Insurance is a way of protection against financial loss. In basic terms, it’s a kind of risk management, mainly utilized to offset the inherent risk of an unknown or contingent gain. Insurance providers provide a wide variety of schemes, including insurance on life, health, property and even assets. There are two types of insurance; namely, “fee-for-service” insurance and “guaranteed-issue” insurance.
The primary objective of an insurance contract is to ensure that the insured party (person or entity) pays an agreed amount, as determined in the insuring agreement, to the insurer once a specific loss occurred. This loss may occur in case of accident or natural disaster. In such cases, underinsured or uninsured persons would be left without any means of financial assistance once the dangers they were exposed to came into view. A contract is usually entered into by the insurer and the insured party.
Under insurances on life and other categories, there are two parties involved. There is the insurer who pays the insured person once his or her death has taken place, while the insured person provides monetary funds to the insurer to compensate for his or her death and its related consequences. Under most types of life insurance, there are two policies to be filed; i.e., the term policy and the whole life policy. The former is for a definite time frame, while the latter allows the insured person to pay premiums even when not in his or her life, which may result in much higher costs in the long run.
One of the most common types of insuring agreement is the “all risks” or the “indemnity” insurance. It basically protects the company from any loss arising out of negligence of the business or company officials. As opposed to the fee-for-service or the primary insurance scheme, this type of insuring agreement provides little or no protection against death. For example, if a worker is killed in an accident on the job, this kind of agreement does not provide any compensation. In such cases, it is important for an employee to have some form of workers’ compensation coverage in his or her life insurance. However, if the insured individual is the head of a large company, or is a member of a highly successful business, he may benefit more from the more expensive commercial insurance schemes like group coverage and entrepreneur’s liability coverage.
Although there are different types of insuring agreement, each one requires a unique set of rules and coverage rules. Therefore, it is best to study each insurance coverage very well before settling on one. Moreover, it is extremely important to compare the different types of insuring policies sold by different companies and their respective rates before settling on one. This will ensure that you get the lowest auto insurance coverage possible.
Most insurance policies also stipulate a prescribed amount as the policy limit, which is paid by the insurer when an insured accident occurs. The deductible or co-pay amount is also a very important factor in determining the premium cost of an insurance policy. The deductible is the maximum amount that the insurer has to pay when an insured accident happens. It is essential to keep this amount in mind while working out the premium costs of a policy.