Importance of Insurance

The insurance industry communicates through codes and check-off boxes. If there's no check-off box for you, you don't exist. - Jack Anderson

There are many times when we have to go through bad times, which may involve physical injuries or financial losses. And in such times, insurance seems to be our only hope. If you are not insured against uncertain risks, we have to bear the losses involved therein.

The Basic Concept of Insurance

In simple words, insurance is a concept which involves two parties; namely the insurer and the insured, also referred to as the policyholder. The insurer is the insurance company, whereas, the policyholder is the one who avails the service. In this process, the policyholder has to pay certain amount of fees at prescribed time intervals to the company. And in turn, the insurer agrees to bear the financial losses and expenses of the policyholder. Therefore, the risk of financial losses completely falls on the insurance company. The importance of insurance is considered in property loss in business, loss of life, substantial medical expenses, damage to automobiles in case of accidents, etc.

In Business
If you are thinking about the importance of insurance in risk management, it protects the business from shutting down due to any kind of property loss. The losses can be incurred by any means of destruction such as fire, floods, storms, and many other natural calamities. Financial losses can be covered that may arise due to a major theft. In addition to the property losses, business insurance is significant as it also may cover a part of the amount to be paid in case of losing to a lawsuit. This is no doubt the best way to protect the organizations from major losses.

Life Insurance
In the working of a life insurance policy, you keep paying the premium periodically, and in case of your death, the insurer has to pay a particular amount to the nominees who are primarily your family members and those dependent on your financial support. The amount to be received by your family in case of your death depends on the policy you choose. Even if you are covered with a policy that is provided by your employer, it is always better to have your own policy. The policy of the employer may just include an amount of two times the annual pay, however, other policies may allow up to ten times the yearly pay.

Health Insurance
Health insurance plays a very important role in covering the prescribed medical expenses. In this, you have to pay the premium, for which the expenses on your medical bills are paid by the insurance company. Remember that the expenses will only be covered if the insured becomes ill due to the causes covered in the policy or in an accident. As the costs for medical treatments are rising, it is suggested to avail a good health care plan.

Auto Insurance
Auto or car insurance is nothing but the cover for the damages incurred due to car accidents. This is the best option to stop worrying about the expenses to be paid in case of a car crash. In USA alone, more than 1200 road accidents take place. There are many types of policies which have a cover for specifics in the accidents. Some types may cover damages caused by vandalism, fire, robbery, and natural disasters. Before deciding on an auto insurance policy, understand all the aspects that are covered.

Health, life and car insurance are few types that will help you to be safe against the losses incurred in uncertain events.