What is insurance?
Insurance is a contract between two parties in which one party the insurer in return of certain and agreed amount of money called the premium, assure the other party, the insured to make good any financial loss, the insured may suffer as a result of occurrence of the specified, insured and unforeseen events (perils), that take place within the period described in the contract.
Why do we need insurance?
Insurance is a way of managing risks. When you buy insurance, you transfer the cost of a potential loss to the insurance company in exchange for a fee, known as the premium
. Insurance companies invest the funds securely, so it can grow, and pay out when there’s a claim.
How many types of insurance are there in the market?
There are two types of insurance in the market, namely Life Insurance
is an insurance cover that gives out a certain amount to the insured or their nominated beneficiaries upon a certain event such as death of the individual who is insured. For our convenience and better understanding it won’t be wrong to state that Life Insurance is related to a human life. It’s basically a long term investment and requires periodic payments, either monthly or quarterly or annually. The risks that are covered by Life Insurance include – premature death, income during retirement, illness. The main products for the same consists of – whole life, endowment, term, medical and health, life annuity plan.
which is covers things apart from the things covered in Life Insurance. It is basically an insurance policy to protect an individual against losses and damages other than those covered by Life insurance. The coverage period for most non-life insurance policies and plans is usually one year, whereby premiums are normally paid on a one time basis. The risks that are covered by non-life insurance is property loss (stolen car or burnt house), liability arising from damage caused by an individual to a third party, accidental death or injury. The main products of non-life insurance includes – motor insurance, fire/house owners/householders insurance, personal accident insurance, medical and health insurance and travel insurance.
Process of insurance:
• Selection of Product
When you are going for insurance first you should need to choose the product .There are so many products of insurance company which are mentioned above. So you should be confirmed which insurance should you going to be done.
• Proposal form
Every product have their own proposal form so when you select the product then you should need to fill the proposal form where it contains an insured person details and insured property details.
• Evidence of respectability
After proposal you should need to prove the insured person and properties with the required documents.
• Survey of property
Insurance Companies has their own surveyors who survey the insured properties and proved right or not?
• Acceptance of proposal
After all the above process is done then insurance company is ready to accept your proposal .It means insurance company gets all details about insured person and properties as well as all the necessary requirements.
• Issue of Debit note
A debit note is a document used by a vendor to inform the buyer of current debt obligations. So insurance company also issued the debit note first where all the details of premium, covered risk, contracted time period and other information are clearly defined.
After received a debit note if you should be satisfied then you pay the total premium amount to the insurance company which is called payment process.
• Issue of insurance policy
Finally Insurance Company issued an insurance policy which is generally an integrated contract, includes all forms associated with the agreement between the insured and insurer.