Some Useful Insurance Related Terminology You Need to Know

Definition: Insurance is a contract in which between two parties. One party agrees to undertake the risk or loss of the other party in exchange of certain amount of money and a promise to pay certain amount of money for the loss.

In other words, Insurance is an agreement between an individual and the insurance company in which the individual pays certain amount of money known as premium in exchange of which the company pays some money to the individual for the uncertain event.

Premium

• Premium is a certain amount of money to be paid to the insurance company at a regular interval of time by the insurance holder.
• Premium is a certain amount of money that is charged by the insurance company to the insurance holder to offer insurance service for the loss.

Indemnity: Benefit of a predetermined amount paid for a loss.

Insurable interest: An interest on a person or thing that will support the issuance of insurance policy.

Causality: Liability or loss resulting from an accident.

Insurance claim: A demand made by the insurance holder or from beneficiary, for payment of benefits as provided by the policy.

Coverage: The scope of protection provided under an insurance policy.

Death benefit: The limit of insurance or the amount of insurance that will be paid in the event of the death of a covered person.

Exposure: The measure of vulnerability to loss, usually expressed in dollars or in monetary units.

Occurrence: An event that results in an insurance holder's loss.

Reinsurance: It is the insurance taken by a firm from other third party to protect the latter from huge losses.

Example: All the people residing in a particular place have taken insurance policies from an insurance company, and a massive earthquake occurred. Then all the people need the insurance benefits at a time. In such cases it is a heavy risk for that firm to offer benefits to all people. To cover the risk to the company from this type of incidents, an insurance company takes an insurance policy from another insurance company known as reinsurance.

Grace period: This is the period given to the insurance holder, if insurance holder does not pay the premium on time. The insurance company does not charge interest for a month from the date of premium.

Net premium: the amount of premium minus the agent commission.

Agent commission: it is the incentive paid for the insurance agent, in addition to his salary. For managing the customer policy. This amount is paid at a percentage on the insurance premium.

These are some of the common terms one need to know regarding insurance.

Importance of Income Protection Insurance in a Person's Life

Income protection insurance insures the individual income and pays the benefits when they need. Income protection insurance gives benefits to an individual when the person is not getting income from his income sources.

Income protection insurance provides protection for the person in many ways, like loss of current income due to loss of job or unable to work due to some temporary or permanent disability. It is very much helpful for the employees, as in cases when they lose their current job or when they are unable to do work due to a disability like health problems or an accident, the insurance company provides financial security.

For example: If a person is temporarily disabled to do work due to a road accident, then the person cannot work and does not get income from his job. It is quite a risk for that person to manage his expenses during these days. If the is person already holding income protection insurance, then the insurance company gives some income at a percentage on his salary to manage his expenses.

Importance of income protection insurance in a person's life is as follows,
1.Secures person life style: With the help of income protection insurance, you can maintain your life style without too much disruption in the event of illness or serious injury that prevents you from working. This insurance gives money at a percentage on your salary, when you are disabled.

2. Provides safety for your existing savings and investments

If a person bhttp://www.blogger.com/img/blank.gifought a home with the help of a bank loan and suddenly the person looses his income due some disability to do work, then the person will not be able to pay the installments of the loan. If the person has income protection insurance, then insurance policy gives some money to the person, which allows him easily pay the installments.

3.It secures your children education If you have income protection insurance, you can give assurance for your children, that you are able to pay their school fees, exam fees and preserving their life styles even when you are unable to work. Due to all the above reasons we can say that income protection insurance is very helpful for a person.

All You Need to Know about Different Kinds of Life Insurances

Life insurance is an bond between an individual and insurance company. In which the individual pays some amount of money to the company in order to get benefits after his death.

Life insurance is an agreement between the insured and the insurer. The person who insures his life is known as insured and the company which is offering insurance is known as insurer. In this contract the insured requires to pay some amount of money at regular intervals of time known as premium. In exchange, the insurer gives some benefits to an individual over life time or gives some amount of money to the beneficiary of the policy after insured death.

Life insurance policies are classified based upon some parameters like benefits coverage, number of years, premium and other regulations etc.

Life insurances are mainly divided into two types, they are,

1. Term life insurances
2. Permanent life insurances

Term life insurances
Term life insurance is a type of life insurance policy for a particular period of time. In term life insurance policies the insured need to pay premiums for fixed period. The premiums remain same over the period. The terms and conditions of this type of life insurance policies are that the insurance amount will be paid only on the death of the insured. In case the insured does not die during the term of the insurance, the insurance amount does not get carried over. That means, after the term of the insurance the insured will not get any benefits or the insurance amount. The insurance premium of term insurance increases with respect to the increase in age of the insured.

