The main purpose of insurance is the hedge the risk of loss. The risk-bearing onus is shifted from the owner of the insured item also referred to as the insured to the insurer. A premium is paid to the insurer and in return you get a guarantee against larger losses. If a quantity can be attached to a risk, it can normally be insured.
Auto insurance covers cars, trucks, buses etc. The main purpose of the insurance is to guard against possible losses incurable as result of road accident as well as liability arising out of an accident. The insurance can include cover for insured party, insured vehicle or third parties. Examples are theft, fire or accident damage insurance. Premiums are based on gender, marital status, age, vehicle type and distance traveled. In terms of leased vehicles, insurance is an obligated.
Excess is a very common term in the insurance industry. An excess payment refers to a fixed amount payable every time your insured vehicle is repaired in terms of the insurance policy. Compulsory excess refers to minimum payment insurer wants from insured in event of claim. Voluntary excess is an offer by the insured to pay higher amount of excess to reduce insurance premium. Compulsory excess is the basic excess. Voluntary excess is added on the basic compulsory amount.
Home insurance covers private homes. The insurance is a combination of personal and liability insurance protections covering accidents as well as losses that may occur in and around your home. A single premium is paid to cover all risks. Your premium will be dependent or calculated on replacement value of the home. Additional items in or around the home can also be insured and included in the policy.
Special cover required
Note that some events are excluded from insurance. These are referred to as “Acts of God”. These events call for additional or special coverage attracting separate or increased premiums.
Life insurance is dependent upon the death or disability of the insured for benefits to be paid to the beneficiary. The benefit is usually in form of a lump sum amount. However funeral expenses and other bills can also be paid in terms of the policy. Premiums either monthly or in lump sum are payable in return for the benefits to be paid. The insurance contract has certain inclusions as well as exclusions covering both the insured and insurer. There are many types of life insurance, such as term and permanent life insurance. Universal life insurance and whole life insurance are the two most popular forms of permanent life.
This type of insurance is for coverage of medical expenses. It can be provided by a private insurer or government program in individual or group form. Group form is preferred by companies who would like to give employees Health Insurance as employment benefit. Disability and permanent or long term care nursing can also be included or covered by the insurance policy. A monthly premium or tax is paid and in return their have benefit of medical expense payment with possible inclusion of medication, hospitalization etc.
Exclusions are applicable where some services are not covered. The insured will have to carry full cost of these services. Limits do also apply, where services are only paid up to certain amount the rest will be carried by the insured.