Overview of Insurance

Insurance is a term commonly used to refer to an action, systems, or business, where financial protection (or financial compensation) to life, property, health and others seek relief from the events that can not be expected that may occur as death, loss, damage or illness, which involves all regular premium payments within a certain period in exchange for policies that ensure such protection.

The term insured usually refers to all things that get protection.

1. Insurance in Act. 2 Year 1992

Regarding insurance in law No. 2 Year 1992 on business insurance is an agreement between two or more parties, by which the insurer is binding to the insured, by accepting the insurance premium, to provide reimbursement to the insured for loss, damage or loss of expected benefits or legal liability to third parties may be suffered by the insured, arising from an event that is uncertain, or provide a payment based on death or life of an insured person.

Agency risk that channel called the insured, and the agency receiving the risk is called insurer. The agreement between the two bodies is called the policy: this is a legal contract that explains each of the terms and conditions protected. Costs paid by the insured to insurer for the risks assumed called premium. This is usually determined by the insurer for funds that can be claimed in the future, administrative costs, and profits.

For example, a couple bought a house worth 100 million. Knowing that lost their homes will bring them to financial ruin, they took the insurance protection in the form of home ownership policy. The policy will pay for replacement or repair their homes in case of disaster. Insurance companies on their premiums by 1 million per year. Risk losing their homes have been channeled from the homeowner to the insurance company.

2. Insurance Law in the Book of Commercial Law

Definition of insurance by the Book of the Law of Commercial Law, about his age insurance or coverage, "Insurance or coverage is an agreement by which an insurer is binding to an insured, to receive a premium, to provide reimbursement to him for any loss, damage or loss of profits expected, which might be experienced as an event that is not certain...".

3. Insurers Use of Actuarial Science

Usually insurer uses actuarial science to calculate the risks they assume. Actuarial science uses mathematics, particularly statistics and probability, which can be used to cover risks to estimate the claim at a later date with reliable accuracy.

For example, many people buy insurance policies for housing and then they pay a premium to the insurance company. When you lose a protected place, the insurer must pay claims. For some of the insured, the insurance benefits they receive are far greater than the money they had paid to the insurer. Others may not make a claim. If it is averaged from all policies sold, the total claims paid out was lower than the total premiums paid to the insured, with the only difference is in cost and profit.

4. Benefits Insurance Company

Insurance companies also get a return on investment. It is obtained from investing premiums received until they have to pay the claim. This money is called float. Insurers can benefit or loss from price changes in the float and also interest rate or dividend on the float. In the United States, loss of property and death are recorded by insurance companies was U.S. $ 142.3 billion in five years ended in 2003. However, total profits in the same period was U.S. $ 68.4 billion, as a result of the float.

5. Insurance Denial

Some people consider insurance as a form of betting in force during the policy period. Insurance companies are betting that the property buyer will not be lost when the buyer paid the money. The difference in fees paid to the insurance company against the amount they can receive when the accident happened almost the same as if someone bet on horse racing (eg, 10 to 1). For this reason, some religious groups including the Amish avoid insurance and rely on the support received by their communities when disasters occur.

In communities close and supportive relationships in which its people can help each other to rebuild lost property, this plan can work. Most people can not effectively support the system as above and this system will not work for large risks.

Up here first, folks....

Hopefully there are benefits !