A Guide For Beginners On insurance.
Having a good insurance is the key to a sound financial planning. Many people might have a list of auto insurance companies even though they might not know what an insurance is or why it is necessary. A lot of Indians see insurance as a form of investment or a good avenue for saving tax. When asked about their investments, any average individual will mention insurance as one of his or her core investment.
Insurance can be referred to as a means of spreading out the important financial risks of a business entity or an individual. This could also be done to a group of people and business entities in the occurrence of a bad event which is predefined. The cost of insurance is like an annual or monthly compensation which is paid to an insurance firm. In the event of shock, insurance can be used to effectively spread out the risks involved among several people to reduce the load of financial strain.
When you seek for protection against a financial risk and then make a contract with any insurance discount provider, you are referred to as the insured while the insurance company is known as the insurer.
When dealing with life insurance, the money insured is the sum the insurer intends to the insured when they dies before the predefined day. But in the case of a non-term insurance, this money will not include the bonuses which are supposed to be added. While in non-life insurance, the guaranteed amount is referred to as insurance cover.
The person insured will be expected to pay some compensation for protection against any financial risk an insurer offers. This is known as premium. These premiums can be paid either monthly, quarterly, annually or as put in the contract. The total premiums paid should be several times lesser than your insurance cover, otherwise it will not make sense to have an insurance. Some important factors which will determine the premiums include age of insured, the cover chosen, the period of insurance and so forth.
The policy term is the period with which the insurance will last for. These terms will be dictated at the time of purchase by the insured. Some insurance policies might provide additional features as add-ons in addition to the actual cover. This can be provided after paying additional premium. When you purchase these features separately, it can be very expensive.