These policies are tax free.

Term life insurance policies are divided into two types, they are

1. Group term life insurances: Generally these policies are taken by employer to his employees, in which the employer pays premiums to the insurance company. Either employer pays these premiums from business money or it can be deducted from individual employees salary. This type of insurance is gaining significance in the developed countries.
2. Level Term life insurances: Level term life insurance means that the death benefits does not change during the term of life insurance coverage. In this policy the premium amounts will be same. And premium are paid for a fixed period.

Permanent life insurances
Permanent life insurance policies are a type of insurance policies. It gives benefits for the individual for the whole life. These policies does not have maturity time, unless the policy holder fails to pay the premiums.

The various types of permanent life insurances are as follows

1. Whole life insurance policy: This policy provides benefits to the individuals for the whole life. This policy gives guaranteed death benefits, and guaranteed cash value for the individual. In these type of policies insured may have the option to rise substantial investment on his premium amounts. Because here the insured pays premiums for a long period. The advantage of this policy is, insured can gets continuous benefits till the death of insured.
2. Universal life insurance policy: Universal life insurance policy is a very flexible option for the insured. In this policy insured has flexible premium options and death benefits. Flexible premium and death benefits means insured gets a chance to increase or decrease his premium amounts at any time and also as same for death benefits.
3. Variable universal life insurance policy: This policy allows the insurance holder to make investment by his premiums. Here the insured has flexibility for their premiums. The insurance holder is responsible for the investment made by the premiums.

Life insurance policy is must for every individual, as it gives security to our family after our death.

All you Need to Know about Reinsurance

Reinsurance is a type of insurance policy, mainly purchased by the insurance companies. Reinsurance is the contract between the insurance company and a third party company, in which the insurance company pays the premiums to the third party, in exchange to receive benefits when huge loss occurs. Here the third party means another insurance company.

Reinsurance is purchased by the insurance company to transfer the risk from insurance holder to another insurance company. It is very useful to the insurance company, when there will be heavy loss due to the natural disaster.

For example: In big cities all the individuals are holding home insurance policy provided by an insurance company. Then suddenly a big earthquake occurred, due to which many buildings are collapsed. In such case, all the people want their insurance benefits. It is a heavy risk for that insurance company to pay money for all the policy holders. In such type of cases the insurance company transfer their policy holders loss to the reinsurance company.

With the help of reinsurance, insurance holder gets guarantee benefits from their policy as well as insurance company, minimizing the risk.

Reinsurance is mainly divided into two categories they are

1. Finite reinsurance
Finite reinsurance is reinsurance policy that covers a finite proportion of loss of the insurance company. That means when huge lose occurs for the insurance company, the insurance company recovers reinsurance only for the stated proportion from it's reinsurance company.

2.Financial reinsurance
Life insurance companies takes this type of reinsurance to keep profits form one year to next.

Importance of Worker Compensation Insurance for Employer and Employee

Worker compensation insurance is another type of insurance policy, that protects the employer and his employees from the losses, which arise while working on a job.

Benefits for employer

1. It covers all the losses which are related to the workers compensation and their safety.
2. It benefits to the employer, when an employee is injured while doing his job, then the employer is responsible for the injuries. It provides compensation for medical expenses, hospital expenses and providing some portion of wage when they are disable.
3. Employer is responsible for the workers death while they are operating machines or while they are driving business vehicle.
4. To protect the employee from work place violence, terrorist attacks and natural disasters. While they are on the job.

Benefits for employee

1. It covers medical expenses while they are injured on the job.
2. It secures employee's wages, while they are disabled to do work due to injury.
3. It provides death benefits to the employee dependents, if employee dies while doing the job.

Worker compensation is very much important for smooth running of a business, as man power is the major asset of an organization.

Benefits of Public Liability Insurance in Health Care Industry

Public liability insurance is the only policy, which helps to get the complete protection needed for Health Care industry. With a public liability insurance plan from Insurance Company, the coverage will be provided for compensation, legal and medical expenses in the case that injury or property damage occurs as a result of the business operations, activities or products.

The advantages of having public liability insurance policy by a Health Care company are:

• Individual and Group Practice Medical Professional Liability Insurance
• Malpractice Coverage for All Medical Specialties
• Specialize in Hard-to-Place Physician’s Malpractice Insurance
• Claims Made Coverage and Occurrence Policies Available
• Medical Professional Liability for Institutional Coverage

Mental Health Liability insurance is a type of public liability insurance in which mental health professionals are protected from damages claimed by patients in lawsuits. It is important for every mental health professional to carry a public liability insurance cover.

