Insurance

1) What is Insurance?
Insurance is a type of contract represented by a policy. It is a contract between the policyholder and
the insurance provider. Insurance is a kind of protection from financial loss. It is a form of risk
management and is mainly used to hedge against the risk of an uncertain loss. It is a great way to
manage your risks. When a person buys insurance, they get protection against unexpected financial
losses. The insurance company pays them a contractual amount if something bad happens to them.

An insured individual or entity receives financial protection or reimbursement against losses from an
insurance company. If a person doesn't have any insurance and an accident happens, he may be
responsible for all the related costs. So, it is always a good idea to have the right insurance.

2) What do you understand by an insurance policy?

The insurance policy is a written contract between the policyholder and the Insurer. An entity or
organization which provides insurance is called an insurer, an insurance company, or an underwriter,
and the person or entity who buys the insurance is called a policyholder.

Insurance policies are mainly used to hedge against the risk of financial losses, both big and small,
resulting from damage to the insured or their property or liability for damage or injury caused to the
third party.

3) What do you understand by the term "insurance coverage"?

The term "insurance coverage" specifies that when an individual takes an insurance policy from an
insurer or an insurance company, the insured things will be covered by the insurance company for a
specific amount for themselves or the things that he had taken the insurance policy. It is a type of
agreement that consists of some points according to the premiums paid by the policyholder. The
person who takes an insurance policy has to pay premiums to the insurance company. According to
their insurance coverage, the insurance company has to pay the insured in case of damage or claims
made by the insured according to their "insurance coverage".

4) What are the different types of Insurance Coverage?

There are mainly two different types of Insurance Coverage:
 1. Life Insurance
2. General or Non-life Insurance

5) What is a premium? How does an insurance company determine the

premium?
A premium is a price or amount the policyholders have to pay for a contract of insurance to the
insurance company. It is the price paid for protection from an uncertain loss, hazard, or harm. It can
be paid monthly, quarterly, or annually according to their plan, in return for the coverage the
policyholders have taken from the insurance company.

The word "premium" is derived from the Latin word "praemium", which means "reward" or "prize."

Insurance premiums are mainly determined by the likelihood of the insured things having a loss or a
setback out of their control and are based on specific types of risk that are predictive of loss. Things
that have lower risks also have a good chance of lower premiums.

6) What do you understand by the term "Beneficiary"?

The term "Beneficiary" is used for that person who gets nominated for the insured amount if the
policyholder dies.

7) What is the key difference between "revocable beneficiary" and

"irrevocable beneficiary" in insurance?
The "revocable beneficiary" is a designation in which the policyholder has all the rights to change the
beneficiary name without the consent of the named beneficiary. On the other hand, the "irrevocable
beneficiary" is a designation in which the policyholder must ask for the beneficiary's consent before
changing the beneficiary's name. In this condition, the policyholders cannot change the beneficiary's
name without their consent, even if they have purchased the insurance and paid the premiums.