Insurance – How Insurance Works | Types of Insurance

Do you know what insurance is? Well if you don’t know what this term is, you are in the right place. In this article, I will be explaining to you what insurance is, how it works and every other thing you need to know regarding the topic. Insurance as a topic is a very popular one. I can tell you without any evidence of doubt that a lot of people know what this is all about and they have also made use of it. But do you know that although it is very important among users the world’s population, not everyone knows about it? Others may have heard about it, but don’t know what it really stands for. I urge you to continue reading this article to know more about what this topic really is.

Insurance

How would you feel to have protection or be protected against a thing or an occurrence that hasn’t happened yet? Well, I would feel great, said john. This is just the main concept of insurance. Insurance can, therefore, be seen as an arrangement by a company. This arrangement is undertaken to provide a guarantee of compensation for special losses, illness, death or damage in return for a specified payment.

Insurance can also be seen as a thing providing special protection against a possible eventuality. With this, a person can, therefore, get protection if he or she loses a car or a house. The protection here in the sense that the car or house gets replaced.

How Insurance Works

Insurance is available to everyone. But before you consider it, it is important that you know how it works. This helps you to cover or pay for damages to your property or other people’s property when you damage theirs or injure someone. This term altogether encompasses a contact that lets one transfer the risk of financial losses from an individual or a firm to an insurance company. These companies collect small amounts of money from their clients, puts them together to pay for losses.

Insurance uses the law of large numbers and probability to determine the costs of charging clients and other risk factors of course. When a company is charging you, the said company makes sure that the rate must be able to pay its expenses and also make a reasonable profit. The more like an event will occur, the more the company will have to collect from a client.

Types of Insurance

Basically there are two types. Every other type falls under these two categories. We have;

  • Property and casualty.
  • Life and health.

Life and health insurance protects users from financial losses due to sickness, diseases and even death. Property and casualty, on the other hand, provides protection for losses relating to assets, belonging and properties.

Why Insurance Is Important

If you take a close look at the world, it’s full of uncertainties and risks. Both individuals and companies alike are being exposed to various levels of risks. Some of these risks can be avoided while others cannot. The financial world has come up with a product to curb these risks and this is where insurance comes in.

Do you know that besides protecting individuals and businesses from risks, this sector contributes largely to the economic growth of nations? This is done by providing stability to the functionality of businesses and also generating long term financial resources. Below is a list of some of the benefits of insurance;

  • Generates long term financial resources.
  • It promotes economic growth.
  • It spreads risks.
  • Provides support to families and individuals during medical emergencies.
  • Lastly, it provides safety and security to businesses and individuals.

These are some of the benefits or the importance’s of insurances

Which Insurance Company Is Best

There are lots of companies in the world today which are actually doing well. Although they are all doing well, there are some that stand out from the others. I will be giving you a list of the top ten insurance companies in the world today and you can find them below;

  • AIA group ltd.
  • AIG.
  • Allianz SE.
  • AXA.
  • Berkshire Hathaway.
  • China life insurance.
  • ING group.
  • Ping An of China.
  • MetLife.
  • United health group.

These are the top ten insurance companies in the world.

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