Features of Insurance
The decision whether to buy an Insurance policy now or later always confuses the people because at one hand you have to pay a premium which is an expense and on the other hand you have the benefit of your loss getting covered by insurance company in the event of any contingency.
Insurance business behaves differently than regular business activity. Policies are issued for varying coverage periods, policy conditions and rates can subsequently be changed by midterm endorsements, claims are reported in delays, claims reserves are set and adjusted over time and finally claim payments are made at even later dates.
Before deciding whether to take insurance or not one should know the features of insurance since different types of life insurance provide flexibility to choose one to suit your needs for coverage and savings.
- Insurance that excludes life insurance which tends to pay after certain period of time is not an investment rather it is a hedge against the future probable losses.
- It gives you the comfort that in the event of any loss from unforeseen events will be compensated by the insurance companies.
- One has to pay premiums regularly to the companies providing insurance in order to enjoy the benefits of insurance.
- It can be of many types like life insurance, fire, marine, health insurance and so on and one can take any of the above polices depending on the risk with which an individual is exposed to.
- Insurance policies can be modified and offered to people depending on their risk profile and the need of the insurer.
- There is a limit to the amount by which an insurance company will compensate for the loss incurred by the insurer. The amount is mentioned in the insurance policy and the more the amount of insurance cover the more will be the premium which one has to pay to the company.
- A person can take more than one policy, in other words there are no restrictions on the number of policies which one can take.
- Term insurance is the best and the most important form of insurance and one should take as high a cover as possible as early in life.