by kelvin » Tue Jun 13, 2006 06:56 am
Hi!
I am going to start a new topic on the Basics of Insurance. Let me begin with the definition of Insurance. Anybody might add their comments or articles regarding this issue, like the advantages of insurance, needs of insurance and so on.
What is Insurance:
Insurance could be looked upon as a promise towards the reimbursement of losses to be made to the associated person/persons against the hazards for which they have paid an amount to the insurance company. The pre-paid amount is called Premium which is exchanged to transfer the risks from an individual to a company.
An Insurance policy is a written contract providing the support to the medical needs, personal needs and liabilities, against the probable financial losses.
Insurance Discussion Forum
I am going to start a new topic on the Basics of Insurance. Let me begin with the definition of Insurance. Anybody might add their comments or articles regarding this issue, like the advantages of insurance, needs of insurance and so on.
What is Insurance:
Insurance could be looked upon as a promise towards the reimbursement of losses to be made to the associated person/persons against the hazards for which they have paid an amount to the insurance company. The pre-paid amount is called Premium which is exchanged to transfer the risks from an individual to a company.
An Insurance policy is a written contract providing the support to the medical needs, personal needs and liabilities, against the probable financial losses.
Insurance Discussion Forum
Posted: Tue Jun 13, 2006 07:11 am Post Subject: The need of insurance
Hi Kelvin , Thanks for starting the topic. I'm sure all the community members can take part in it. The first one would surely be mine :)
An Insurance policy is a promise to protect you against the perils like illness, accident, natural disasters and/or other unforeseen events that may cause financial losses.
For the insurance you have to pay an amount of money called premium. In general this promise is renewed on a yearly basis.
The more responsibility a person has towards his family, the greater is the chance to have an impact if he dies or becomes physically disabled. By having insurance you can alleviate your concern regarding the possibilities of suffering a loss of property or a disabling accident.
Odds may come in life with all shapes, sizes and colors as Health problems, premature deaths, Floods, Lawsuits, Fires, Hurricanes. You cannot prevent these from occurring, as the future is unpredictable. But you can always take the constructive actions to protect the lives as well as the financial belongings against the damage and harms caused by these perils. Because even a minor health treatment or replacing a spare part of the car could cause a significant depletion of the savings account.
Insurance do probably need for the persons of the following categories:
To conclude: In the present era of rising costs associated with the greater future uncertainty, it has become a necessity to have an insurance policy specially designed for the car, life, and health. Car insurance has become a must for almost all the states.
Posted: Tue Jun 13, 2006 09:04 am Post Subject: How much of insurance?
Insurance related topics are not meant to bring forth any amusement but rather they are for discussing, and when it is about the discussion of life it can be unpleasant to talk about death or own death. Because we do not storm our brains in thinking about insurance very much.
Determine the need:First you need to determine the prime factors depending on which you are going to buy a policy. Then estimate the costs and expenses that would likely be incurred after your death. If you have debts, estimate how much of it you need to make the future payments so that your family will be able to cope with it. Debt in general includes the mortgage, cars, home loans, credit card debts etc.
Income replacement would be the most important for you, keeping in mind the need for your beloved ones after your death. And with insurance worth a lump sum this replacement can be done. Calculate yourself the amount you want to invest in order to earn same amount as income each year; also you need to incorporate the future expected inflation.
While calculating the needs, the other things should be considered like the living standards and the specific needs associated with that. Children college costs, financial support of the family are with prime priority. These require extra income and you would obviously like to provide support for them.
Determine the period: Think for a while whether the above expenses are short-term or long-term. In case if you die, the short-term expenses will cost you the money only. These expenses include the children's education. Also it covers your car and the house. Suppose if you die and the payments are not yet paid off, in that case insurance will be helpful to cover the due payments. And the long-term or the permanent expenses are adjacent to the costs like estate taxes, the wages. These costs would always remain there irrespective of whether you are alive or not.
Now you should get an idea as to how much insurance you'd need and for how long. You can talk to your broker to know what options are available for you. Listen to the amount of coverage they are suggesting and you can address your queries from the predetermined list. As you have got the knowledge it will be an added advantage to select the coverage amount. Some of the states are taking steps to implement health insurance as a mandatory one, as there is a bulk of people in US including children, who lack the health insurance.
Posted: Tue Jun 13, 2006 10:02 am Post Subject: Components of premium
Well, good to see all o' these articles at one place. In addition, everyone should know the following divisions of insurance premium...... I think its quite important !
Insurance premium has three components:
1. Investment component
2. Administration costs
3. Risk (underwriting)
I fact the premium is divided into the above segments. Out of the three components insurance company earns from the underwriting and investment components.
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