What is Insurance? Summary of Information insurance buyers need to know

Do you know what insurance is? It can be said that for most Indian citizens it is a kind of risk prevention. Find useful information for yourself immediately before deciding to buy insurance with shares in the article below!

What is insurance?

What is insurance?

Insurance is a type of activity in which participants are entitled to insurance benefits. By contributing an amount for yourself or for a third person in the event of unforeseen risks, insurance will help pay a share. This subsidy will be provided by a specific organization that is responsible for compensating for the losses of the insured under a specific regime.

Currently, there are two types of insurance, in particular as follows:

Compulsory insurance: It is the compulsory insurance of the government that includes regulations, fees, the minimum amount to be charged by participating individuals or organizations.

Voluntary insurance: An individual and an organization have the right to choose the company or its products with fees and benefits.

In addition, now there are many other types of insurance such as state type, commercial type; classified by people, objects with properties,...

The meaning and role of insurance

The meaning and role of insurance

Insurance brings a lot of great meaning to participants, especially as follows:

  • Participating in insurance is financial security for the family because there are always hidden risks in life that are inevitable such as illness, illness, unemployment, accident, etc.

Unfortunately you and your family need to be financially secure when going through difficult times. It is better for the earner to have a policy so that the insurance can replace them for family life responsibilities.

  • Joining insurance helps to prepare for the future of capital for business. This is an effective way to save money, to help protect you, and to accumulate and appreciate your own labor.

This is considered a safe solution if you want to start helping you realize your dreams.

  • Create a financial account for your comfortable retirement. Participating in insurance is the best and most effective financial preparation to enjoy your old age. Do not depend on anyone, spend independently and still get the salary you want.

The role of insurance

The role of insurance

What is the role of insurance?

Insurance plays an extremely important role in life, it is like a life saver when you are swimming in the hardships of life. Accordingly, the typical roles of insurance are as follows:

  • Insurance helps transfer risks, and helps spread damages to the needy, reducing losses as much as possible for policyholders.
  • Insurance is a tool to stabilize costs, help buyers save money and feel better mentally.
  • Insurance is also an investment source to develop the economy and create more jobs. This not only helps to protect you, but you are also contributing a share to the financial reserve fund in insurance companies, thereby compensating not only for those who are lost and unfortunate.

Explanation of terms commonly used in insurance

Explanation of terms commonly used in insurance

Some of the terms used in insurance that you need to understand specific and detailed information are as follows:

Social Insurance

It is an agency under the government, this agency has the function of implementing social insurance and health insurance arrangements and policies and is responsible for managing the Social Insurance Fund in accordance with the rules issued by the government.Enforcement of the law.

Health insurance fund

It is a financial fund derived from health insurance premiums and various legitimate sources of income. The health insurance fund is used to pay for medical examination and treatment expenses for health insurance participants; pay for the costs of managing organizational mechanisms and other expenses.

Social insurance fund

This fund is a financial fund independent of the state budget. It is also created by employers, staff contributions and state support.

Time to pay Social Insurance

The calculation is made from the moment when the employee stops making payments. In the event of frequent non-payment of Social Insurance, time will be calculated as the total payment time.

Assurance Company

Established, operated and organized in accordance with the provisions of the law on insurance business.

Insurance agent

Persons or organizations authorized by insurance companies/enterprises to carry out activities prescribed for Agents of the law on insurance business and other regulations.

Insurance buyer

This may be an individual or organization that enters into an insurance contract with an insurance company/company and has to pay a premium. The insured party may at the same time be the beneficiary or the insured person.

Insured person

An insured person is a concept that refers to a person or organization whose citizenship and civil liability are protected by an insurance contract signed in accordance with the rules and arrangements. The insured can also be the beneficiary of the insurance policy when a crisis occurs.

Beneficiary

The beneficiary is the person or organization that is designated to receive the insurance amount, receive a guarantee and compensate under a previously signed insurance contract.

An insurance contract

There is a document representing the agreement between the buyer and the business/insurance company. In the insurance contract, it will mention the responsibility and obligation to compensate, protect the seller and the buyer must perform under the contract in the contribution costs under the contract.

Insurance fee

The amount to be paid according to the agreed time and method is what the buyer must pay to the insurance support business.

Insurance funds

It is the amount approved by the business/insurance company and detailed on the insurance policy, through which is clear about the benefits to be obtained as per the rules.

Principles of insurance

Principles of insurance

The principles that you need to understand specifically in insurance are as follows:

Complete honesty

All parties from the insurer to the insured must be honest. An insurance contract is legally valid only when it is established on the basis of honest information and high reliability of the parties.

Benefits can be insured

An insurable right is created for a person or institution if a valid economic benefit is received and does not cause harm when the insured subject matter is adversely affected by an unforeseen risk.

The right to receive insurance is established on the basis of: right of right, right of ownership, right of legitimate use of property; rights and obligations under the contract; right of identification, blood relations and parenting.

Compensation principle

In no case will the amount of compensation that the insured receives exceed their losses if the insured event occurs. This is to prevent profiteering from the insurance policy.

The principle of supremacy

The principle of supremacy

This principle is used when there is a third party who should be held responsible for the loss of the object. Accordingly, insurance companies and enterprises will be allowed to subrogate to claim third-party compensation according to the limits set, after completing the compensation for the insured.

The principle applies to types of property and civil liability insurance.

Principle of compensation contributions

If a person or organization participates in several insurances, when an insured event occurs, the insurers will jointly contribute compensation, but not exceed the damage value, even if the subject has signed a contract. Several insurance policies at once.

The" proximity cause " principle

This principle simply means that insurance is only responsible for paying if your consequences and losses are due to a series of related events, within the acceptable risk scope of the policy. And no other independent cause has any interference or effect.

The" closest cause " is considered to be the cause that is decisive and direct to the effect that has occurred, whether it is the first or last cause.

Example: a person has Accident Insurance, in an unfortunate case, this person's leg broke. Then taken to hospital for treatment, accidentally became infected with an infectious disease and died.

The cause of death here is not to break the leg of this person. Therefore, infection of a communicable disease is not counted as an immediate cause and accident insurance will not cover the accidental part of death from this infectious disease.

Types of insurance

Types of insurance

Currently, there are many different types of insurance, which can fall into the most popular types of insurance today:

  • Social insurance
  • Commercial insurance
  • Maternity insurance
  • Health insurance
  • etc.

Each type of insurance will have a different method of payment. You can see more details here: types of insurance

Above is all the information that not only helps you understand what insurance is? Hope that sharing in the article will be useful to readers. Do not forget to follow and update many other useful information.

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