Insurance is a form of risk management and in some ways a damage limitations exercise. In many ways Insurance offers protection, albeit in the form of money.
Life is fraught with many potential hazards but it is possible to cover many of these potential problems with Insurance. This will not prevent disasters from occuring but it will offer the peace of mind that some extra money may bring should the worst happen.
So what is Insurance?
Insurance tends to be purchased as a specific policy. The policy will state just what cover it is offering, its terms, conditions, payments due and what it may payout, and when.
Take for example Life Insurance.
We are all going to die sometime or another, fact. However, these days even dying can be expensive. There will be the price of a funeral and perhaps some associated bills to pay. For a small premium, perhaps each month, an Insurance company will offer you a life insurance policy.
The company takes a calculated risk that you will live long enough to pay plenty of premiums. Sometimes this will not be the case and the policy holder may die young. However ,overall the Insurance company will make money on such policies.
Most Life Insurance these days takes into account the person's state of health, their age, lifestyle and whether or not the person smokes. For people who are generally thought to be a high risk the premiums will be higher and perhaps the payout on any claim will be less.
There are many forms of Insurance
These days there are many types of insurance such as :-
- Home Contents
- Critical Care
- Car or Vehicle
- Accidental damage
Insurance policies can also be tailored to your personal needs although such policies will usually be more expensive.
Most insurance policies have some exclusions. For example a life insurance policy will quite rightly not pay out if the person commits suicide. There are also some hazards which are classed as acts of God and will not be covered.
The small print
It is vital that you read the small print of any Insurance policy you take out. This is the only way that you will know what is covered and what is not. Such policies are often a minfield so take financial advice if necessary.
Global warming and climate change
Current weather problems have seen many insurance companies take a battering as policy holders have made hefty claims. After years of accepting premiums these firms have struggled to survive such claims. The upshot has been that Insurance companies are being stricter with buildings and contents protection.
Changing your Insurance provider.
As with most things these days it is possible to change your Insurance provider, if you are not happy. There are many Insurance comparision websites which offer some great deals. Before you change thoughs make sure that you will not lose any potential beneifts or payouts which are tied to your existing policy.