INSURANCE: What is Insurance? | Different Types & Benefits of Insurance

What is Insurance? Different types of insurance their simplest meaning, benefit and Importance of Insurance

What is Insurance?

Insurance is the transfer of the risk of a loss from one entity to another in exchange for payment.

Insurance is a form of risk management in which the insured transfers the cost of potential loss to another entity in exchange for monetary compensation.

Insurance As per Wikipedia - Insurance is a means of protection from financial loss. It is a form of risk management, primarily used to hedge against the risk of a contingent or uncertain loss. An entity which provides insurance is known as an insurer, insurance company, insurance carrier or underwriter.

What is the Definition of Insurance?

Definition of Insurance: An arrangement by which a company or the state undertakes to provide a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a specified premium.

What are the different types of Insurance?

Any risk that can be evaluated can possibly be insured. An insurance policy will set out in detail which perils are covered by the policy and which are not. Below are non-exhaustive lists of the many different types of insurance that exist. A single policy that may cover risks in one or more of the categories set out below. For example, vehicle insurance would typically cover both the property risk (theft or damage to the vehicle) and the liability risk (legal claims arising from an accident). A home insurance policy in the United States typically includes coverage for damage to the home and the owner's belongings, certain legal claims against the owner, and even a small amount of coverage for medical expenses of guests who are injured on the owner's property.

Business insurance can take a number of different forms, such as the various kinds of professional liability insurance, also called professional indemnity (PI), which are discussed below under that name; and the business owner's policy (BOP), which packages into one policy many of the kinds of coverage that a business owner needs, in a way analogous to how homeowners' insurance packages the coverages that a homeowner needs.

Life Insurance: Life insurance is a contract between an insurance policy holder and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money in exchange for a premium, upon the death of an insured person.

• LIFE INSURANCE: What is Life Insurance? | Different Types of Life Insurance | Everything about Life Insurance

Health Insurance: Health insurance policies cover the cost of medical treatments. Dental insurance, like medical insurance, protects policyholders for dental costs. In most developed countries, all citizens receive some health coverage from their governments, paid for by taxation. In most countries, health insurance is often part of an employer's benefits.

• HEALTH INSURANCE: What is Health Insurance? | Different Types of Health Insurance | Everything about Health Insurance

Auto Insurance: Auto insurance is insurance for cars, trucks, motorcycles, and other road vehicles. Its primary use is to provide financial protection against physical damage or bodily injury resulting from traffic collisions and against liability that could also arise from incidents in a vehicle.

• AUTO INSURANCE: What is Auto Insurance? | Different Types of Auto Insurance | Everything about Auto Insurance

Gap Insurance: Gap insurance covers the excess amount on your auto loan in an instance where your insurance company does not cover the entire loan. Depending on the company's specific policies it might or might not cover the deductible as well. This coverage is marketed for those who put low down payments, have high interest rates on their loans, and those with 60-month or longer terms. Gap insurance is typically offered by a finance company when the vehicle owner purchases their vehicle, but many auto insurance companies offer this coverage to consumers as well.

• GAP INSURANCE: What is Gap Insurance? | Different Types of Gap Insurance | Everything about Gap Insurance

Income protection insurance (IPI): Income Protection Insurance is an insurance policy, available principally in Australia, Ireland, New Zealand, South Africa, and the United Kingdom, paying benefits to policyholders who are incapacitated and hence unable to work due to illness or accident. IPI policies were formerly called Permanent Health Insurance.

• INCOME PROTECTION INSURANCE: What is Income Protection Insurance? | Different Types of Income Protection Insurance | Everything about Income Protection Insurance

Casualty insurance: Casualty insurance is a problematically defined term which broadly encompasses insurance not directly concerned with life insurance, health insurance, or property insurance.

• CASUALTY INSURANCE: What is Casualty Insurance? | Different Types of Casulty Insurance | Everything about Casulty Insurance

Burial insurance: Burial insurance is a very old type of life insurance which is paid out upon death to cover final expenses, such as the cost of a funeral. The Greeks and Romans introduced burial insurance c. 600 CE when they organized guilds called "benevolent societies" which cared for the surviving families and paid funeral expenses of members upon death. Guilds in the Middle Ages served a similar purpose, as did friendly societies during Victorian times.

• BURIAL INSURANCE: What is Burial Insurance? | Different Types of Burial Insurance | Everything about Burial Insurance

Property Insurance: Property insurance provides protection against risks to property, such as fire, theft or weather damage. This may include specialized forms of insurance such as Aviation Insurance,Builder's Risk Insurance, Crop Insurance, Fidelity bond, Fire insurance, Flood insurance, Earthquake insurance, Home insurance, Landlord Insurance, Marine insurance or boiler insurance, Surety Insurance, Volcano Insurance, Windstorm Insurance.