Some of the professional mental health organizations, that offer their members liability insurance include the American Psychological Association, the Mental Health Counselors Association, the American Counselors Association and the Association of Alcohol Drug Abuse Counselors.

According to Counseling Washington State, the risk of getting sued is always present, even if it is only perceived to exist by the client. They suggest reviewing the malpractice policy of the employer to ensure there are no gaps in coverage.

Benefits of Public Liability Insurance For Manufacturing Industry

The public liability insurance policy provides public and products liability cover. Cover is provided to protect the insured against legal liability to pay compensation, claimants' costs and expenses in respect of accidental:

• Bodily injury to any person
• Loss or damage to material property occurring in connection with the business

Product liability insurance:
If the products manufactured by the company are consumed by the public and if the products damage the persons health or property this insurance will protect the owner against the claims raised by the customers.

Public liability insurance:
This insurance policy helps the business in cases where the company may be held responsible for injuring a member in the public or damaging a third person's property, by covering the costs associated with legal fees and compensation for claims.

In recent times Public Liability Insurance premiums have reduced and the premiums available currently to manufacturers are cheap, that means public liability insurance policy is affordable to every business to buy.

Public liability insurance claims are becoming more common as the public are becoming more aware of their rights. Hence, it is necessary to have a public liability insurance to protect the business from huge financial losses.

Different Types of Business Insurances

Organizations and companies can protect their assets by purchasing business insurances. Financial loss can be transformed by the these insurance policies to the insurance company. According to the amount of coverage stated in policy, the insurer will indemnify the business during the policy period. There are many types of insurance policies, such as:

Professional Indemnity Insurance: This is an important business insurance for business or companies. This policy safeguards the business from professional mistakes which can cause law suites.

Workers Compensation Insurance: The importance of this insurance policy is increasing today. This policy protects workers while they are on the work. This insurance policy is compulsory in some states. This policy supports the employee financially, if any employee is injured while he or she is on the job.

Key Person Insurance: Business is protected by this policy from financial loss or collapse, if the key person or someone who is important for success of the business or company dies or he or she becomes disabled. The benefit of the policy is given to the company.

Commercial Vehicle Insurance: This policy can protect the vehicles of the business or company. This insurance policy pays for damage caused by or to vehicle while using it for business. Medical expenses of injured party can be paid by this policy.

The important thing is choosing the right or correct amount of coverage for your business, when you want to purchase the business insurance. This may depend on the type of your business and insurance company.

General Liability Insurance Vs Business Liability Insurance

Your assets will be protected by general liability insurance by providing a first line of defense from different claims which are caused by negligence or wrongdoing. Liability claims are covered by this insurance policy, these claims can arise because of bodily injury, property damage, personal injury and advertising injury. Compensatory and general damages are covered by this insurance company.

Business liability insurance is designed for you to keep your business in business by covering the cost of defending or settling claims.

The following basic categories can be covered by general liability insurance policy:

• Bodily injury: If there is any physical harm to an individual at your business place or if there is any injury to your employee who works at client's site, then it will be covered by this insurance policy.
• Completed Operations: If there are any losses while providing services to the customers or from manufacturing and distributing products, then such losses can be covered by this insurance policy.
• Personal injury: If there is any damage to the reputation or rights of a person or business because of the slander, libel, copyright infringement, invasion or privacy, false arrest, wrongful eviction, etc.

Advertising injury, medical payments can also be covered by general liability insurance policy.

Following coverage can be provided by business liability insurance:

• Compensatory damages: If there are any financial losses and additional monetary losses because of the claims then such losses can be covered by this policy.
• General damages: If there is any intangible losses, such losses can be covered by this Business insurance policy. It also covers penalties against your business for wrongdoing.

There is a slight difference between general liability insurance and business liability insurance policies.

Growth Of The Insurance Sector

Insurance is one of the major and essential financial services sector. The main concept of insurance is managing the risk. Insurance sector generates long-term savings. Insurance sector plays major role in economic development.

The factors which are included in growth of the insurance sector are:

• Macroeconomic growth: Most of the countries are investing large amounts in infrastructure. These factors will create large demand for insurance coverage.
• Privatization and restructuring of government pensions: Privatization programme will serve as a channel for the development of the insurance sector. Reduced role of the state in pensions will also lead to the raising demands for the life insurance and long-term savings.
• Growth of financial services: The demand for insurance products will be increased due to the growth in asset based financing such as home and auto loans.
• Demographics of the region: If population matures the demand for insurance products increase.
• Create awareness about insurance products: The demands of the insurance products increases by creating awareness.

The above mentioned are some of the factors, which can increase the demand of insurance products and also lead to the growth of the insurance sector.