8 Different Types of Insurance
What is insurance
A written agreements between an individual and an insurance company it states the insurance company what we call the insurer is going to pay money to the individual who we refer to as the insured if the individual suffers our loss it’s designed so that the injured person will be back in the same position financially as they were before the incident after they incur the loss.
Different Types of insurance organization
When we talk about the self insurance it is when a person or business does not take out any third party insurance so basically this particular type of insurance is totally against the principle of insurance because here we are not going to transfer our risk so we can take out the example of health groups so where there is a combination of four and five people they take out the insurance of themselves so this type of insurance is practically not exist
An individual like any other business can start the business of insurance and work as a insurance provider but again the business of insurance is a very vast business which include the risk at a huge level so it is very difficult for an individual to start a business of an insurance the individual organization has been realized in this type of business.
This type of business it is in the form of partnership so we all are very well aware about the partnership business where more than two person come together to start a business a partnership one can also carry out in the business of insurance but the personal liabilities of the partner in respect of the partnership that is unlimited so it means when two people or three people come together and a star the business of insurance their personal liabilities are liable for the risk and thus it is very risky business that you go for a insurance a partnership so practically there are very less partnership organization in India which are in the business of insurance.
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Joint a stock company
When we talk about the joint a stock company the joint desktop companies are those which are organized by the shareholder pattern who subscribe the necessary capital to start the business and fall for the earning profit from this stockholder who are the real owners of the company now before we move further first clear it out that there is a difference between a policyholder and shareholder shareholder are those people who invest in the company by issuing the share capital whereas policyholders are the person who buy the policy of that particular company for example if we talk about LIC so as a person if I buy the IP of LIC or buy the shares of LIC I am the shareholder whereas when I buy the policy of LIC i become the policyholder so it is not necessary that policyholder and shareholder is a one person whereas in some circumstances I am able to buy the shares of LIC various the policy of LIC we can go through the distinction and further when we talk about the life insurance business and detail now the management of a company entrusted to a board of director who are they elected by the shareholders from among themselves mostly the business of insurance in India is in the form of joint stock company.
Mutual Insurance Companies
When we talk about the mutual insurance companies these companies are the cooperative association firm for the purpose of effective insurance on the property of its member so most of these companies are on the business or in the principle of a corporation the policyholder were themselves the shareholder now this is the basic distinction between the joint district and mutual insurance come when we talk about joint Stock company the shareholder and policyholders are different people where is it mutual insurance company the policyholders are the shareholder of the Company we can go with the example of met life insurance it is one of the very famous mutual insurance company exist in India.
Cooperative insurance organization
The cooperative insurance organization are those concerned which are in corporate and registered under the principle of co-operative society eggs these concern are also called as cooperative insurance societies these society likes most of the mutual company are a nonprofit organization now this is another again distinction for the joint stock– company the joint stock company is a profit organization whereas co-operative insurance organizations are the nonprofit organization this aim to provide insurance protection to its number at the lowest reasonable prices we can take the example of HSE so most of these self-help groups in the you know villages when they are in the business of insurance they come into the category of co-operative insurance organization we can take one example of evergreen health cooperative which is working in the business of medical in India.
State insurance is defined as the insurance which is under the public sector so when we talk about India the insurance business in India is under the state insurance sector we can take the example of LIC so LIC is in business of life insurance and a license under the Public Enterprises it is a government company so most of this take in LIC is the central government so more specifically it can be stated that when government have taken over the insurance business particularly low life insurance it come under the category office state insurance in India the life insurance business was nationalized in year 1956 where is the journal insurance or non insurance business were nationalized 1971 so the most of the insurance provider in India are under the state insurance control so LIC is the very good example when we talk about general insurance there are four basic company which is under the GIC although there are companies which is not under state insurance in working in India like ICICI Prudential HDFC MetLife and many more so when we talk about the basic structure of companies in India which are in the business of insurance most of them either are the state insurance or in the joint test of business or in the form of mutual organization.
