Did You Know Facts About Insurance?

Yes, you read that correctly. The word “insurance” comes from the French word “ensurer,” which originally meant “to marry.”

Over time, the word ‘assurance’ developed into ‘insurance,’ which has its present meaning.

The origins of the term insurance can be traced all the way back to ancient civilizations. The first documented insurance contract was made in Genoa, Italy, in 1347. This was the first time insurance was employed, and it was only for loan-related policies and insurance groups backed by real estate guarantees.

What did you know about insurance?

Insurance is a contract in which an individual or entity receives financial protection or compensation from an insurance firm in the form of a policy. The firm pooled the risks of its clients to make payments more reasonable to the insured.

What are two things you know about insurance?

We all desire to be financially secure for ourselves and our families. We understand that having insurance can assist us and contribute to a sound financial plan. Despite this, many of us do not consider insurance. We rarely consider hazards or the possibility of the unexpected (after all, it’s the unexpected! ), so we leave things to chance. It could also be that we don’t understand insurance and that it’s far too difficult to pay attention to.

So, to get you started, we’ve simplified certain things to the basic essentials. Here’s insurance 101: the five most important things to know about insurance:

First off, what is insurance?

  • It’s a contract between the insured and an insurance company that allows the insured to be compensated for specific losses. The insurance company pools the risks of its customers to make payments more cheap for the covered (Investopedia).
  • It’s insurance that can assist cover the costs of unforeseeable calamities like theft, illness, property damage, or death.
  • You may acquire protection or coverage for a set amount of time or for the rest of your life.

You pay a fee in exchange for the protection. Premiums are the amounts you pay on a regular basis, based on the type of insurance you have and what your policy says. The premiums you pay are determined by the likelihood that you will have a claimable loss. Other considerations in determining rates include the insured’s age, health, lifestyle, and family history.

The amount of premiums for health, dental, house, and vehicle insurance policies is also determined by the deductible.

This is the amount you agree to pay before the insurance covers the balance of your claim. Choosing a greater deductible will, of course, lower your premiums because you are agreeing to cover a larger portion of your loss.

How does insurance work?

When consumers purchase insurance, they are putting their money into a pool with a lot of other people’s money. Some of that money goes to policyholders who are having financial difficulties during that time. Losses of a home, car, or business can be a source of hardship. You are only protected for losses specified in your contract, not for situations that are predicted.

A claim is filed when a hardship or loss occurs. This is a formal request for payment from the insurance for a covered loss. Benefits can be claimed with the help of the insured’s agent or broker. During claims processing or claims investigation, supporting papers will be necessary, depending on the type of loss (for example, images of an injury or property damage for an accident or property insurance claim, or a death certificate for a life insurance claim).

Life insurance

After the insured’s death, life insurance pays out to the insured’s family and loved ones. The insured names a person or people (beneficiary/beneficiaries) who will receive the policy’s death benefit. The death benefit or revenues are tax-free.

  • Term insurance covers you for a set period of time. If the insured dies during the coverage period (and the premiums are paid), the policy’s death benefit is given to the beneficiary. The coverage expires at the end of the set period. It can be renewed at the conclusion of the term, but the premium may increase due to the fact that premiums are based on the insured’s age.
  • It is permanent in that it protects the insured for the rest of their lives (unless the insured fails to pay the premiums). There are two types of them:
  • Whole life insurance ensures that your rates will remain constant as you age.
  • A minimum cash value and death benefit amount are guaranteed with this type of insurance.
  • Universal life insurance is a program that combines life insurance and investing into one package.

Health insurance

Health insurance can assist you in paying for procedures that are not covered by the provincial health-care plan. If you have a significant illness or injury, some sorts can help you augment your income. Other types of insurance can cover medical costs if you get sick while on vacation.

Property and Casualty (General) Insurance

Property insurance protects you against losses or damage to your home, personal belongings, car, or company. Casualty insurance protects the insured from legal liability for losses caused by third-party injuries or property damage.

Group Insurance

“Outside of government-provided benefit programs, group insurance allows firms to give employee benefits as part of an employee’s complete remuneration package, as part of a single group” (Benefits Consultant.ca). Many Canadian organizations give this as a way to provide additional advantages to employees, demonstrate that they care about their well-being, and ensure a healthier workforce. On the practical side, contributions to a group insurance plan are deductible as a company expense.

Supplementary health insurance, basic life insurance, dental insurance, long-term disability insurance, and accidental death and dismemberment insurance are all typical group insurance benefits in Canada.

Where do your premiums go?

Premiums are paid by insurers to cover claim costs, investments, and operational costs. They use careful financial management to ensure that claims are paid. For example, they invest in low-risk assets that may be quickly liquidated in the event of a claim. They also set aside funds for legal reserves. They must keep this amount since it is required by law. The legal reserve ensures that an insurer will be able to pay out a significant number of claims in a short amount of time (such as in cases of disaster, for example).

