Basics of insurance

The Indian government had made motor insurance compulsory. Your big client is asking for security before signing the deal with you. Now you are forced to buy insurance. Your employer has provided you with medical insurance. And T.V is asking you to buy Term insurance.?

So what is insurance that everyone is talking about?

Insurance is a?contract between two parties?represented by a policy, in which an individual or entity receives financial protection against losses that may occur in future. This protection, is provided by an insurance company to the insured.?

Let's breakdown insurance using 7 key terminologies

• ?Insured:?Anyone a person, family or business who pays a premium to secure their financial losses is called insured.
• Insurer:?The company that provides insurance against financial loss.?
• Policy:?A written and signed contract between insured and insurer to financially protect against accident and loss.
• Sum Insured:?Are maximum losses that the insurer will cover on paid premium.
• Premium:?It is the amount of money?an insured has to pay to the insurer in order to secure your financial loss.
• Deductible:?The amount the insured pays in the event of an accident before your insurance kicks in.?
• Claim:?A request for financial compensation due to loss covered by your insurance policy.