Example of Insurance
let’s say for an example I take care of a car insurance policy and let’s say for example I have an accident in the car therefore I’ve suffered a financial loss in other words it’s gonna cost me money to fix the car because I’ve had the accident well with the insurance company does because I’m basically protecting myself against a risk of some type of an accident happening with the car the insurance company is then going to cover the losses there the amount of money that I’ve had to pay in fixing up that car so therefore I paid the insurance company a fee to protect me against this risk and therefore now the insurance company are going to pay me because that risk has happened so that I’m not gaining anything but it means that I’m back in the same position so I’ve car fixed up again as if I was before the accident happened.
How does insurance work
How does insurance work one step at a time so firstly to be insured you have to pay a fee to an insurance company this insurance company Bajaj Allianz Car Insurance ensures lots and lots of people so if they receive fees from lots of different people now as the riskier insurance against does not expect to happen to many people the insurance company knows they’ll not have to give a pair to everyone pay fee sake do you say take say for example Care Insurance okay everyone it’s a legal requirement in Ireland that if you have a car you have to have car insurance however we don’t expect everyone to have a car crash okay or have an accident in the car so therefore they know they’re not going to have to make it paved everybody that gets it has a car that has a car only a small percentage of those paying for the insurance is going to suffer a loss so in the case of our car insurance only a small percentage of people those require insurance is gonna have an accident or for house insurance only a small number of people are going to say have their house go on fire are going to have a software burglary most people that pay for insurance don’t suffer a loss so therefore the money that these people pay will cover the losses of the people that do suffer a loss so say for example I take out a care insurance policy in a house insurance policy for the air and nothing happens to my house and nothing happens to my car well then happy days then I don’t receive any money for the insurance company because I haven’t suffered a loss but the money that I’ve paid my insurance fees will end up going to someone else who has suffered a loss who has been an accident or has had say for example a fire or a burglary in the house anything left over from this it becomes profit for the insurance company because the end of the day insurance companies are businesses and the aim of the business is to make a profit.
let’s say for smart phone example a thousand people pay 10 euro to insure their smartphones against breaking damage loss etc. so therefore the insurance companies receive 10,000 euros so 10 euro by a thousand is 10 thousand euro let’s just say for the argument it’s gonna cost 500 euro to replace the phone just for example 16 people of that house and have had problems with their phone so they’re either lasted that’s broken it’s stolen or whatever I want you to think about
How much is the insurance company going to have to pay out & how much will the insurance company make as a profit
So continuing on the examples you replace the insured smartphones insurance companies gonna have to pay a thousand euro how do I get that ready to multiply the 16 people with the damaged phones I multiply that by the 500 euro the cost of each phone however the insurance company collects a 10,000 euro from insurance fees so that means if I take the 10,000 away from the 8,000 this insurance companies made a profit of 2,000 euro yay for the insurance company woohoo okay so that folks is quite simply and so I just continue there most people in paid insurance didn’t suffer a loss so the fee that they paid was used to help the people that did suffer and that little cartoon image on the right there I think explains it brilliantly so you can see yourself there’s a big pool of money there and you see on the left there lots of people pouring money into the pool to protect themselves against the risk of a possible loss they might occur and the right hand side there you see people dipping into the pool of money to basically get money so that they don’t have to suffer a financial loss so if you look at some of the examples there’s a back bill there so someone obviously has passion insurance because they’re dogs after getting sick so they need to get money to cover the signals of the dog there’s the lady there is after crashing her car so she’s getting money from the insurance company to fix the damage to the car so that she’s not having to actually having to pay anything more to fix the car the insurance company looks out for that why because she pays her insurance fee and the insurance company looks after it you can see there there’s a man that’s broken his leg so he therefore doesn’t because he pays insurance he doesn’t want to suffer a loss from that so the insurance company is covering that and last what he see the woman in there she’s broken by looks like this is a computer screen or a TV screen so she’s getting because she has insured she’s getting money to fix that up so therefore she isn’t incurring any further loss.
- So this is all About insurance and it types.
- Your all needs will change according to your life stage.
- Create and Reconfigure your insurance plan
- Note your plan on a Regular basis specially when there significant life events such as getting mirage, Buying home, having kids and deciding to take a break in your working life.
- Discuss important option with your financial advisor.
- look both advantage and disadvantage of the insurance or product.