The First question Comes in mind is What is Insurance? The easiest Answer to get to know the Insurance is that Its a policy or we can Say a Contract which is responsible for paying all the Damage or provide you the financial Protection to the particular entity or Individual.
Insurance Provide you the protection from the big or Small Financial Loss, Property or Health Related Issues or 3rd party. There are many Insurance in the market:
- Pension Plans
- vehicle (Includes both 2 Wheeler and 4 Wheeler)
and many more
How Insurance Claims Works
Insurance includes the poling money from the different individuals or we can say Exposures and using them as the Risk Management for them. When you Insured something the money will be deposited to the particular insurance company with some terms and conditions, Whenever you meet any Damage or something issuing, the company will use the money to cover up all your financial problems which can be solved with the money. For example, you have a vehicle Assurance and unfortunately, you meet an accident the insurance company will be responsible for the damaged Control of yours as well as the other one who has also get some damage by your fault or we can say by his/her Fault. That’s how the Assurance Works
Where insurance Company Invest their Funds
Assurance Companies invested their money in many areas but the main thing is the bonds. All companies invest their money in bonds as they are the safest. So basically there are many categories they invest their funds but the most important and the basic is the bond Investment
How they Make Money
Like a Person Bought a Life Assurance of 5 lakhs with an Annual Premium of 1000 INR and unfortunately the person passed at the age of 25, the Company has Collected total money of 25000 INR but it will pat 5 Lakhs. Another is if a person has taken 10 Lakhs Insurance for a year if the person pays less then the 10 lakhs then it will be the profit for the company and if the person pays more then 10 lakhs in a claim then its a loss for them. The other thing is the lapsed policy in which the policy expires without the death benefits without being paid or the person cancels the policy because he can’t pay the premium anymore.
Components of the policy
- Policy Limits
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