Importance of Insurance
There are many times when we have to go through bad phases in life, which may involve physical injuries or financial losses. In such times, insurance seems to be our only hope. If we are not insured against uncertain risks, we have to bear the losses involved therein.
Basic Concept
In simple words, insurance is a concept, which involves two parties namely, the insurer and the insured, who is also referred to as the policyholder. The insurer is the insurance company, whereas the policyholder is the one who avails the service. In this process, the policyholder has to pay a certain amount of fees at prescribed time intervals to the company, and in turn, the insurer agrees to bear the financial losses and expenses of the policyholder. Insurance is most helpful in cases of property loss, in business, loss of life, substantial medical expenses, damage to automobiles in case of accidents, etc.
In Business
If you are thinking about its importance in risk management, it protects the business from shutting down in the event of any property loss. The losses can be incurred by any means of destruction, such as fire, floods, storms, and many other natural calamities. Financial losses that may arise due to a major theft can be covered. In addition to the property losses, business insurance is significant, as it may also cover a part of the amount to be paid in case of losing to a lawsuit. This is, no doubt, the best way to protect organizations from major losses.
Life Insurance
In the working of these policies, you keep paying the premium periodically, and in case of death, the insurer has to pay a particular amount to the nominees, who are primarily your family members, and those dependent on your financial support. The amount to be received by the family, in case of death, depends on the policy you choose. Even if you are covered with a policy that is provided by your employer, it is always better to have your own. The policy of the employer may just include an amount which is twice the annual pay; however, other policies may allow up to ten times the yearly pay.
Health Insurance
It plays an important role in covering the prescribed medical expenses. In this, you have to pay the premium, for which the expenses on your medical bills are paid by the respective company. Remember that the expenses will only be covered, if the insured becomes ill due to the causes covered in the policy. As the costs for medical treatments are rising, it is suggested to avail of a good healthcare plan.
Auto Insurance
This is nothing but the cover for the damages incurred due to car accidents. This is the best option to stop worrying about the expenses to be paid in case of a car crash. In US alone, more than 1200 road accidents take place. There are many types of policies, which have a cover for specifics in the accidents. Some types may cover damages caused by vandalism, fire, robbery, and natural disasters. Before deciding on the policy, understand all the aspects that are covered.
Health, life, and car insurances are few types that will help you to be safe against the losses incurred in uncertain events.
