What is Insurance? – Definition, Types, Benefits 2023

 What is Insurance? – Definition, Types, Benefits 2023

What is insurance or what is insurance (insurance meaning in Bengali)? How many types of insurance and what are they? Through today's article we are going to discuss in detail about Insurance.

What is Insurance? – Definition, Types, Benefits 2023

What is insurance?

What does insurance mean?

There is no guarantee of life in our fast lifestyle.

Yet, almost all of us have families and the thoughts of loved ones around us always haunt us.

And, we want to make some arrangements for our family to be healthy and happy in our absence.

Again, when we spend a lot of our hard-earned money to buy something valuable, the thought of the permanence or loss of that thing also makes us anxious.

So, for the convenience of our loved ones or to protect something valuable, we often insure that thing or ourselves.

So, today in this article we will discuss in detail what is this insurance? Or what insurance is, and what its types are, about these things.

First I know, what does this insurance mean?

What is insurance? (what is insurance in Bengali)

Insurance is the most effective risk management tool.

That management can protect any person or business from various financial losses or risks.

Although mental and psychological damage is never reimbursable, at least financial loss can be covered by this insurance.

Life is definitely uncertain, which you can't change in any way, but insurance can help you reduce your life-related financial loss to a great extent.

What is insurance or definition of insurance:

Insurance is a legal agreement between two parties.

And, this agreement is basically signed between the insurance company (insurer / insurer) and the person (insured / insured).

Where the insurance company promises to compensate the insured for any sudden financial loss in return for the premium paid by the insured.

Simply put, insurance is a risk transfer process.

In this process you transfer your risk to the insurance company.

And, you get financial coverage from that company for the financial loss that you face due to an unforeseen event.

The amount you pay to arrange this insurance is called 'premium'.

You can insure everything from your life to the smartphone you use.

In other words, what is 'important' to you is that you are able to protect yourself from financial loss through insurance.

Insurance coverage can be described as a type of contract described in the form of a financial security policy.

This policy protects people from financial risks created by unforeseen events.

The insured person is the policyholder of the insurance.

And, the companies that arrange the insurance are the insurers, the insurance companies, the insurance carriers or the underwriters.

The policyholder usually pays a certain amount of ‘premium’ or money to the insurance company.

And, in lieu of this premium, the insurance company provides insurance cover to that person.

However, insurance is a contract subject to certain conditions.

The insurance company compensates the policyholders only if they abide by the agreements.

The amount of insurance coverage or ‘policy limit’ is determined based on the amount of premium payment.

Then I hope you have understood what is meant by insurance.

What are the components of insurance:

Friends, what is insurance (What Is Insurance), you have already understood about this, let's know the elements of insurance one by one.

It is important to understand how insurance works before choosing any insurance policy.

The basic elements of any general insurance policy are -

1. Premium:

The premium for a policy is the cost of that insurance.

Premiums are generally considered as monthly expenses.

The amount of premium in any insurance policy is determined based on the amount of risk you or your business has and what type of insurance coverage you want.

Suppose you have a car and you have a history of accidents while driving.

So in that case, if you want to choose your car insurance policy, you will want to insure more money.

And, the higher the premium, the higher the premium.

On the other hand, a careful driver will insure less money than you.

Therefore, different policyholders may charge different premiums for the same type of policy.

2. Policy limit:

The maximum amount that a policyholder will pay under a policy for a covered loss is the policy limit.

A maximum policy limit can be set for each period (e.g. annual or policy term), depending on the loss or injury or the life of the policy.

Generally, higher premiums require higher premiums.

For a general life insurance policy, the maximum amount paid by the insurer is considered as face value.

Which is given to the nominee after the death of the insured person.

3. Deductible:

The deductible value is a certain amount of money that the policyholder has to pay before the insurer pays the claim.

Depending on the insurance company and the type of policy, deductibles are applied depending on the counter-policy or counter-claim.

In general, policies with higher deductibles are less expensive, as higher costs reduce the amount of claim money.

4. Special considerations:

In the case of health insurance, those who have chronic health problems or need regular treatment should take policies with less deductible.

However, the annual premium is more expensive than a relatively high deductible policy.

However, low cost medical insurance is the best choice throughout the year.

Basically, there are 6 types of insurance.

They are-

1. Life Insurance:

The essence of this type of insurance is to protect a person's life in exchange for money.

