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welcomes you to have a great new experience in the insurance industry. Learn more about the basics of insurance including its historical origin and the latest innovations taking place around the length and breadth of the globe.

What is insurance?

Insurance is defined as a co-operative device or instrument to spread the loss caused by a particular risk over a number of persons who are exposed to it and who agree to ensure themselves against that particular risk or the risk in question may be an uncertainty leading to financial loss. However, the risk should never be confused with the loss itself which is the unintentional decline in the value or the disappearance of the value altogether arising due to a contingency.

From the business point of view, the insurance can be classified into three broad categories. We will discuss them one by one. First and foremost in its category is the life Insurance, which typically differs from other kinds of insurance in that the subject matter of insurance is the life of human being. It is given at most importance among other types of insurance because life is precious and considered as the most important property of the society or an individual.

Second one is the general insurance, which brings into its fold the property insurance, liability insurance and other forms of insurance. Fire insurance falls under the property insurance whereas theft, fidelity, machine and motor insurance are grouped under the liability insurance.

The third type of insurance is the social insurance which aims to provide protection to the weaker section of the society, who would not be in a position to pay the premium for necessary insurance due to lack of resources. It is considered as the essential duty of the government who is bound to protect its weaker masses. Benefits for the unemployed, pension schemes, disability benefits, insurance for the industrial workers are some of the social insurance.

Insurance intended for the comprehensive health coverage of the masses is called health insurance and it provides protection to the social development of a country.

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What do others think about insurance?

Insurance may be defined as a device in which a sum of money as premium is paid by the insured in consideration of the insurer’s bearing the risk of paying a large sum upon a given contingency (risk) or

In simple terms, it is defined as “a contract wherein one party called the insurer agrees to pay the other party called the insured or his / her beneficiary, a certain sum of money upon a given contingency, called risk”

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The individual considers the insurance as an economic device whereby the individual concerned can substitute a small but relatively definite cost (called premium) for a large uncertain financial loss (risk) that would have to borne if insurance was not available.

From the society’s point of view, insurance may be considered as a mechanism which relieves the individual citizen and the industry from the burden of carrying on themselves the various risks they are likely to face in the day today affairs.

The insurance can in fact be described as a contract and the following points are considered important.

1. Premium, which is nothing but certain sum of money is charged in consideration.

2. Against the agreed consideration, a large sum is guaranteed to be paid by the insurer who receives the premium.

3. The unexpected loss in the form of the value of policy will be paid as compensation to the insured.

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