Applying for insurance

Insurers will determine whether or not they can provide an insurance depending on a number of factors, including:

A medical exam is required for several types of insurance, such as life insurance.

The insurer would next assess your risk after reviewing your application and reviewing your personal and medical background.

After this evaluation, you’ll know how much coverage you’re eligible for and how much you’ll have to pay in premiums.

Answer all questions on the application completely and honestly, regardless of the type of insurance you’re applying for.

If you hide vital facts or lie on the application, your policy may be canceled, or worse, your claim may be denied in the future.

Definition of terms:

A policy is a legal agreement between you and the insurance company. It explains which risks are covered, when the insurer will pay you, how much money you’ll get, and what kind of benefit you’ll get if you file a claim.

Coverage refers to the amount of insurance you’ve purchased. It’s also the highest amount your insurance provider will pay you if you file a claim for a covered loss or event.

Benefit — the amount your insurer will pay you if your claim is approved.

When a life insurance policy is cancelled, the insurer pays the cash value to the policyholder.

It can also be a sum added to the death benefit and paid out after the insured passes away. Permanent life insurance policies are referred to by this phrase.

When an insured person dies, the insurer pays the recipient or beneficiaries a death benefit.

A claim is the formal notification to your insurer that you want to be compensated for a loss or event covered by your insurance policy.

The beneficiary is the person or entity whom the insured designates or assigns to receive the policy proceeds.

A beneficiary can be revocable (that is, it can be changed at any moment without alerting the beneficiary) or irrevocable (that is, it cannot be changed without the beneficiary’s express consent).

Exclusions are things that your insurance coverage does not cover.

Some health insurance policies, for example, may not cover certain medical issues that existed before you sought for coverage, and some travel insurance policies may not cover claims if you travel to a high-risk country. This is why it is critical to study your policy carefully to determine what it covers and does not cover so that there are no surprises when it comes time to file a claim.

Risk is the possibility or likelihood that an insured event will occur while the policy is in existence, such as loss, damage, or death.

A rider is a provision or phrase that is added to your insurance policy to protect you.

This comes at a higher price because it includes hazards that aren’t covered by the basic insurance.

Financial Consumer Agency of Canada’s Module 6: Insurance; Financial Consumer Agency of Canada’s Understanding insurance essentials; Insurance Bureau of Canada’s Insurance Basics (Insurance 101); and Insurance Bureau of Canada’s Insurance Basics (Insurance 101).

All information was retrieved on January 23, 2018.

Do you know about insurance?

The insurance policy is a legal contract between the insurer and the insured for the insurance. The insurance policy specifies the rules and situations under which the insurance company will pay the insured person or nominees the insurance sum. Insurance is a means of safeguarding yourself and your loved ones from financial ruin. In general, a large insurance policy has a lower premium in terms of money paid. Because very few insured people actually claim the insurance, the insurance firm bears the risk of offering a high level of coverage for a low cost. This is why you can get insurance for a large sum of money at a low cost. Any individual or business can seek insurance from an insurance company, but the insurance company has the final say on whether or not to give coverage. To make a decision, the insurance company will review the claim application. In most cases, insurance firms refuse to insure high-risk applicants.

What is the most important thing about insurance?

The single most important sort of insurance you’ll ever get is health insurance. That’s because if you don’t have health insurance and anything goes wrong, you’re putting your life on the line.

The purpose of health insurance is to cover the costs of medical care. Many people obtain health insurance through subsidized premiums from their employers, which means that your company pays the majority of your premium and you contribute a small amount with each paycheck.

If you don’t have health insurance via your company, you’ll have to purchase it on the open market. You may be able to get subsidized insurance on a state or federal exchange and receive tax credits to help you afford monthly premiums thanks to the Affordable Care Act (often known as Obamacare).

When you acquire health insurance, the type of coverage you get is determined by the policy you choose. You have the following options:

