A Simple Guide To Insurance For Beginners.
To have an insurance is the key to sound financial planning. A few people have a list of auto insurance companies, however, very few people understand what insurance is or even why they need to have it. For Indians, insurance is viewed as some form of investment or an excellent avenue for tax saving. Any average person will mention an insurance cover as one of his or her core investments when asked.
Insurance is also known as a method of spreading out some of the significant financial risks of either a business entity or an individual. This will also relate to several business entities as well as a large group of people. The value of being insured is like the annual or monthly compensation which is paid to an insurance company. In the event of shock, insurance can be used to effectively spread out the risks involved among several people to reduce the load of financial strain.
If you are seeking for protection against financial risks and make a commitment with an insurance provider, then you are known as an insured and the insurance firm will be called the insurer.
In life insurance, the sum insured is the money an insurer promises to pay the insured when he or she dies before the predefined date. However, this money is not included in the bonuses which are to be added in the case of a non-term insurance. In a non-life insurance the promised amount is also known as the insurance cover.
The person insured will be expected to pay some compensation for protection against any financial risk an insurer offers. This is known as premium. The premium can be paid monthly, quarterly, annually or as stated in the contract. If the total premiums which you paid are not a few times lesser than the insurance cover it will not make much sense to have an insurance. Some important factors which will determine the premiums include age of insured, the cover chosen, the period of insurance and so forth.
A nominee is the listed beneficiary by the insurer who will receive the total amount accrued. If it is a life insurance the nominee must be someone else apart from the insured.
The number of years an insurance is going to last for is known as the policy terms. These terms will be dictated at the time of purchase by the insured. A few insurance policies will also offer add-on features in addition to the actual cover. With an extra premium, this will be available. If these features are to be purchased separately, then they would expensive.