INSURANCE POLICY

What is an Insurance Policy?

A Insurance Policy (Lie Insurance Policy) is a printed form, which serves between an insurer and insured as the contract.

Insurance Life Policy is a document, which specifies the contract between an insurance company and insurer called Life Insurance Policy.

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The Insurance Company, sell Insurance Policies known as Insurer and Policies buyers known as Insured. Normally, there are two types of Insurance 1 is General Insurance and the other is Life Insurance. An Insurance Policy is a Written Document. It contains the requirements, the insurance schedule, ability factors, benefits, guidelines that are applicable to the policy holder under the plan.

Insurance Policy - Important

Insurance Policy is a very important document. It is a proof of an Insurance that an insured had bought. Among the details of policy, Insured person’s (Policy Buyer’s) detail given by him or her must be true. If any, of these, detail will proved or known wrong, the insurance Company can cancel his or her Insurance Policy.

For example : A Person is buying a Life Insurance. He is suffering from high blood pressure. While buying a Life Insurance, he said that he is healthy and he has no illness. Insurance Company agrees and signed the contract. But after some time or at the time of Compensating an Insurance Company knows that the Life Insurance Policy Holder was failed give true information, then Insurance Company can cancel this Policy.

At the time of Compensating Policy holder, have to saw his Policy. If he lost it, Insurance Company will not give him reward, because it is a proof of an Insurance cover. It is obvious that, if you do not have any Insurance then you will be alone while facing the expenses. The insurer analyzed this type of financial risks and this is the base of the Contract. This all verified by making use of details and all the data and information that you have provided in Policy for the Insurance.


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WHAT IS INSURANCE PREMIUM? KEY INFORMATION ABOUT PREMIUM

According to an insurance Contract, insurance Company promise to pay money to the policy owner if some specific event happens. In consideration of this promise, policy owner has to pay some fixed amount to the insurance company is called “Premium”.

Insurance premium or life insurance premium is the amount of money, which is paid for a certain level of insurance cover for a particular time period.

Example: monthly premium of $25.
: Yearly premium of $300.

In simple language we can say, Premium is the amount paid to the insurance company for the purchase of an Life Insurance cover or Life Insurance policy.


Amount of the Premium is depending upon the price of Insurance Cover. Policy Holder can pay it in some different mode of time, normally Life Insurance Companies offer monthly, Quarterly, Half yearly and yearly. In rare case it may be a one time payment. An insurance Premium must be paid regularly at the given period of time. There is any default in insurance premium can put the insurance Policy in Danger. If those kinds of event take place, this policy will be count up as lapsed policy. In this situation Insurance Company may not give all the benefits to the Policy Holder, If Policy Holder prevent his Policy than he have to pay Penalty. The Particulars of Penalty are given in the Policy Conditions.



Calculation of insurance premium

Calculation of an Insurance Premium is related with statistic and actuarial principals. This whole process is a complex technical progression. Mostly, well-trained and experienced professionals can calculate the insurance premium. Each insurance plan and each insurance policy has different premium. Each Insurance Company has their own tables for Premium calculation.

The premium cost is not based on necessarily on history or any individual habits, it’s generally based on statistics.

For an Example

Ex.1
A Young man, about 23 years old has a sport car. He is looking for Car Insurance. He can often anticipate a higher insurance premium than the premium of sedan car’s insurance, owned by a 50 year old man. They both are very good driver. In this matter an Insurance Company thinks that a young man in a fast sport car to be more risk for accidents. So that the different between that both Insurance Premiums are noticeable. And normally more expensive car has more cost to be insured. In this example an Insurance Premium is decided upon Risk and the cost of an insured thing.


Ex.2
This same method is used to calculate for medical insurance premium. Generally a smoker is not so healthy than a non-smoker. So a non-smoker can live healthier live. Therefore the Health Insurance Premium of smoker person is higher than the non-smoking person. A man working at a construction site and a man working as computer operator in an office, they both want to buy a Life Insurance. But they both have to pay different amount as Life Insurance Premium because the man, who is working on a construction has more probably to meet with an accident than the Computer operator. If the Policy holder can change the type of his or her working and change habits, the insurance company may be reduce or upgrade in their Insurance Premium.


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Insurance Policy

Life Insurance Vs. Other Saving

Types of Life Insurance

What is Insurance? Understand the Insurance.

What is insurance?

There are different types of definitions, some of them are below.

“According to law and economics, Insurance is a form of risk management, which mainly used to protect against the risk of a non-essential loss.”

“Basically, Insurance is a protection against an economical loss which can arise on the occurrence of an unfortunate occasion.”

“Insurance provides protection by compensating economic loss that arises from fortuities.”

“Insurance is a ensuring a good result against a possible unnecessary outcome: in company or business and in life, it is a way of managing risk and keeping things on the move.”

“Insurance is an equitable transfer of the risk of a loss, from one to another entity, in exchange for a premium, and can be thought of a surety small loss to avoid a large, probably devastating large loss.”

Everybody knows and understands that an accident will happen, but everyone does not know the time that when it will happen and even if it will happen. In this type of fortuitous events insurance is very helpful to the person, his property and his business.

Insurance is one kind of contract between two parties, one is insurer and the other is insured. Insurer pay fixed amount called premium to the insured on the happening of a certain incident.

Basically insurance is a protection against economical loss arising on the happening of an unpredicted incident. Insurer pays some of money to the insurance company to provide for this protection. In exchange of this premium insurer (a person) can defend himself, his family and his property economically from an unexpected event. And normally for the security of his costly property an owner should ready to pay very small amount.

You can understand easily by this example given below.

One person buys a life insurance Policy for this he has to pay Premium to the insurance company. By this contract the insurance Company promise to the person that in case of any unexpected event like death will happen then a fixed amount will given to his family members.

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Insurance policy

Insurance Premium