Definition

Insurance is a contract between two parties whereby one party agrees to undertake the risk of another in exchange for consideration known as premium and promises to pay a fixed sum of money to the other party on happening of an uncertain event (death) or after the expiry of a certain period in case of life insurance or to indemnify the other party on happening of an uncertain event in case of general insurance. The party bearing the risk is known as the insurer or assurer and the party whose risk is covered is known as the insured or assured.

Concept of Insurance / How Insurance Works

The concept behind insurance is that a group of people exposed to similar risk come together and make contributions towards formation of a pool of funds. In case a person actually suffers a loss on account of such risk, he is compensated out of the same pool of funds. Contribution to the pool is made by a group of people sharing common risks and collected by the insurance companies in the form of premiums.

Why should I buy insurance?

All assets have some economic value attached to them. No person can deny that there is also a possibility that these assets may get damaged / destroyed or become non-operational due to risks like breakdowns, fire, floods, earthquake etc. Different assets are exposed to different types of risks like a car has a risk of theft or meeting an accident, a house is exposed to risk of catching fire, a human is exposed to risk of death / accident.

Types of Insurance

• 1. Life Insurance.
• 2. General Insurance

General insurance again classified in to many types

• 1. Health Insurance
• 2. Vehicle Insurance
• 3. Travel Insurance
• 4. Theft Insurance
• 5. Fire Insurance and so on.

give good advise to the individuals based on their necessity. For more information please contact us.