Posted in Finance, Accounting and Economics Terms, Total Reads: 314
Insurance is an agreement or policy where an individual or company will get financial relief or reimbursement or compensation for a specifically mentioned loss, damage, calamity, death, illness etc in return for a certain regular payment done by the individual/organization.
In common terms, it means saving things/items/yourself from a possible eventuality. Other terms for it can be safeguard, defense, protection, shelter, etc. One more meaning can be related to a company where they take responsibility of paying you back the insured amount of something damaged due to a calamity.
It varies from life insurance to auto, fire, flood, health, pet, malpractice to unemployment insurance, etc.
An individual can pay the fee monthly (premium) or lump sum for insurance. A precaution here is that one should look at the policies the companies offer and not just look at the money.
Situation needs to be looked upon before lending insurance. Identification of the buyer, product, size, market trends are few factors which are being made sure such that the buyer will not default.
Insurance companies get money from different investors by distributing different types of risks through liabilities and assets. E.g.: A person who came for life insurance will pay some premium till his death which can be used to pay for those people who have paid before and who needs them now.