Definition Of

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Definition of 'Insurance' A contract (policy) in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. The company pools clients' risks to make payments more affordable for the insured. hen shopping around for an insurance policy! look for the best priced package that is right for you " prices can vary from one insurance company to the ne#t. And make sure you know what you want. $ome individuals! for e#ample! prefer %&"hour claims service or face"to"face contact with an insurance representative. Also consider the claims settlement process! the amount of the deductible and the e#tent of the replacement coverage. Insurance companies and the policies they offer are not all the same! so think about more than 'ust the price. Insurance is the e(uitable transfer of the risk of a loss! from one entity to another in e#change for payment. It is a form of risk management primarily used to hedge against the risk of a contingent! uncertain loss. According to study te#ts of The )hartered Insurance Institute! there are the following categories of risk* +. ,inancial risks which means that the risk must have financial measurement. %. -ure risks which means that the risk must be real and not related to gambling .. -articular risks which means that these risks are not widespread in their effect! for e#ample such as earth(uake risk for the region prone to it. It is commonly accepted that only financial! pure and particular risks are insurable. An insurer! or insurance carrier! is a company selling the insurance/ the insured! or policyholder! is the person or entity buying the insurance policy. The amount of money to be charged for a certain amount of insurance coverage is called the premium. 0isk management! the practice of appraising and controlling risk! has evolved as a discrete field of study and practice. The transaction involves the insured assuming a guaranteed and known relatively small loss in the form of payment to the insurer in e#change for the insurer's promise to compensate (indemnify) the insured in the case of a financial (personal) loss. The insured receives a contract! called the insurance policy! which details the conditions and circumstances under which the insured will be financially compensated. Types of Insurance

All too often we hear about various types of insurance policies without really understanding what they are and more importantly! what they protect. The truth is! there are two main types of insurance! namely life insurance and general insurance which covers different aspects in your life.

Life insurance
1ife insurance is an insurance coverage that pays out a certain amount of money to the insured or their specified beneficiaries upon a certain event such as death of the individual who is insured. This protection is also offered in a ,amily takaful plan! a $hariah"based approach to protecting you and your family. The coverage period for life insurance is usually more than a year. $o this re(uires periodic premium payments! either monthly! (uarterly or annually. The risks that are covered by life insurance are* • • • -remature death Income during retirement Illness • • • • • •

The main products of life insurance include* hole life 2ndowment Term Investment"linked 1ife annuity plan 3edical and health

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