Insurance
Insurance I | | INTRODUCTION | Insurance is legal contract that protects people from the financial costs that result from loss of life, loss of health, lawsuits, or property damage. Insurance provides a means for individuals and societies to cope with some of the risks faced in everyday life. People purchase contracts of insurance, called policies, from a variety of insurance organizations.
Almost everyone living in modern, industrialized countries buys insurance. For instance, laws in some countries require people who own a car to buy insurance before driving it on public roads. Business partners take out life insurance on each other to make sure the business will succeed even if one of the partners dies.
Insurance makes up part of the broader financial saving institutions. In the western world most insurance companies offered a wide range of policies and services while in Africa only a few do offered such. Some large companies sell virtually every type of insurance available in the marketplace. Smaller companies may specialize in a specific geographic region or type of insurance. II | | REASONS FOR INSURANCE |
In life, losses are sometimes unavoidable. People may become ill and lose income or savings to pay medical bills. People’s homes or other property may suffer damage or theft. People also may accidentally cause injury to others or damage to the property of others. Since one can’t know when a loss will occur or how serious that loss will be. The uncertainty surrounding potential losses is known as risk and Insurance offers a way for people to replace risk with known costs—the costs of buying and maintaining insurance policies.
For example: If the accident injures someone, the costs of medical care could be much higher. Through the mechanism of insurance, however, the car owner can share the risk of an accident with others who face the same risk.
The reduction in risk brought by insurance relies on so many factors. Insurers distinguish between two
Almost everyone living in modern, industrialized countries buys insurance. For instance, laws in some countries require people who own a car to buy insurance before driving it on public roads. Business partners take out life insurance on each other to make sure the business will succeed even if one of the partners dies.
Insurance makes up part of the broader financial saving institutions. In the western world most insurance companies offered a wide range of policies and services while in Africa only a few do offered such. Some large companies sell virtually every type of insurance available in the marketplace. Smaller companies may specialize in a specific geographic region or type of insurance. II | | REASONS FOR INSURANCE |
In life, losses are sometimes unavoidable. People may become ill and lose income or savings to pay medical bills. People’s homes or other property may suffer damage or theft. People also may accidentally cause injury to others or damage to the property of others. Since one can’t know when a loss will occur or how serious that loss will be. The uncertainty surrounding potential losses is known as risk and Insurance offers a way for people to replace risk with known costs—the costs of buying and maintaining insurance policies.
For example: If the accident injures someone, the costs of medical care could be much higher. Through the mechanism of insurance, however, the car owner can share the risk of an accident with others who face the same risk.
The reduction in risk brought by insurance relies on so many factors. Insurers distinguish between two