to break even.
Insurance companies also earn investment profits, because they have the use of the premium money from the time they receive it until the time they need it to pay claims. This money is called the float. When the investments of float are successful, they may earn large profits, even if the insurance company pays out in claims every penny received as premiums.
In fact, most insurance companies pay out more money than they receive in premiums. The excess amount that they pay to policyholders is the cost of float?.. An insurance company will profit if they invest the money at a greater return than their cost of float.
An insurance contract or policy will set out in detail the exact circumstances under which a benefit payment will be made and the amount of the premiums.
These pensions or other recoveries received after mishaps and misfortunes help reboost the family or the industry. It acts as a support system to the falling company or family. In earlier times if a source of survival was lost due to causes there would be no solution unless the individual had some additional support system to help him bear the looses. The insurance system has been able to secure lives and prevent complete destruction of the source of living.
Insurance cannot get you back what you have lost but it can give you something in compensation? as it is very wisely said??Something is better than nothing? ? Insurance cannot get you back the emotions, hard work and sincerity you had invested but it can give you something which will boost you to do it again and grow for the second time. Life goes on?..
