Insurance Or Risks ~ Types Of Risks And Kinds of Insurance

DEFINITION:

Insurance is a legal contract that protects people from the financial costs that result loss of life, loss of health, lawsuits, goods or property damage.

Insurance provides a means for individuals and societies to cope up with some of the risks faced in everyday life. People purchased contracts of insurance called policies from a variety, of insurance companies.

TYPES OF RISKS: Insurance distinguish between two types of risks.

SPECULATIVE RISK:

It offers both the potential for gain and the potential for loss. People who invest the sock of companies for example, take speculative risk. An increase in stock prices procedures a gain, why a decline in stock prices produce a loss.

PURE RISK:

Pure risk does not necessarily result in loses, they never result in gains. Historically, insurance dealt only with pure risk and most people still buy insurance to cover pure risks. No one, for instance, experience a gain when they go a full year without an auto accident. However, same insurance companies now help business finance large losses including those incurred on speculative risks, such as the international exchange of currency.

Kinds of Insurance:
 
They are the Kinds of Insurance 

a)LIFE INSURANCE:
Life insurance is a financial resource for loved ones in the event of person’s death. When a person enters into a contract with an insurance company that promises to provide a certain amount of money upon his death is called life insurance. In return (that person) makes periodic payment, known as premiums. The size of premiums is generally based on factors such as age, gender, medical history and the amount of life insurance a person select. While there are many types of life insurance policies, they generally fall into two categories-term and permanent.

01. TERM INSURANCE:

Term insurance is the simplest form of life insurance. It provides financial protection for a specific time, usually one to thirty years. These policies are relatively inexpensive and are well suited for goals. Such as insurance protection during the child raising years or while paying off a mortgage. They provide a death benefit, but do not offer cash saving.

02. PERMANENT TERM INSURANCE:

Purchasing permanent insurance is like buying home instead of renting. Permanent insurance provide long term financial protection. These policies include both a death benefit and in some cases cash savings. This type of insurance is good for long range financial goals.

b)HEALTH INSURANCE:
A health insurance provides a sense of security that if a person becomes ill or need an operation he can get treatment promptly without getting worried about the rising cost of medical care.

The current health insurance system is quite complex and constantly changing.

c)BUSINESS INSURANCE:

The success of business, whether it is tiny enterprise or a large corporation, it is largely independent on hard work and ingenuity. However, no matter how industrious a person is, one disaster can wipe-out all profits and even destroy business. The key to make sure that all the efforts and money invested in a business will not disappear if a disaster strikes is called business insurance. COMMERCIAL 

d)AUTO / TRUCK INSURANCE:

Auto / Truck insurance protects against the financial loss if a person have an accident. It is a contract between an insurance company and an individual (employee) to play losses as defined in policy.

e)DISABILITY INSURANCE:

Disability insurance is a type of health insurance that pay’s a monthly income to a policy holder who is unable to work because of an accident or illness during the employment.

LONG TERM CARE INSURANCE:

It is a protection for employees and their families associated with the cost of qualified long-term care service. It involves variety of serviced aimed at helping people with chronic conditions compensate for limitations in their ability to function independently.

a)HOME OWNERS INSURANCE:
Home insurance provides financial protection against disasters. A standard home owners insurance includes for essential types of coverage.

• Coverage the structure of home.

• Coverage for the personal belongings.

• Liability protection. • Additional cost of living away from home if can not live there de to damage from fire, storm or other insured disasters.


b)OTHER TYPES OF INSURANCE:

Other types of insurance are:

• Travel insurance

• Landlord contents and building insurance

• Marine insurance

• Sport insurance

• Mortgages insurance 

THE IMPORTANCE / ADVANTAGES OF INSURANCE:
Insurance are not only benefit society but it also serves many other important economic and social functions.

• Insurance allow individual to share the risk faced by many people.

• The increased availability of credit helps people buy homes and cars.

• It provides capital that communities need to quickly rebuild and recover economically from natural disasters, such as tornadoes or hurricanes.

• It helps employers in buying insurance to cover their employees against work related injuries and health problems.

• Because it makes business operation safer, insurance encourages businesses to make economic transactions, which benefits the economics of countries. • Insurance company invest their funds to brings in extra revenues, such investment help businesses and government to finance their operations.

 
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