Insurance nz

Insurance

Insurance is defined as the undertaking of compensation for a particular loss in exchange for periodic payment. Insurance is intended to protect the pecuniary well-being of individuals, companies in the event of unexpected loss.

There are many types of insurance services, these include; life insurance, car insurance, house/property insurance, business insurance and more. Just as the definition states that it is the undertaking of compensation given to the affected party after a misfortune it is important to know how insurance works generally.

 

Insurance

 

Insurance nz

Insurance Companies

Insurance companies do not function as banks do but it is worked out by having a large number of individuals/people conversing a legal contract between the insurance company and the policy holder (person buying the insurance) which creates a grouping together of funds to pay for the loss that is likely to incur. 

Insurance Policy

The legal contract which is the insurance policy like all lawful documents spells out the terms and conditions that both the parties agree to. But then to run such policies fund is needed which is stated as the price of policy. The price of the policy is known as premium. Hence in case of an unexpected loss this can be meant as contingent, the money to reimburse the person affected is pooled out of the premium that was expected to pay in the legal contract.