A Simple Beginner’s Guide To Insurance.
To have an insurance is the key to sound financial planning. Although some individuals may have a list of auto insurance companies, a good number of them may not actually know what an insurance is or why it is important. For many Indians, insurance is a type of investment or a good tax saving avenue. When asked about their investments, any average individual will mention insurance as one of his or her core investment.
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 cost of insurance is like an annual or monthly compensation which is paid to an insurance firm. Insurance is an effective means of spreading out the risks amongst a pool of individuals who are insured and lessen their financial load in the vent of shock.
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.
When dealing with life insurance, the money insured is the sum the insurer intends to the insured when they dies before the predefined day. However, this money is not included in the bonuses which are to be added in the case of a non-term insurance. While in non-life insurance, the guaranteed amount is referred to as 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. These premiums can be paid either monthly, quarterly, annually or as put in the contract. The total premiums paid should be several times lesser than your insurance cover, otherwise it will not make 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.
The nominee is the beneficiary who is listed by an insured to receive the amount assured and other benefits. The nominee has to be a different person other than the insured in life insurance.
The policy term is the period with which the insurance will last for. The term is dictated by the insured when buying the insurance policy. In addition to the actual cover, some insurance policies also offer additional features as add-ons. With an extra premium, this will be available. If these features are to be purchased separately, then they would expensive.