Insurance is a system developed by mankind as a way of reducing the chances of risk in day to day living. The system began as early as the 16th century when the Babylonians developed the very first insurance transaction in paper. This early insurance transaction was for a loan. If a merchant gets a loan for his shipment, an additional amount of money should be paid in exchange for an assurance that loan will be cancelled in case the shipment gets lost. This had paved the way to the modern insurance systems that the world is practicing today. All of these insurance systems run on one particular concept, to limit risk of loss in the future in exchange for money.
It is important to explain Insurance in a layman’s terminology, as the transaction includes determining and preparing for the kind of losses that can eventually happen and not mere and imagined. It is important that a person must understand the need for insurance, since no matter how reassuring it is, there are still countries in the world that does not put insurance into practice. Some countries in Asia, (China and India excluded) have expressed reluctance to get an insurance policy for a reason or two. Poverty and less education about what insurance is and its importance are the prime reasons of not getting insured. However, in North America and Europe, Insurance is widely practiced, as it is regulated by the government. Risk management is taken seriously, as well as appraising and controlling future risks is very common.
Modern insurance system involves two main parties in the transaction, the insurer and the insured, where the insurer – a person or a company issues an insurance policy to the insured in exchange of money. In the insurance policy, the insurer expresses in detail the condition and the circumstances involving the contract, when and under what circumstances the insurer can be compensated.
Insurance can be in a form of life and health insurance, home-property insurance, vehicle insurance, and business insurance. Risks in these particular aspects are widely calculated and therefore become the top four types of insurance that are practiced globally.
Generally, the insurance system helps the society prepare for the uncertainties in the future. This is a form of preparation for the next stage of life which may bring risks of loss, severe or moderately severe. Life’s stages are so unpredictable that an insurer or his family members may suffer the consequences of an miscalculated loss.
Why get an insurance policy?
Here are the important points why an individual needs Insurance; aside of course that it is government regulated.
- · An Insurance policy assures the insured and his family members to continue living a good life even after an unfortunate situation like death, accident, or illness. Perils are unpredictable but they can be highly calculated. Why risk ones self or any family members to difficult situations -mostly financial, when it can simply be prepared for?
- · It protects the insured and his family from rising expenses and assures easy recovery in case of severe loss of life and property.
- · It manages the future by preparing for the next stage in life. It is the safest form of long term investment. A certain type of insurance offers good life as a source of livelihood during retirement age.
Tips in looking for the right Insurance Company
- Look for a reputable company. Consider the one that has long history of trust.
- Check the benefits that the company offer.
- Calculate the ration between premium and the benefits.
- Apply as an insurance agent to avail of the discounts that agents enjoy in an Insurance premium.
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