Depending on the type of risk involved there are different types of insurances available. If you are the bread winner in your house and something happens to you, you want to make sure that those dependent on you don't go through any financial misery. So, you buy a life insurance . The proceeds from life insurance could be used to pay off any debt and provide financial support to your dependents.
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If you become the victim of a major medical emergency, your financial situation could be devastated by huge medical bills. So, to avoid that risk you purchase a health insurance . Additionally, many doctors may not be willing to treat you if you already don't have a health insurance. In fact, some states mandate having a health insurance. A majority of health insurance plans are sponsored by employers and, as a result, they don't go past your employment. Medicare is the most commonly used health insurance during retirement, . However, it falls short in multiple areas. In order to get a better healthcare, many people consider Long Term Care Insurance .
If you become disabled due to an accident or illness and are unable to work, you will want to make sure that it does not become devastating to you or those dependent on you. In this case, you need to buy disability insurance . This disability could be for a short term or long term and you would need to purchase both of them.
If you own properties such as a home, automobile, a boat, their value could diminish due to an accident or could cause harm to others. In either case, financial implications could be significant. To protect your home, you need to have a homeowner's insurance . In case of automobiles, you need to have an appropriate amount of auto insurance .
Insurance companies work on the model of spreading the risk. For example, in the case of life insurance, an insurance company collects a life insurance premium from all the insured people. A significant part of the total premium is used to pay life insurance to a few who end up dying sooner than their normal life. The remaining premium is used for administrative cost and profit of the life insurance company.
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Some insurance companies operate as mutual insurance companies. In this case, a part of the profit is given back to the policy holders as a dividend. Insurance companies work on historical models and actuarial analysis to decide on the premium based on the state of subject being insured. Sometimes, an insurance company may get more than the usual number of claims. An example would be a property and casualty insurance company being hit by a large number of claims because of too many hurricanes. To avoid such contingencies, insurance companies keep a financial reserve. Many insurance companies limit their risk exposure by purchasing reinsurance from large reinsurers. Since, the role of insurance is to provide financial stability to the public, insurance is a highly regulated area of business.
Depending on the type of risk involved there are different types of insurances available. If you are the bread winner in your house and something happens to you, you want to make sure that those dependent on you don't go through any financial misery. So, you buy a life insurance . The proceeds from life insurance could be used to pay off any debt and provide financial support to your dependents.
...
If you become the victim of a major medical emergency, your financial situation could be devastated by huge medical bills. So, to avoid that risk you purchase a health insurance . Additionally, many doctors may not be willing to treat you if you already don't have a health insurance. In fact, some states mandate having a health insurance. A majority of health insurance plans are sponsored by employers and, as a result, they don't go past your employment. Medicare is the most commonly used health insurance during retirement, . However, it falls short in multiple areas. In order to get a better healthcare, many people consider Long Term Care Insurance .
If you become disabled due to an accident or illness and are unable to work, you will want to make sure that it does not become devastating to you or those dependent on you. In this case, you need to buy disability insurance . This disability could be for a short term or long term and you would need to purchase both of them.
If you own properties such as a home, automobile, a boat, their value could diminish due to an accident or could cause harm to others. In either case, financial implications could be significant. To protect your home, you need to have a homeowner's insurance . In case of automobiles, you need to have an appropriate amount of auto insurance .
Insurance companies work on the model of spreading the risk. For example, in the case of life insurance, an insurance company collects a life insurance premium from all the insured people. A significant part of the total premium is used to pay life insurance to a few who end up dying sooner than their normal life. The remaining premium is used for administrative cost and profit of the life insurance company.
...
Some insurance companies operate as mutual insurance companies. In this case, a part of the profit is given back to the policy holders as a dividend. Insurance companies work on historical models and actuarial analysis to decide on the premium based on the state of subject being insured. Sometimes, an insurance company may get more than the usual number of claims. An example would be a property and casualty insurance company being hit by a large number of claims because of too many hurricanes. To avoid such contingencies, insurance companies keep a financial reserve. Many insurance companies limit their risk exposure by purchasing reinsurance from large reinsurers. Since, the role of insurance is to provide financial stability to the public, insurance is a highly regulated area of business.
