Insurance is by nature a device, which serves to distribute the risk of economic loss between those who are subject to or exposed to the same kind of risk. Each of the insured belonging to the group most likely to suffer the same kind of risk or peril pays a predetermined amount known as the premium. Said premium goes to a general fund out of which, payment for the economic loss to the member who suffers said loss would be taken out of.
Insurance is basically a contract and there are three parties. The insured or the person who possesses the insurable interest, the insurer or the insurance provider and the beneficiary who benefits from the proceeds of said transaction. The insured makes payment of the premium and in turn, once an economic loss is realized, the insurer compensates such loss by giving the same to the beneficiary. However, the insured needs to prove the existence of such loss and the fact that at the time said loss was suffered he is still in possession of the insurable interest at the time said loss was incurred.
There are essentially two major kinds of insurance. There is the life insurance that can be either individual or cheap joint life insurance, group life insurance and industrial life insurance. Another kind is non-life insurance, which refers to casualty or accident insurance, fire insurance and marine insurance.
As there are numerous kinds, so are there a number of insurance companies providing a wide range of policies depending on your unique situation and contrary to popular belief, affordable insurance is within reach. An example is the cheap liability insurance now prevalent in the business.
All the consumer has to do is research, compare policies from different providers and make the decision to purchase only based on knowledge of the workings of a solid policy.