INSURANCE PART -1

   Basically Insurance is a risk transfer instrument or arrangement that a typical customer signs with an Insurance Company.
   The basic logic in entering into an insurance contract goes like this. Life and events occurring in life, are largely unpredictable and unforeseen.These are beyond human control. But the consequential damages and sufferings to an individual are heavy and painful.
   By entering into an insurance contract, we cover our selves and our family members against financial insecurities which come about due to such unforeseen occurrences,by paying a periodic insurance premium to the insurance company. In turn, the insurance company, undertakes to compensate you for the sum assured in case the particular event occurs. 
    Events may be simple inconsequential event or critical. Let me give some  examples. A kid falling down while playing football and  getting slightly bruised we may classify as inconsequential while if he gets grievously injured, it may be classified as critical and life threatening. Similarly, while riding your motor cycle you may end up touching another vehicle with no serious damage to either parties or the accident may turn out to be more serious. 
   Loss of the only earning  member in a family can be very difficult, to the surviving family members. Natural disasters which occurs in one part of the country or other, periodically, results in loss of life, property, livestock and means of livelihood.
   Insurance protects us against financial insecurities that occur due any of these causes. Insurance is basically classified as Life and Non-Life Insurance.Details of the different classification we shall see another day.
  One important understanding we need to gain is that insurance  is not an investment.Generally we are mislead by  unscrupulous sales agents to believe this erroneous idea which is spread by them in their own interest and not yours !

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