  • Low-deductible health insurance plans are those that keep your out-of-pocket healthcare spending to a minimum. These plans have higher rates because they give more coverage. Your costs will be more predictable because you’ll know what your premiums will be up front, and you’ll never have to worry about paying thousands of dollars if you need medical help.
  • High-deductible health plans (HDHPs) offer low monthly premiums, which means you pay less up front each month merely to be insured. However, because your deductible — or the amount you pay out of pocket before your insurance kicks in to cover the remainder — is generally several thousand dollars, you’re responsible for funding routine basic care. Many high-deductible health plans allow you to open a Health Savings Account (HSA) and contribute pre-tax funds to pay for medical expenses as they arise.
  • Catastrophic health plans are the cheapest in terms of premiums, but they provide essentially no coverage for services until you have tens of thousands of dollars in medical expenses. The deductibles are significantly greater than those of a standard high-deductible health plan.
  • Health maintenance organizations (HMOs): You are limited to receiving care from a specified network of participating doctors if you are a member of an HMO network. These doctors are known as in-network, and they have agreed to accept your insurance company’s rates for services. To see a specialist, you’ll need a referral from your primary care physician. Most HMOs consider anyone who isn’t your primary care physician to be a “specialist.” Obstetricians, dermatologists, psychiatrists, chiropractors, and others may be included.
  • Preferred provider organizations (PPOs): You don’t need a referral to see a specialist if you have a PPO. While choosing an in-network doctor will save you money, you’ll have better coverage for out-of-network treatment than with an HMO.
  • Exclusive provider organizations (EPOs) don’t require a referral to see a specialist, but they won’t pay for out-of-network care unless it’s an emergency.
  • A point-of-service plan covers both in-network and out-of-network care, though you’ll pay more if you see a doctor who isn’t in your network. When necessary, a primary care physician will need to refer patients to specialists.

Out of what’s available and offered to you, try to match your coverage to your care needs. A high-deductible health plan may be the most cost-effective option if you don’t have a lot of medical bills. If you visit the doctor frequently for any reason, consider a policy with higher premiums but more comprehensive coverage and a lower deductible so you don’t go bankrupt paying for all of your treatments.

Every health insurance plan, under Obamacare, is required to cover certain essential services, such as preventative care, before your deductible is satisfied. Insurance firms cannot charge more for a health insurance policy if the person has a pre-existing condition, according to the legislation. The cost of health insurance is determined by your age, location, and whether or not you smoke. Obamacare forbids insurers from taking into account your gender, race, or previous medical history.

Everyone, without exception, requires health insurance since even a little medical issue can be enormously costly. A single hospital stay or surgical operation can cost thousands of dollars, thus major medical conditions might come with exorbitant prices.

What is insurance and its importance?

Insurance contributes significantly to society’s overall economic growth by ensuring the smooth operation of processes. By strengthening financial resources, the insurance industry develops financial institutions and reduces uncertainty.

Provide safety and security:

In business and in everyday life, insurance provides financial support and reduces uncertainty. It ensures safety and security in the event of a specific occurrence. There is always the worry of losing something important. Insurance protects you from unexpected losses. In the case of life insurance, for example, financial aid is offered to the insured’s family upon his death. Other insurance provides protection against loss due to fire, marine, accidents, and other causes.

Generates financial resources:

The collection of premiums is how insurance generates money. These monies are put to work in government bonds and stocks. These money are profitably invested in a country’s industrial development in order to generate more cash that may be used for the country’s economic development. Large investments that result in capital formation improve employment chances.

Life insurance encourages savings:

Insurance not only protects against risks and uncertainties, but it also serves as a means of investment. Because premiums are paid on a regular basis, life insurance allows for systematic savings. Life insurance can be used as a means of investing. It encourages people to save money by paying a premium. At the end of the contract’s term, the insured receives a lump sum payment. As a result, life insurance encourages people to save.

What is the purpose of insurance?

The transfer of risk is the most basic function of property/casualty insurance. Its goal is to lessen financial risk and make unintentional loss more tolerable. It accomplishes this by paying a professional insurer a small, predictable fee—an insurance premium—in exchange for the assumption of the risk of a significant loss and a guarantee to pay in the case of such a loss.

What are the 4 types of insurance?

Fire, floods, accidents, man-made disasters, and theft are all covered by general insurance for your house, travel, automobile, and health (non-life assets). Motor insurance, health insurance, travel insurance, and home insurance are all examples of general insurance. A general insurance policy compensates the insured for losses sustained throughout the policy’s term.

Why insurance is important in our life?

Life insurance is crucial because it protects your family and allows you to leave them an amount that is not taxable when you die. It can also be used to pay off your mortgage and personal loans, such as a vehicle loan. When you retire and your employer no longer insures you, your individual life insurance follows you. When resources are scarce, this insurance will replace your family’s income, allowing them to maintain their standard of living.

What are the benefits of insurance to society?

The insurer safeguards society’s wealth through a variety of insurance systems. Protection against the loss of human wealth is provided by life insurance. General insurance coverage cover damages caused by fire, theft, accidents, earthquakes, and other natural disasters. As a result, both general and life insurance can help to stabilize a company’s financial situation and condition.

How insurance is created?

Insurance, in some shape or another, has existed since the dawn of civilization. Bottomry contracts were known to Babylonian traders as early as 4000–3000 BCE. The insurance contract took shape early on as well. It was well-known in ancient Greece and other maritime nations that traded with Greece.