Here at the time of death of the policyholder or at the expiration of a certain term a certain amount of insurance money is paid to his nominee.

Nowadays life insurance is the most popular because life is the most important asset to any human being.

This type of insurance protects the policyholder's family from untimely death.

Or, in the old days, when the ability to earn decreases, it also pays a sufficient amount.

A limited amount of money is paid in case of any kind of accident under personal insurance.

What is a mutual fund?

Insurance not only provides protection but also refunds a substantial amount of money paid by the insured in case of death or expiration of the term.

2. General Insurance:

Property insurance, liability insurance, and other types of insurance are examples of general insurance.

Even fire and marine insurance are considered property insurance.

The most difficult type of liability insurance is fidelity insurance.

In this type of insurance, the insurance companies have to repay the amount owed by the third party to the insured.

3. Property Insurance:

Under property insurance, a person's property is protected against a certain risk.

This type of insurance covers the loss of property in the event of a fire, property theft or accident, starting with a fire.

4. Marine Insurance:

This insurance is effective in many areas ranging from collisions with rocks at sea, to attacks by enemies and more.

There are two types of insurance - inland and ocean marine insurance.

Ships, cargo and cargo can also be insured here.

5. Fire Insurance:

This type of insurance covers any loss to the society starting from personal.

Damage to personal property, or damage caused by fire due to riots and accidents is also covered by this insurance.

. Liability insurance:

The person insured under this insurance is liable to pay for the loss of property or to compensate for the loss of any person.

. Social Insurance:

This insurance provides protection to the weaker sections of the society, those who are unable to pay premium for adequate insurance. Different types of social insurance like pension plan, disability benefit, industrial insurance, unemployment benefit, sickness insurance etc.

. Health Insurance:

This type of insurance is a special type of insurance that covers a person's medical expenses.

Of course, the insurance company will cover your medical expenses depending on how much premium you are paying and your policy limit.

What are the insurance benefits?

An insurance policy performs a variety of functions and offers multiple benefits.

Some of the common benefits of this insurance are discussed below -

1. Provides protection:

Insurance helps to save a person from a dangerous situation by reducing the impact of financial loss.

It protects the afflicted with financial compensation in times of financial crisis.

These insurance not only frees people from financial problems, but also frees them from the stress created by such situations.

2. Guarantees:

Insurance gives a sense of reassurance to any policyholder.

To secure this guarantee, a person spends a small portion of their income on regular insurance to secure their future.

Thus, insurance guarantees reliable financial support for a small premium.

It promises to protect the policyholders financially in the event of an accident, or any danger.

3. Risk sharing:

The way the insurance policy works has transformed it into a cooperative scheme.

An insurer or insurance company is often unable to pay from its own capital.

Any insurance company collectively manages the risk and collects many premiums at once.

Therefore, these insurance companies provide coverage to a large number of people at risk.

And, the insured person who claims insurance coverage, the insurance company pays the coverage to that particular person from the funds of the rest of the insured.

In this way, all policyholders share the risk of the person at risk.

4. Value of risk

Insurance policies assess the level of risk and predict the various causes of these risks.

Insurance determines the amount of coverage and the amount of premium paid based on the level of risk.

It provides protection against unforeseen events and consequent losses.

5. Capital production:

The money raised from various premiums is used to fund the insurance company.

Insurers invest this bulk money in different parts of the market.

For example, insurance companies invest in stocks, mutual funds and other productive channels.

So, these insurances help to increase the income and profit for the business.

Which protects against loss of company capital.

. Helps in economic growth:

Insurance policies combine domestic expenses to provide financial stability.

These policies seek to reduce the damage caused by the loss or destruction of the insured community.

This not only divides the risk evenly, but also helps to increase trade and commerce using funds.

. Helps to create conservation habits:

Insurance policies help people to develop savings habits.

They save a portion of their income to pay premiums, which protects them from the dangers of the unknown future.

There are many insurance plans, including insurance-o-savings or insurance-o-investment schemes.

Therefore, insurance encourages individuals to save and invest.

Today our article on insurance is over.

If you like the article, please let us know in the comments.

Our last word,

So friends, through today's article we know what insurance is and how many types of insurance are there.

If you like our today's article written about insurance meaning in Bengali, then you must share the article on social media.

Also, if you have any other questions or suggestions about insurance, you can let us know by commenting below.

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