Insurance: An Introduction

Insurance is the means by which risks of loss or damage can be shifted to another party (the insurers) on payment of a charge known as premium.  The party whose risk is shifted to the insurer is known as the insured. Obviously, the insurer is generally an organization (Insurance Company), which is willing to share the loss or damage and it is also qualified to do so.
Insurance is a contract between the insurer and insured whereby the insurer undertakes to pay the insured a fixed amount, in exchange for a fixed sum (premium), on the happening of a certain event (like at a certain age or on death), or compensate the actual loss when it takes place, due to the risk insured.

Insurance is a contract between two parties whereby one party, insurer, undertakes, in exchange for a fixed sum called premium, to pay the other party on happening of a certain event. Insurance is a protection against a financial loss arising from the happening of an expected event. Insurance companies collect the premium to provide for this protection. A loss is paid out of this premium collected from the insuring public. The insurance company acts as trustee to the amount collected through premium.

Insurance is a safeguard against uncertainties.  It provides financial recompense for losses suffered due to the incident of unanticipated events, insured within the policy of insurance.
Insurance is an arrangement where the losses experimented by a few are extended over several who are exposed to similar risks.  Insurance is a protection against financial loss arising from the happening of an unexpected event.

Type of Insurance

1 Life Insurance 

Life insurance is a contract providing for payment of a sum of money to the person assured or to his nominee, on the happening of certain events. Life insurance is the contract of insurance, affected on human life on the basis of age to pay a fixed sum to the assured or his nominee, on the death or on the happening of any contingency, dependent on human life in consideration of the payment of a fixed installment premium by the insured person.

Life Insurance is different from other insurance in the sense that, here, the subject matter of insurance is the life of a human being. The insurer will pay the fixed amount of insurance at the time of death or at the expiry of the certain period. At present, life insurance enjoys maximum scope because the life is the most important property of the society or an individual. Each and every person requires the insurance. This insurance provides protection to the family at the premature death or gives the adequate amount at the old age when earning capacities are reduced. Under personal insurance, a payment is made at the accident. The insurance is not only a protection but is a sort of investment because a certain sum is returnable to the insured at the death or at the expiry of a period. 

2. Non-life Insurance

Non-life insurance is also called general insurance. Any insurance other than life insurance is known as non-life insurance. Because of its nature of measuring any risk in terms of money, it is also said as pure insurance. General insurance is the insurance of property and liable risk of insured against the most specified cost that is premium. It also includes property insurance, liability insurance and others forms of insurance.

The Non-life insurance includes property insurance, liability insurance and other forms of insurance. Fire and marine insurances are strictly called property insurance. Motor, theft, fidelity and machine insurances include the extent of liability insurance to a certain extent. The strictest form of liability insurance is fidelity insurance, whereby the insurer compensates the loss to the insured when he is under the liability of payment to the third party.