What is Insurance? Insurance is an agreement represented by a policy, in which a Person or entity receives financial protection or reimbursement against losses from an insurance company.
Another definition of insurance by an English dictionary stated: A means of indemnity against a future occurrence of an uncertain event is called insurance.
Type of Insurance
There are different types of insurance, 4 of these are explained below.
1. Property Insurance: this type of insurance covers the property of an individual. In this case, the persons property are insured against a certain specified risk. It could be fire or marine perils, theft of property or goods damage to property at the accident.
2. Fire Insurance: this covers the risk of fire loss. In this case, the company helps the individual and society by compensating them for their losses. This is to help them not to loss much from the destroyed property or loss caused by the fire.
The fire insurance does not protect only losses but it provides certain consequential losses also war risk, turmoil, riots, etc. can be insured under this insurance, too.
3. Social Insurance: this is to give protection to weaker people of the society or community who are unable to pay the premium for adequate insurance.
The various forms of social insurance are Pension plans, disability benefits, unemployment benefits, sickness insurance and industrial insurance.
4. Life Insurance: among the different types of insurance, this is the most important one because the subject matter of insurance is the life of human being. The insurer will pay the fixed amount of insurance at the time of death or at the expiry of the certain period.
Currently, the life insurance enjoys maximum scope because the life is the most important property of an individual. And Each and every person requires the insurance. This insurance provides protection to the family at the premature death or gives an adequate amount at the old age when earning capacities are reduced.
Aside from the four discussed above, other types of insurance are Liability insurance, Marine insurance, Guarantee insurance and others.