Insurance is a means of providing protection against
financial loss in a great variety of situations. It is a contract in which one
party agrees to pay for another party's financial loss resulting from a particular
event. Insurance works on the principal of sharing losses.
If you wish to be insured, against any type of loss, agree
to make regular payments, called insurance premiums, to an insurance company. The
company in turn gives you a contract, which is known as Insurance Policy. The
company promises to pay a certain sum of money for the type of loss stated in
the policy.
Types of Insurance:
- Life
Insurance
- Private
Health Insurance
- Property
and Liability Insurance
Insurance generally covers situations involving pure risk -
that is, situations in which only losses can occur. Such situations include
fire, floods, and accidents. People also buy insurance to cover unusual types
of financial losses.
What is Insurance Premium?
The amount of money required for coverage under a specific
insurance policy for a given period of time. Depending on the policy agreement,
the premium my be paid monthly, quarterly, semiannually, or annually.
Life Insurance
A life insurance policy provides that the insurance company
will pay a definite amount when the person dies. This may be paid in a lump sum
or in installments to the beneficiary (people named by the policyholder to
receive the death benefit).
In order to save money, some types of life insurance
policies also enable policyholders. Such policies have a cash value. A
policyholder may borrow money against the cash value or surrender the policy
for its cash value.
Private Health Insurance
Health insurance pays all or part of the cost of
hospitalization, surgery, laboratory tests, medicines, and other medical care. The
growing need for adequate health insurance also leads to the rising cost of
medical care.
You could suffer a major financial hardship without such
coverage, particularly in case of a serious illness or accident. One of the
fastest-growing types of health insurance is Dental insurance. It helps pay for
a wide variety of dental services.
Property & Liability Insurance
In order to protect the assets of individuals against financial
loss, Individuals and businesses buy property and liability insurance. Property
insurance provides direct compensation if a policyholder's possessions are
damaged, destroyed, or lost as a result of perils.
Liability insurance protects individuals and businesses
against possible financial losses if their actions result in bodily injury to
others or in harm to property owned by others.
The main types of
individual coverage are:
- Homeowners
Insurance
- Automobile
Insurance
Insurance Premiums on any type of insurance is subject to
change, however there are factors that force the increases.
The premiums may
increase on certain types of insurance if the laws change, and if the
policyholder has Re-viewable Policy the premiums are reviewed on scheduled intervals,
between the first year and up to five years.
If you have claimed a number of times on your insurance, your
insurance premiums may increase. Again, it depends on the insurance coverage
plan.
Many of the Guaranteed Plans claim that the insurance premiums
will never increase, and few companies claim the policies offer lower premium
rates. Thus, the Re-viewable marks up insurance premiums on occasions,
therefore, when considering life insurance, you should always ask questions.
Life insurance polices are often straightforward without
hidden fees underlying the fine lines. However, few policies have more
exclusions and restrictions than others, therefore reading the terms are
essential to understand what you are purchasing.
Few companies may charge
additional costs, therefore again; it is worth reviewing several options before
considering life insurance.
Life insurance is something we all need and definitely
something we should all want if we have family. If the person deceased has
family with no life insurance and a mortgage to boot, you are putting higher
fees on your family than the fees you will pay for higher premiums.
Thus, rated
premiums are not underrated; rather the policy is considering risks against a
policy.
If you are considering life insurance, again you may want to
consider asking the company about the Critical Ill and Terminal
Ill policies. Again, you may pay a bit more
cash for the policy, but after you review a term, condition from one of the policies,
and do your math, you will see those fees are nothing to worry about.
Critical Illness and Terminal Illnesses are distinct
polices; however, few companies will invite their clients to take on the free
policy, while other companies might charge a small fee for the extra coverage.
Sounds ludicrous, but you would think that all insurance
companies would toss in this plan and you might wonder how few companies can
include the coverage free. The answer is apparent that the companies are
probably compensating somewhere else in the mix of your policy.
Rated premiums are policies you want to be careful of, since
the company will often persuade the client to pay steeper premiums than
initially offered. If you accept this policy and pose any risks during the term
of agreement the companies will often increase the premiums.
In general, 12% of the people that apply for life insurance
receives the Rated Premiums over the common premiums, however, these people are
often considered higher risk than average.
Finally, we can see that life insurance is something we all
need and we know that premiums are inevitable. Some of us pay more, some less,
but over the long run we are paying nothing at all compared to what our
families will pay if we do not have life insurance.
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