Insurance | Insurance key points

What is insurance?

Insurance is the contract represented by a policy in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. The company pools clients’ risks to make payments more affordable for the insured. Insurance policies are used to hedge against the risk of financial losses both big and small that may result from damage to the insured or her property or from liability for damage or injury caused to a third party.

Key points.

Insurance is a contract policy in which one insurer indemnifies another against losses from specific contingencies or perils.

  • there are many types of insurance policies. Life. Health homeowners and auto are the most common forms of insurance.
  •  The core components that make up most insurance policies are the deductible and policy limit. And premium.

Insurance policies components:

When choosing a policy it is important to understand how insurance works. A firm understanding of these concepts goes a long way in helping you choose the policy that best suits your needs, for instance, whole life insurance may or may not be the right type of life insurance for you. There are three components of any type of insurance premium policy limit and deductible that are crucial.


A policy’s premium is its price typically expressed as a monthly cost the premium is determined by the insurer based on your business risk profile which may includes creditworthiness. for example if you own several expensive automobiles and have a history of reckless driving you will likely pay more for an auto policies then someone with a single mid range sedan and a perfect driving record. however different insurers.
Main charge different premiums for similar policies so finding the price that is right for you requires some legwork.

Policy limit:

They policy limit is the maximum amount in ensurar will pay under a policy for a covered loss maximum may be set per periods (example annual or policy terms), Per loss or injury. Or over the life of the policy also known as the lifetime maximum. typically high limits carry higher premiums. for a general Life insurance policy the maximum amount the insurer will pay is referred to as the face value, which is the amount paid to a beneficiary upon the death of the ensured.


The deductible is a specific amount the policy holder must pay out of pocket before the insurance claim. deductible serve as a deterrents to large volumes of small and insignificant claims, detectable can apply per policy or per claim depending on the insurer and the type of policy. policies with very high deductibles are typically less expensive because the high out of pocket expense generally results in fewer small claims.

Special considerations:

With regard to health insurance people who have chronic health issues are need regular medical attention should look for policy with a lower deductibles. Though the annual premium is higher than a comparable policy with a higher deductible less expensive access to medical care throughout the year maybe worth a trade off. read more

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