Insurance

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INSURANCE

insurance

Insurance is a term used to refer to actions, systems, or business where the financial protection (or financial compensation) for life, health, property, and others seek help from the events that can not be expected to occur such as death, loss, damage or disease, which involves the payment of premiums on a regular basis within a specified period in exchange for policies that ensure protection.

insured term usually refers to anything that get protection

Insurer uses actuarial science

Insurers use actuarial science to calculate the risk they assume. Actuarial science uses mathematics, particularly statistics and probability, which can be used to cover risks to estimate the claim at a later date with reliable accuracy. For example, many people buy insurance policies for home and then they pay a premium to the insurance company. When you lose a protected place, insurers must pay claims. For some of the insured, the insurance benefits that they receive far greater than the amount paid to the insurance company. Others may not make a claim. If the average of all policies sold, the total claims paid less than the total premiums paid to the insured, with the only difference is in cost and profit.

Insurance company profits

insurance

Insurance companies also get a return on investment. It is obtained from investing premiums received until they have to pay the claim. This money is called "float". Insurers can benefit or loss from price changes in the float and also interest rate or dividend on the float. In the United States lost, property and death are recorded by insurance companies is U.S. $ 142,300,000,000 in the five years ended in 2003. However, total profits in the same period was U.S. $ 68400000000, as a result of these float.

Basic principles of insurance

In the insurance world there are 6 basic principles that must be met, namely:

* The right to insure Insurable interest, arising from a financial relationship, between the insured with the insured and legally recognized.

* Utmost good faith  An action to disclose accurate and complete, all material facts (material facts) about something that will be insured both requested and unsolicited. The meaning is: an honest insurance must clearly explain everything about the scope of the terms and conditions of insurance and the insured must also provide clear and accurate description of the objects or interests of the insured.

* Proximate cause A cause of active, efficient cause of a train of events which brings a result without the intervention started and working actively from a new and independent sources.

* Indemnity A mechanism by which the insurer provides financial compensation to place the insured in a financial position that he had immediately before the loss.

* Subrogation The transfer request from the insured to the insurer after a claim is paid.

* Rights of Contribution  of an insurance company to another insurance company to invite the same bear, but do not have the same obligation to the insured to participate in providing redress.

Insurance Denial :

Some people consider insurance as a form of betting in force during the policy period. Insurance companies are betting that the property buyer will not be lost when the buyer pays cash. Differences fees paid to the insurance company against the amount they can receive when the accident happened almost the same as if someone bet on horse racing (eg, 10 to 1). For this reason, some religious groups including the Amish avoid insurance and rely on the support received by their communities when disasters occur. In a close community and a supportive relationship where people can help each other to rebuild lost property, this plan can work. Most people can not effectively support the system as above and this system will not work for large risks.