Insurance Meaning And Principles

Insurance Meaning And Principles – The insurance is based on the principle of economic cooperation. It is exacerbating the risks and spreading them across many people. It is the basic principle of insurance. The premium is collected from several people and then an insurance fund is established. From this fund, compensation is given to donors who have suffered potential losses. Nowadays, it is now a special branch of business. Today insurance covers many risks. It is now closely linked to the daily lives of individuals and communities. It also plays a leading role in the country’s economy.

In insurance principles the principle of good faith is the contract. In this insurance contract the risk of loss is transferred from the insured to the insurer. For this reason, good faith between employer and insurer is necessary. The insured person must provide all information relating to the subject of the insurance contract in the form of an insurance proposal. The insured must provide complete, accurate and reliable information. In case of concealment of the truth or false declarations, the employer can declare the contract null and void, and will not be required to pay any compensation.

Insurance Meaning And Principles

In insurance principles the principle of insurance interest is the contract. The main issue of insurance is the relationship between the insured’s profit and the insured. In the case of insurance the insured must have an unquantifiable profit. The insured must own some or all of the property. He should be in such a position that any damage could happen to his property; you should take responsibility for it. An insurance contract is void and ineffective when such interest does not exist.

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For example: If a person owns a house and has an insurance interest in that house, to protect it from any risks that may arise. If a person sells the same house to another person, the house will not have any insurance benefits.

According to insurance principles, the payment (deposit) principle does not apply to the life insurance contract. It is based on other types of insurance such as marine, accident and fire insurance. The main purpose of general insurance is to put a person back in the same situation they were in before the damage occurred.

The insurer pays compensation only for the actual damage. The insured is not allowed to profit from the insurance contract. Compensation cannot exceed the actual loss. Therefore, double insurance is not possible in general insurance.

In principle the health insurance contract does not work, because if a person dies due to an accident, that person’s life has no monetary value. Human life matters; he has a lot of interest in his life.

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Example: Mr. Ronaldo has a three million dollar life insurance policy in his name and will receive a certain amount after his death. It is none other than that, Mr. Ronaldo, the value of life cannot be calculated in money.

In insurance principles the contributory principle is the fundamental principle. The principle of compensation reinforces the principle of contribution. According to this principle, the insured has the freedom to request from any insurance company or other insurers only the actual costs.

Example: if Mr. Bill Gates has a net worth of 79 billion dollars, he is insured by three companies, State Farm Group 40 billion dollars, All-State Insurance Group 40 billion dollars 30 thousand and by Liberty Mututal Insurance Cos 20 billion. If the loss of real estate is equal to 40 billion dollars, then he will be able to claim 40 billion dollars only from a company which is State Farm Group and not from other companies.

In insurance principles the principle of subrogation is a fundamental principle. The principle of compensation is the result of this principle. Therefore, life insurance does not apply to this law. This principle applies to fire and marine insurance. This principle is established to cover the loss against the damage insurance. If the loss is paid by the insurer, the ownership of the entire property will belong to the insurance company. This principle helps the insurance company prevent double insurance.

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Example: If Pepsi company burns due to negligence of coco cola company, in this fire of Pepsi the loss is 20 billion dollars, insurance company has to pay 20 million dollars to Pepsi company. However, if the insurance company files a lawsuit against the coco cola company, if the insurance company wins the case, then the coco cola will have to pay the full amount, including attorney’s fees and court costs. If the money is in balance with the insurance company, it will be returned to Pepsi.

In insurance principles, the principle of minimizing losses is an important principle. According to this principle, the insured must give 100% of himself to save his property and not just watch the damage to his property. All the difficult things of his property are guaranteed and his efforts should be there to reduce the loss.

In insurance principles the principle of causa proxima is an important principle. This principle must find one or more reasons for the cause, and the closest cause should be considered to determine the liability of the insurance.

Example: A ship was insured against damage caused by a collision. At the same time the ferry collides causing a delay of several days. Due to this delay, the banana on board rotted and was unusable. So there are two reasons for the loss: one is collision and the other is delay, the proximate cause of the rotten banana was delay. Since the fishing vessel was insured only in the event of a collision and not in the event of a delay, the insured cannot obtain compensation from the insurance company for the rotten bananas. But the fishing vessel will receive compensation for the collision. The insurance industry is made up of companies that offer risk management in the form of insurance contracts. The fundamental premise of insurance is that one person, the insurer, will guarantee payment for an uncertain future event. Meanwhile, the other party, the insured or policyholder, pays a small sum to the seller in exchange for that protection in that uncertain future event.

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As an industry, insurance is considered a safe and slow-growing sector for investors. This sentiment is not as strong as it was in the 1970s and 1980s, but it is still generally true compared to other financial sectors.

The insurance industry is largely based on risk management. All written policies are evaluated for various perceived risks and an actuarial analysis is performed to better understand the statistical probability of certain outcomes. Based on the difference between the statistical data and the estimates, the premiums of the insured are modified or the benefits are re-evaluated. In general, premiums paid in the insurance industry are a function of the risk associated with the person, property or property insured.

In some cases, insurance companies partner with banks to market their products to bank customers. This practice, known as “bancasurance,” is more common in Europe but is still being developed in the United States.

One of the most attractive features of insurance companies is that they can use their customers’ money to make their own investments. This makes them similar to banks, but investments happen more. This is sometimes called “floating”.

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Float occurs when a person transfers money to another person and does not expect to be repaid until after a certain event. This approach ensures that insurance companies have a good cost of money. This distinguishes them from private equity funds, banks and mutual funds. For investors in real estate insurance companies (or insured in mutual societies), this means the possibility of a low and stable risk return.

Insurance plans represent the main product of the industry. However, recent decades have brought many corporate pension plans and annuities to retirees. This puts insurance companies in direct competition with other financial product providers in these types of products. Many insurance companies now have their own internal or joint sales force.

Not all insurance companies offer the same products or target the same customers. Major insurance groups include accident and health insurers; property and casualty insurance; and financial managers. The most common types of personal insurance are auto, health, homeownership and life. Most people in the United States have at least one of these types of insurance, and auto insurance is required by law.

Accident and health companies are probably the most popular. These include companies like UnitedHealth Group, Anthem, Aetna and AFLAC, designed to help people with physical injuries.

What Is Insurable Interest?

Life insurance companies primarily offer policies that pay beneficiaries death benefits as lump sums after the insured’s death. Life insurance can be sold as term life, is cheap, and expires at the end of the term or forever (usually whole life or whole life), which is very expensive.

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