· We always need security to guard ourselves against unexpected accidental occurrences, and this security is what constitutes insurance.
· Simply put, insurance refers to a compensation mechanism against undesired losses in future in exchange for periodic monetary payments usually called premiums.
· Insurance is entirely meant to restore the original financial position of a person, a company or any other entity in case a disaster strikes and losses occur.
· While some insurance policies are optional, some are mandatory as dictated by existing laws.
How insurance works
· An insurance contract is entered when one party seeking insurance (the insured) agrees to pay a specified some of money, usually called a premium over a certain period of time to another party (the insurer).
The insurer therefore agrees to indemnify or rather pay the policy holder an amount of money equal to the losses incurred as a result of an eventuality against which insurance is sought.
Types of insurance covers
· Several types of insurance plans exist and the choice of one will usually depend on the need in question. These include;
Life insurance cover
· This insurance plan is designed to offer financial compensation to a family in case of demise of their sole bread winner.
· There are two types of covers under this; namely term life and whole insurance covers.
· Term life policies are usually taken for a period not exceeding 30 years upon which compensation is given to the insured.
· Whole life covers on the hand give lifetime coverage to the insured and have cash values that are bound to grow with time.
· As the name suggest, this cover is meant to cater for automobiles and its occupants which in this case will include the owner, his or her family and other people permitted by law to be in the car such as a licensed driver.
· Two types of covers exist under this arrangement; that is a third party cover and a comprehensive cover.
· This policy arrangement covers such things as injury and bodily harm to people as well as physical vehicle damage caused by among other things wind, fire, floods and storms.
· This insurance plan is meant to cater for medical expense of the insured.
· The insured pays premiums to an insurance company and the later engages with certified health care providers for the provision of medical care.
· In case the insured falls sick, he or she can seek medical attention from any of the health providers listed by the insurance company at subsidized rates.
· This cover is meant to insure properties and people who may suffer as a result of the property loss.
· Property in this case will include a house, a business premise or any other property as may be classified by the insurance company.
· Popular insurance covers under this plan include fire, earthquake, flood and most recently terrorism insurance.
Other insurance cover types
· There are a host of insurance covers that exist today and the list is bound to grow as competition takes centre stage.
· Other insurance covers include disability, title, professional liability and credit insurance among others.
Why we need insurance
· We live in a world where no one is ever certain of what might transpire tomorrow.
· We therefore need to secure our future against unexpected losses since we can’t have enough in our emergency kitties to cater for this hence insurance is vital.
· This is just about insurance coverage in brief.
· There is more to learned, thus grabbing your NI card will offer you a chance for accessing comprehensive information.