Financial literacy and more
All about insurance
One of the biggest problems with respect to insurance is the making of incorrect disclosure.
This becomes a big reason for which insurance companies refuse claims.
Those taking insurance are often afraid of the consequence of disclosing past illness or some other medical condition.
They might also not disclose some risk that they face due to the nature of their work.
This kind of act of not giving the correct information violates the principle of utmost good faith.
There are some basic principles that are followed in the process of insurance.
Utmost good faith means in simple words disclosing the right information.
The person taking insurance should make the right disclosures.
They should not be hiding any details from the insurance company.
This will ensure that the insurance company pays the claims when they arise.
In insurance there are lot of policyholders.
These policyholders are actually pooling their risk.
The insurance company is covering the risk of these policyholders.
The idea behind this is that a small premium will be collected from everyone.
Out of these only a few will have claims so the premium will be used for these claims.
Insurance being a contract has big implications.
A contract can be enforced in a court of law.
The conditions of the contract thus become very importance.
It is not possible for someone to say at a later date that they did not know certain thing.
Their signature on the contract is proof of their knowledge of the matter.
An insurance is a contract that is entered into between two parties.
Here on one side of the contract is the insurance company.
On the other side is the person or entity that is being covered by insurance.
Both of them enter into an agreement.
The agreement has all the terms and conditions of the insurance.
Insurance is meant for protection,
Insurance is not for profit,
The idea is to put a person back to the position that they were in before the loss occurred.
This non profiteering point is crucial for insurance.
The various policies are constructed keeping this factor in mind..
Insurance in simple words is protection available for those facing a risk.
Insurance involves paying a sum called premium.
Against this payment there is protection for the risk that has been decided.
The happening of a specified event results in a payment coming to those covered or their nominees.
It is meant to put the person back to the position that they were before.