Necessary & Benefits Of Insurance Including Insurance Premium - insuranceie
Check out the following articles from my blog to know what is insurance and what are its types:
Why is Insurance Necessary?
Naturally it may come to your mind why insurance is necessary? Why would you be willing to risk paying a fixed amount every month to an organization? If you want, you can keep the money with yourself to deal with possible risks. Yes, you can, but it is not possible for any person alone to be ready for all kinds of risks all the time. Money likes to change hands all the time so uncertainty and risk can engulf you in ways you may not always be prepared for.
Life is beautiful, we all hope to get something better in life. But in addition to that, insurance is very important for dealing with bad situations in life, for our safety and peace of mind. Insurance is not only for human life, but insurance is done to avoid different categories of risks. In the next step we will know how insurance works and how many types of insurance there are. Insurance is taken to deal with financial losses in future uncertain situations or any risk by acquiring the ability to cope or cope with the situation.
Insurance Benefits:
Many people are interested in knowing the benefits of insurance.
1) Insurance provides security of life and property. In case of any loss under any circumstances, the insurance promises to get its compensation through premium.
2) Insurance creates capital. When the policyholder pays the insurance premium in small installments in the hope of receiving possible compensation in the future, the insurance company transfers it as capital to other individuals or institutions. By which the said person or institution can raise capital.
3) Insurance is termed by many as an old age asset as it provides financial security in the event of situations in life where one has to live an active life.
4) Insurance essentially provides peace of mind. Because whenever the mentality of uncertainty or risk does not work on any work or any thing, then life can be conducted without thinking about it. And the feeling of being free from worry is described here as tranquility.
5) Insurance reduces inflation, because it does not keep the money after collecting it but continues to grow the money by investing it in various places.
6) Insurance always promises social security head.
What is the Insurance Premium?
The term premium is used when discussing insurance matters. Because of which one must know what the premium is basically. The word insurance insurance must be used before the word premium. So the matter stands, the promise of the insurer to pay compensation to the insured in the contract of insurance is called insurance premium.
To understand easily, when an insured pays a certain amount to the insurance company at a monthly rate in the hope or expectation of receiving compensation and the amount that the insurance company pays to the insured in case of any loss is called insurance premium.
Insurance premium is slightly different in case of life insurance, as in case of no life indemnity, the premium is paid to the insurance company by the policyholder in case of death of the insured before the expiry of the specified term of service, which is determined as per the insurance claim contract.
According to the Insurance Act, 2010, the following factors are to be taken into consideration in determining the premium of an insurance and in the light of which the amount of the insurance premium is determined:
- Sum insured
- Term of Insurance
- Age of the insurance customer
- Insurance office expenses
- Mortality Table
- Commission charges etc.