• PROPERTY INSURANCE: What is Property Insurance? | Different Types of Property Insurance | Everything about Property Insurance

Liability Insurance: Liability insurance is a very broad superset that covers legal claims against the insured. Many types of insurance include an aspect of liability coverage. For example, a homeowner's insurance policy will normally include liability coverage which protects the insured in the event of a claim brought by someone who slips and falls on the property; automobile insurance also includes an aspect of liability insurance that indemnifies against the harm that a crashing car can cause to others' lives, health, or property. The protection offered by a liability insurance policy is twofold: a legal defense in the event of a lawsuit commenced against the policyholder and indemnification (payment on behalf of the insured) with respect to a settlement or court verdict. Liability policies typically cover only the negligence of the insured, and will not apply to results of wilful or intentional acts by the insured.

• LIABILITY INSURANCE: What is liability Insurance? | Different Types of liability Insurance | Everything about Liability Insurance

Credit Insurance (Payment Protection Insurance): Payment protection insurance (PPI), also known as credit insurance, credit protection insurance, or loan repayment insurance, is an insurance product that enables consumers to ensure repayment of credit if the borrower dies, becomes ill or disabled, loses a job, or faces other circumstances that may prevent them from earning income to service the debt. It is not to be confused with income protection insurance, which is not specific to a debt but covers any income. PPI was widely sold by banks and other credit providers as an add-on to the loan or overdraft product.

• CREDIT INSURANCE: What is Credit Insurance? | Different Types of Credit Insurance | Everything about Credit Insurance

Pet Insurance: Pet insurance pays, partly or in total, for veterinary treatment of the insured person's ill or injured pet. Some policies will pay out when the pet dies, or if the pet is lost or stolen.

• PET INSURANCE: What is Pet Insurance? | Different Types of Pet Insurance | Everything about Pet Insurance

Reinsurance: Reinsurance is insurance that is purchased by an insurance company. In the classic case, reinsurance allows insurance companies to remain solvent after major claims events, such as major disasters like hurricanes and wildfires.

• REINSURANCE: What is Reinsurance? | Different Types of Reinsurance | Everything about Reinsurance

Multiple Peril Insurance: Multiple-peril insurance coverage is a kind of insurance that bundles together multiple coverages that typically would be needed with each other. Typically the package may include coverage for business crime, business automobile, boiler and machinery, marine, or farm.

• MULTIPLE PERIL INSURANCE: What is Multiple Peril Insurance? | Different Types of Multiple Peril Insurance | Everything about Multiple Peril Insurance

Benefits of Insurance

Based on Insurance policy, an Insurance Policy serves various benefits to an insured person:

• Life time security - Whether you're struggling with Health Problem or Economic Insurance will always be there with you like an umbrella.
• Economic Protection - Everyone faces ups and downs in their life. Nobody knows when what gonna happen. Insurance provides economic against the unexpected losses with regards to ostensible sum called premium.
• Keeps Stable Standard of Living - Since, in every aspect on any sudden loss an insurance policy helps to overcome that situation and get back to previous position an insurance policy maintains standard of living.
• Encourage Saving - Since, insurance policy has some guideline to pay off the installments on a depicted period. Which encourages a person to save money.
• Reduce Dependency - Due to sudden death or accident of the principle earner of the family, a family suffers from an unbearable loss. On such case Life Insurance supports the insured nominees which reduces dependency.
• Grant Instant Loan - An Insurance protected person can get loan from an insurance organization or can take loan from other money related foundations through the security of insurance arrangement. Bank and budgetary foundations favor the guaranteed resources as insurance for giving instant loan.
• Helps to enhance economy - An Insurance company collects premiums from their customers and invests those money on share market and various industrial sectors. Which helps an insurance company to generate revenue, resulting enhances economy.
• Promote foreign trade - As Insurance company invests their money on share market and various other industrial sectors, it helps to promote foreign trade.
• Reduce Inflation - The inflation implies increment in cost of merchandise or administration. Inflation gives difficult experienced to the national so it ought to be control. To control inflation, the volume of cash should be lessen. An insurance organization takes the cash from the general population as premium, which decreases the volume of cash in the market. Henceforth, it controls the inflation in the nation.
• Helps to run a business with ease - Since, an insured person gets benefits on all sudden unexpected falls, it helps them to run their business smoothly both mentally and financially.